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PISA: ‘Transportation’ must remain in utility coverage

PISA: ‘Transportation’ must remain in utility coverage
GENEVI FACTAO September 04, 2019

Local shipping lines have expressed fears that removing transportation from the coverage of public utility would lead to the complete deregulation of the transport industry.

Philippine Inter-island Shipping Association (PISA) has welcomed the proposal to amend the decades- old Public Service Act (PSA), but warned that the removal of “transportation” from the coverage of public utility could bring adverse effect to the riding public.

PISA Chairman and President Christopher Pastrana, said all modes of public transport such as shipping is clearly a public utility which is partly nationalized industry as it is limited to Filipino citizens or to corporations or associations, wherein 60 percent of the capital of which must be Filipino owned.

“By removing transportation from the coverage of the public utility provision of the 1987 Constitution, the proposed legislation has the net effect of lifting the 60-40 percent Filipino foreign owners of transport companies and allowing foreigners 100 percent ownership thereof,” PISA said in its position paper.

PISA said domestic shipping is a strategic industry considering the archipelagic nature of the country. More than 80 percent of all cargoes were transported through ships. Allowing 100 percent foreign ownership of domestic shipping will result to foreign domination of the coastwise trade

“As an archipelagic country, alien control of inter-island navigation means economic control and domination of our economy by alien hands whose commitment to the trade is highly suspect. In times, of political instability in any country, foreigners will most likely leave and wait for better times before coming back,” Pastrana said.

The foreign ownership of public transport is not a guarantee of lower transport cost. The opening up transportation to foreign competition would not bring down domestic transport cost so long as foreign corporations would be subjected to the same operating conditions as domestic transport operators.

Asian Marine Transport Corp. President and CEO Paul Rodriguez said, for instance, China which has so many idle ships would bring them all here. They can freely roam and have access to our islands.

Cebu-based- Asian Marine Transport, which operates Super Shuttle RoRo provides shipping services for inter-island passengers and cargoes. It is the largest ship-tonnage owner and operator in the Philippines, serving 32 ports of call.

“They don’t see the repercussion. This must be emphasized in Congress. We want an exemption of the maritime industry because it involves national security and the livelihood of the seafaring industry is at risk,” he said at the sidelines of the Maritime Safety Summit for Domestic Shipping on Friday.

“We’re the largest seafaring country in the world and this will be gone,” he added.

Rodriguez said that there is a negative perception that the Philippine interisland shipping is expensive, but actually, it’s not.

He explained that other countries don’t tax fuel on ships, they don’t have income tax. He said the cost of operation here becomes high because of port congestion, road congestion and others.

“We are still cheap on freight rate basis. What they failed to appreciate is that the freight charge includes the terminal charge and everything in port costs. That’s inclusive in our freight rates,” he said.

“The foreign carriers’ rates only have the freight component. Domestic shipping have lower rates than international carriers, because these foreign carriers charge left and right like port congestion fees among others. In fact, the DTI [Department of Trade and industry] is trying to come up with administration’s instruction on shipping cost,” he added.

Atty. Rex Tupaz, lawyer of Archipelago Philippine Ferries Corporation (APFC), said the PSA amendment bill was certified urgent by President Duterte.

The PSA amendments bill seeks to amend the 82-year old law to increase competition, reduce barriers to foreign investments which in turn will lower prices and improve the quality of services for customers.

PISA maintained that competition is alive in the domestic shipping industry. PISA said PSA encouraged investments in shipping through the award of exclusive franchises.

In 1994, the government moved away from fixed route franchises and mandated the deregulation of the liner trade. It required that each route would have at least two operators. The original franchise holders entered each other’s traditional routes and created fierce competition.
In 2003, the Strong Republic Nautical Highway (SRNH) was inaugurated and many new players entered the domestic trade in the short and long -haul routes.

In 2004, RA 9295 or the “Domestic Shipping Development Act of 2004 was enacted. The law deregulated the liner sector and newcomers entered the trade.

As a result, domestic ship-owners fiercely compete against each other with services which require investments in ships, containers, container yards and warehouses, trucks, chassis, software and land based equipment in some cases in ports and shore cranes and equipment.

“Removing transportation from the coverage of public utility will render all modes of public transport as private carriers and removed the protection to the commuting public under existing laws.

All modes of public transport are considered common carriers and governed by the common-carrier provision of the Civil Code,” PISA said.
“The duty to observe extra ordinary diligence in the vigilance over the goods and passengers render common carriers liable under virtually all circumstances in the event of damage or loss to the goods or injury to or death of passengers. Remove this protection by converting all modes of public transport as private carriers will enable the latter to avoid liability,” it added.