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ECCP urges immediate creation of PH flag registry for ships

ECCP urges immediate creation of PH flag registry for ships
Bernie Cahiles-Magkilat February 19, 2023

The government is strongly urged to establish as soon as possible a Philippine National Flag registry for ships trading nationally and globally to support and promote the country’s maritime sector or the so-called “blue economy”.

This was raised among other recommendations during a luncheon meeting of the European Chamber of Commerce of the Philippines (ECCP) with Trade and Industry Secretary Alfredo E. Pascual on Feb. 16.

“A Philippine National Flag registry for ships trading nationally and globally should be established ASAP,” said Michael Raeuber, chairman and Group CEO of Royal Cargo Inc. – the country’s largest integrated logistics company.

A bill known as the Philippine Ship Registry Act has been filed for that purpose. Raeuber also noted that while the Philippines has crafted the Ten-Year Maritime Industry Development Program, this has yet to be implemented.

He said that after 35 years of absence, Royal Cargo has established a presence of the Philippine flag owning three container vessels and 4000+ TEUs now operating one weekly regionally between the Philippines, Singapore, and Thailand as Iris Line in cooperation with PIL.

“To continue and grow this Philippine shipping line, we need support, not with cash but with less red tape and competitive taxation. We have formulated ten concrete points of which we need some degree of reform to sustain our Philippine flag operation,” Raeuber added.

In addition, the Philippine maritime industry provides 30 percent of global seafarers, employing over 300.000 Filipino seafarers, who are earning good wages and remitting about $6 billion annually.

To improve their required qualifications to continue or better improve that cash flow requires, Raeuber said an ecosystem of maritime academies and training centers to develop and enhance the technical knowledge and competencies of our seafarers. “This is essential to stay on the Whitelist under the IMO Convention on which the Philippines has been since 1984,” he said.

Raeuber also called the attention of the DTI Secretary on the TRAIN Law, which exempts VAT imposition on ships/vessels and their equipment.

In fact, he said, this was also clarified by the Maritime Industry Authority that containers are essential equipment for a container vessel.

At present, however, the Philippine Ports Authority is at loggerheads with 17 business groups including shipowners and operators over its proposed measure PPA No. 04-2021 on container monitoring and registry system.

“This measure is highly unpopular and inconvenient for port operators, shipping lines, in fact, the entire logistics service chain, as it adds red tape and will cost 2-3 digits of billions of pesos, which sure will be passed on ultimately to the general public – increasing inflation,” he noted.

Considering a throughput of 2 million containers at the Manila ports, Raeuber said this would be costly as the measure requires documentation fees, insurance costs, and moving those containers back and forth to attach tracking devices are enormous, possible reefer plug-in and possible additional demurrage and detention charges.

Such measure would only hamper ease of doing business, which the Anti Red Tape Authority is working on to reduce bureaucratic red tape.

So far, the DTI is still working hard to develop a national logistics strategy to do away with the unjustified high shipping cost.

Along this line, Raeuber said the issue of fraudulent and unjustified destination charges, which the previous Congress addressed by passing Bill No. 10575 in the third reading, is again taken up by Congress under Bill Nr. 4933. A Technical Working group of Congress has recently decided to recommend the measure to be passed on to the Congress Committee of Transportation for approval.

Once finally approved by the Congress and Senate and approved by the President, the bill will become the law of the land, protect Philippine importers from unjustified charges, and reduce inflation. Key components of that bill are the prohibition against charging anything to anybody without negotiated contractual obligation to pay. Container Deposits are to be returned after the latest 15 days after the container was returned to a pre-specified yard of the shipping line.

Once the maritime sector concerns are addressed this will improve logistics infrastructure in the country. This will help the Philippines leverage its strategic location by operating the Subic Free Port as what it was supposed to be, a freeport.