Philippine President Benigno S. C. Aquino III has signed off on legislation to open up the shipping sector and encourage more competition in the cloistered industry, report AFP.
He also signed into law a measure that aims to level the country’s playing field. The twin steps forward is government’s bid to further improve the country’s business climate.
“Today, we signed into law two measures that will help ensure our economy’s continued progress. With these two laws... we are straightening crooked paths borne of lack of competition...” Aquino said after signing Republic Act 10667 or the Philippine Competition Act and Republic Act 10668 or the Foreign Ships Co-Loading Act (Liberalization of Philippine Cabotage)
A new statute will provide greater access for international firms to the Philippines' shipping routes, replacing a 79-year-old law put in place to protect local firms.
It has long been a complaint that the reason why goods are expensive in the Philippines — either those produced locally or from abroad — is because of the cost of shipping the commodities.
“Because of the lack of competition, shipping a container from Cagayan de Oro to Hong Kong it will set you back $1,264 because of the transshipment costs since the cargo would have to be shipped first to Manila before to Hong Kong. But with the amendments to the Cabotage Law, the shipper can ship directly to Cagayan de Oro from Hong Kong and pay only the actual cost of $500 to $764 per container thus saving on time and cost,” Aquino said.
"The old law was apparently meant to encourage the development of the domestic shipping industry, to encourage them to compete. The problem was our fleet hardly grew," Aquino said "This led to an absurd situation where the entire market was controlled by a few."
Despite the shipping sector's vast potential in the archipelago nation, the industry accounted for a measly 0.23 per cent of the Philippines' gross domestic product in 2013, according to a government study.
Leaders of business groups attended the ceremony. “Both bills form part of this administration’s legacy as they create a more level playing field on the competition side and offer cost reductions in domestic shipping,” Henry J. Schumacher, executive vice-president of the European Chamber of Commerce of the Philippines, said
During the ceremony, Aquino claimed that the lack of competition had made shipping cargo across the Philippines with domestic companies more expensive than exporting goods with foreign carriers to nearby countries.
In accordance with the new law, foreign-flagged vessels will be allowed to ship imported goods and transport Philippine-made exports within the country.