Proposal to allow 100% foreign ownership in shipping to crush small local firms — Cebu group

Proposal to allow 100% foreign ownership in shipping to crush small local firms — Cebu group
Arjay L. Balinbin August 26, 2020 https://www.bworldonline.com/proposal-to-allow-100-foreign-ownership-in-...

CEBU-BASED shipping group Philippine Coastwise Shipping Association on Tuesday warned that allowing full foreign ownership in domestic shipping will totally wipe out small and medium-sized companies on the island-province.

“What we are really concerned about, since I’m the president of the [association], [is] this will totally wipe out the small and medium-sized companies, which are really the backbone of the island-province,” Paul Rodriguez, who is also the president of the Cebu-based Asian Marine Transport Corp., said in an online forum on Tuesday.

He was referring to the proposed law amending the Public Service Act, which would open the domestic shipping sector to 100% foreign ownership.

“I hope our lawmakers and our government would really seriously consider the position that the inter-island shipping should only be for Filipinos. I still believe that we can do the better… [and] save an essential industry,” he said.

“History will tell that Filipino shipowners are the first responders to our nation’s crises and emergencies. We should not forget that. Just like power and water, the movement of essential goods is carried out by the cheapest mode of transportation, the shipping industry. So let us not forget the sensitivities of our industry,” he added.

The House of Representatives in March approved on third and final reading House Bill No. 78, which distinguishes between a public service and a public utility and will remove the “60-40” rule.

Public utilities were defined in the amendment as electricity distribution, electricity transmission, and water pipeline distribution or sewerage pipeline system. Telecommunications and transportation were removed from the list of public utilities.

At present, public utilities are subject to a foreign equity cap of 40% as provided under the 1987 Constitution.

Maritime Industry Authority (MARINA) Administrator Robert A. Empedrad said his agency has already presented its position on the Philippine Service Act to lawmakers.

“Allowing foreign ships to ply our routes will be beneficial to the public, and it will enhance competition…. We will support the 60-40 ownership. We allow foreign competition but on a 60-40 ownership basis pa rin, ibig sabihin (still, that means) if there will be foreign competitors plying our routes, they will be owned 60% by Filipinos and 40% by foreigners,” Mr. Empedrad said of MARINA’s position on the matter.

Mr. Rodriguez noted the proposed measure is now being deliberated at the Senate.

“With the direction of 60-40 ownership suggested by MARINA, I think it will just be used to skirt around to be honest. I don’t think foreigners would want to have a local partner really…. If they are to send their ships here, they will be running their show. Perhaps this 60-40 ownership will just become really a dummy setup,” he said.

Various business groups and foreign chambers of commerce have expressed support for the bill, saying that it “will provide a concise definition of public utilities, institute a rate-setting methodology that is fair to both investors and consumers, and facilitate greater competition in the public services sector.”