Wish list for domestic shipping

Given the archipelagic nature of the country, it has always concerned me that there is so little government attention being given to improve the use of our waterways for the transportation of people and goods, or for that matter, in the crafting of laws that would encourage industries related to shipping.

Arben Santos, a good friend and fellow golfer, shares my sentiments. Arben is the chairman of Southwest group of companies involved in ship management and operations. Being an active participant in the shipping industry, he is forthright in giving insights into the inherent problems of the industry and in expressing his frustrations for the failings of both the private sector and the government in upgrading the shipping industry standards.

In between rounds of golf or at gatherings, we would talk extensively about these issues and I would like to share some specific items with our readers for comments and reactions.

Incidentally, I was also informed that the think-tank group of presidential candidate Nonoy Aquino is looking at domestic shipping as part of priority concerns in view of the series of maritime tragedies that regularly occur in the country claiming thousands of lives and damaging the environment. 

Bancas and ‘floating coffins’

We are so comfortable with wooden-hulled bancas that very few of us question why this is still a major feature in the way Filipinos are ferried between islands. These bancas are inefficient, and more importantly, do not adequately cover the safety of their passengers.

Compounding this problem, most of the steel-hulled ships currently in operation in the country that were imported second hand from Japan are the wrong kind of ships, i.e., they were meant for calm inland waters only, and ergo are not suited for waters on the open sea with large swells. On Philippine waters which is regularly visited by typhoons and mostly in open sea, these ships virtually become “floating coffins”.

Capability to build

In the absence of acceptable source of second hand vessels suited for our waters and if we want to seriously offer better sea transport facilities inter-island, we have to start building our own. And the sooner, the better.

On the other hand, to encourage the acquisition of new or appropriate second hand vessels, there is a need to seriously look at a workable program or financing scheme that will support this.

The government can tap funding sources from other countries to alleviate the financing problem of ship owners in acquiring new or second-hand vessels. Or the expansion and development of the lending policies of the National Development Company’s National Maritime Leasing Corp. (NMLC) could be revised to make its terms more attractive to ship owners.

New policies and laws to broaden scope

The ship breaking industry, which is by itself a lucrative business, is at present not feasible because of inappropriate and limiting environment laws. Ship breaking is demolition of sea-going vessels into scrap or for recycling.

One solution would be to put up a Special Economic Zone specifically for ship breaking facilities. Once established, we can effectively compete then with India, Pakistan and Bangladesh. This will also generate jobs as well as generate a new steel industry.

An Omnibus Maritime Code had been proposed before Senator Chiz Escudero on the committee of revision of laws. Lawmakers should give this a more serious look. Likewise, there is a need to certify the Maritime Liens and Ship Mortgage Act as an urgent bill.

A ship mortgage law that is acceptable to foreign bankers is also needed to encourage more ship ownership by Philippine companies. The present ship mortgage law is unattractive and unresponsive to the requirements of foreign lending institutions.

The government can likewise assist ship owners by giving them soft loans, subsidies, or incentives. For instance, a graduated subsidy may be granted to ship owners who place vessels on missionary routes provided the same owners have vessels trading regular routes.

It is good that the country has already spearheaded an early deadline in complying with the double hull policy for tankers carrying petroleum products, both clean and black. As such, the Philippine will have one of the youngest fleet of tankers by 2011.

Seafarers

Another problem, which can be remedied with minimal investments on the part of government, is the rationalization of education facilities for seafarers.

The Maritime Industry Association or Marina needs to review qualifications of crewmembers manning the Roll-on, roll-off (RORO) and passenger vessels. We have enough seafarers. We just have to see to it that qualified seafarers with enough education and experience are placed onboard as officers, and that the International Safety Management Code is properly implemented.

The Philippines is still the biggest supplier of seafarers worldwide due to our English proficiency, good work attitude, and competitive rates. Annually, there are 25,000 graduates of maritime courses, but only 3,000 (or a mere 12 percent) are deployed locally or internationally.

Most of those not deployed cannot get employment in maritime entities and are therefore forced to seek menial or unrelated jobs. Seafarers abroad earn anywhere from $1,000 to $10,000 a month compared to land-based workers who earn only from $500 to $1,000. Hence, the value of seafarers to economy cannot be ignored.

Substandard schools

The government needs to shut down sub-standard maritime schools that are mere diploma mills. We need to attract graduates of maritime schools into working in domestic shipping while waiting for their deployment abroad.

Instead of hiring major patrons who are usually not graduates of a maritime course, we should make use of the many maritime graduates who remain unlicensed and unemployed. This will be their training ground as well for overseas employment.

From precursor of tragedies to spur for growth

To boost local economic growth in the next decade, domestic shipping must stop being the precursor of maritime tragedies and be a spur for growth. It must fix and prepare itself to play a major role in transporting people and goods around the country in the most cost efficient, safe and world class manner.

One of the objectives of the next administration, whoever should win, must be to provide the support and regulatory environment that would free the domestic shipping industry from the shackles of the old policies and mode of thinking.

Incentives and latitude to grow must be provided and full support should be extended to those in the private sector willing to take the challenge and face the business risks involved without resorting to “corrupt practices” and any form of discriminatory intervention via the “palakasan” (unethical influence) system.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.