Our interisland shipping/RoRo/ferry traffic

News about the expansion of the Calapan, Mindoro port passenger terminal caught my attention recently. It is definitely welcome news.

The Port of Calapan, according to the news report emanating from the PPA (Philippine Ports Authority), would quadruple its capacity to serve sea travelers – from 800 passengers to 3,500. It would become the largest passenger terminal among island terminals.

In the same breath, the PPA also announced that the expansion of the Zamboanga City passenger port terminal, which is in advanced construction, would soon surpass Calapan’s capacity. Earlier, the backup area and pier facilities at Zamboanga were also being improved as a result of increased budgetary allocation.

Our national transportation network. Most Filipinos now fly to go interisland if the distance is far enough. Improvement of travel is often dominated by the public demand for the improvement of airports.

Even though we are a nation of 7,000 plus islands, our national nautical highway – the sea routes by which our port system movement of goods and people travel historically – consists only of less than a dozen major islands that are close to each other by distance and geography of size and people population.

To improve that sea highway with infrastructure investments can help accelerate regional economic development. The logic of this statement recognizes that sea and air transport are connected with land transport systems.

Even if air travel becomes dominant for people movements, many land travelers still use land-sea connections. Moreover, merchandise travel – the heart of commerce in goods – will, for the most part, depend on land-sea transport systems.

If the country’s nautical highway becomes an all-in-one part of the national transport traffic, each of the major islands that comprise our geography will help bring more progress to the smaller group of islands that are dependent on them.

Then regional economic development will be more evenly spread in the nation and much more interdependence of all the islands will cement national unity and progress.

Interisland transport efficiency needed. In 1974, major institutional reform was undertaken to put into effect improvements in interisland transportation.

Two critical institutions were created with corporate powers in order to overcome the limitations of the bureaus in the public works department that support transport investment and policies pertaining to inter-island traffic.

Thus, two institutions – the PPA and the MARINA (Maritime Industry Authority) – were created. The PPA was to regulate the port development and maintenance system and the MARINA was “to integrate the development, promotion and regulation of the maritime industry in the country.”

The requirement of sound development requires safer and faster ships, more terminal facilities, and PPPs (public-private participations) between transport providers (shippers and land logistics companies).

Today, decades later, the same problems that predicated the institutional reforms that led to the establishment of both PPA and MARINA still plague the nation.

Why?

Improvement of the national nautical highway needs to accelerate. Newer and safer ships for interisland use must increase in numbers. The interisland ships are full of old, second-hand vessels retired in foreign countries but still used in our shores by shipping companies that are under-capitalized.

In the 1970s, private shippers said that the cost of freight between Hong Kong or Singapore and Davao per ton was cheaper than between Davao and Manila. Today, is the answer the same?

In 2015, the country did liberalize the policy with respect to the participation of foreign vessels to the loading of Philippine products destined for exports. (This was the amendment to the ‘cabotage’ rules in regard to country-to-country shipping of merchandise among national shipping carriers.) Has this solved the question posed?

Many seaports in the country are congested and facilities need improvements for the comfort of passengers and for the efficient port operations within port zones. In general, one could ask if private participation in management and maintenance of systems could be wanting in some port operations.

Can we blame PPA and MARINA only? Of course, No. The state of affairs has remained as demanding in reforms because our national politics has failed to undertake the major reforms that the nation needs all along to promote rapid economic development.

In short, the room for improvement is considerable. For lack of space in today’s column, let me focus only on one important aspect of the problem. This is a topic on which I have spoken many times – the restrictive provisions of the Philippine Constitution.

(Incidentally and as usual, those who are most affected by the discomfort and lack of good facilities in interisland shipping and RoRo traffic in the country would hardly connect the solution to this problem in national policy discussion.)

Constitutional policies affecting transportation services. Over the Christmas season, I received a communication from the chairman of the House Committee on Constitutional Amendments (Rep. Rufus Rodriguez) that seeks to amend the restrictive provisions of the Philippine Constitution. It seems the committee will work on long awaited constitutional issues.

Recall that at the closing period of the Duterte administration, the House of Representatives under Speaker Allan Velasco was pushing for the amendments to the restrictive provisions of the Constitution.

If the new House bill in question is the same bill then under consideration, then that will advance the cause of introducing more foreign capital to the shipping industry and expand the fleet that will serve interisland traffic. It will in addition improve our participation in foreign commerce because it will raise the country’s access to shipping routes.

As important and in relation to interisland vessels, the issue of foreign direct investment in the domestic shipping industry could improve immediately the number and quality of the shipping fleets serving domestic transportation and commerce.

Under Philippine law, because of restrictive provisions to foreign direct investments, foreign capital does not participate directly in the domestic shipping industry. The liberalization of the provisions would widen the participation of foreign capital within the Philippine economy.

(To be continued.)

For archives of previous Crossroads essays, go to: https://www.philstar.com/authors/1336383/gerardo-p-sicat. Visit this site for more information, feedback and commentary: http://econ.upd.edu.ph/gpsicat/