philippine cabotage law

Republic Act No. 10668: Foreign Ships Co-Loading Act

Currently, inter-island shipping is exclusively reserved for ships bearing the Philippine flag. Internationally, this principle is known as the Cabotage Principle, which is implemented to protect the country’s local shipping industry.

Unfortunately, this exclusive right incurs an extra cost for our importers of raw materials and for Philippine exporters of goods. Thus, we are pushing today for allowing foreign ships coming from international ports to dock into multiple ports all over the country.

This reform will provide our producers and entrepreneurs the following benefits and these are: 1) the lowering of production costs; 2) the easing of doing business in the maritime transport industry; 3) the decongestion of the Manila Port; and 4) the further leveraging of our strategic location in the ASEAN market.

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Sen. Bam lauds Malacanang for Including Measures for Small Businesses in Priority Legislation

Senator Bam Aquino has lauded Malacanang for including his two priority measures that will further help in the development of the micro, small and medium enterprises (MSMEs) in the country in its legislative agenda.

 “We thank Malacanang for including the Cabotage Law and the Fair Competition Act in its legislative agenda,” said Aquino, chairman of the Senate Committee on Trade, Commerce and Entrepreneurship.

 “Through this, I expect the swift passage of these measures that I see as crucial to our economic growth, job generation and level playing field for all businesses,” the senator stressed, adding that he is committed to work for the passage of the two measures.

“These measures have been in the legislative pipeline for a long time. Finally, some political will to get difficult reforms passed which are pro-poor, pro-business and will lower cost of goods,” he added.

Passed by the Senate on third and final reading, Senate Bill No. 2282 or the Fair Competition Act of 2014 aims to shield small business owners and consumers from companies engaged in unfair business practices, which usually lead to increase in prices of basic goods and services.

Aquino said a fair competition policy will level the playing field for Filipino businesses and allow more Filipinos to exercise their entrepreneurial spirit.

 “The bill puts in place measures that will protect the welfare of businesses and protect honest, hard-working entrepreneurs against abuse of dominance and position, and other unfair practices that put both Filipino businesses and their consumers at risk,” Aquino said.

If passed into law, the senator said Filipinos will enjoy a wider range of high-quality products and services at reasonable prices.

Aquino also filed Senate Bill No. 2364, which seeks to amend Section 1009 of the Presidential Decree No. 1464, otherwise known as the Tariff and Customs Code of 1978, to lower local shipping cost in the country.

If enacted into law, foreign ships will be allowed to call in multiple ports provided that their cargoes are intended for import or export and duly cleared by the Commissioner of Customs, leading to lower cost.

The senator has filed the bill in response to President Aquino’s call to relax the country’s policies on cabotage.

It was discovered that it is cheaper to send products from other countries to the Philippines than to ship goods within the country.

For example, the cost of shipping a 20-foot equivalent unit (TEU) from Kaoshiung, China to Cagayan de Oro is $360 or P16,000 only.

However, the cost of shipping the same cargo from Manila to Cagayan de Oro will take $1,120 or almost P50,000.

“We’d like to put these policies in place this year to sustain the momentum of our growth we’ve experienced the past few years,” Aquino added.

Transcript of Sen. Bam Aquino’s Interview after the Cabotage Bill Hearing

Lowering of Logistics Costs

I’d like to know specifically if they (DTI) have a study already and how much this measure can lower costs (of logisitics). Kasi at the end of the day, ang pinaka-pakay naman ng bill and all of the things that we are talking about is lower the cost of logistics.

Many people have commented and I think it’s largely accepted already that our cost of logistics is higher that a lot of our countries, iyong pagship natin ng mga produkto.

This hearing was conducted to check ways how we can lessen costs of our logistics. This proposal came from DOTC and is supported by everyone here.

Before proceeding, I would like DTI and even other agencies here to at least give a forecast pag pinasa natin ito, how much ang puwedeng ibaba ng presyo ng ating bilihin, number one.

Number two, I think malinaw rin that if we even file this bill, this is just one of many reforms na kailangang gawin. We have to look at costs in our ports, even in taxes currently being collected from shipping industry and even the operational costs of the shippers themselves.

The suggestion of Atty. Banez was to benchmark this across the ASEAN para makita natin how competitive we really are.

One of slides that they showed earlier showed na pagdating sa taxes, ang taas ng tinatax natin sa mga shippers natin. When we tax the shippers, they charge it to their clients.

At the end of the day, babagsak din ito sa mga Pilipino.


Policy Direction on Taxes 

We’d like to also have a clarified policy regarding, is the policy to collect more in taxes or is the policy is lower the cost of prices.

In this case, posibleng magkasalungat ang mga polisiyang iyon. We want to get a clearer picture from our friends from DOTC, MARINA, PPA and DOF.

If through this measure, if we can lower the cost of logistics even by five to ten percent, that will have an impact sa cost of goods natin.

Most goods in the Philippines pass through logistics and shipping industry because were islands. If you look at the different components that comprise the cost of a product, we’re tackling the logistics part doon.


President’s Agenda

Apart from the President pointing this out in his SONA na kailangang magpasa tayo ng policies which will lower cost, many people commented na just to ship products from the Philippines, it’s cheaper to send it to another country than to send it to another port.

In fact, one of the resource speakers mentioned that she hopes that we don’t stop here. We start with this bill, we look at the costs, we look at the taxes and eventually, we really push for long-term vision with regard to our port situation.

The current problem sa ating Port of Manila, hindi natin nalagyan ng long-term thinking that in an economy that’s growing, ang liit-liit naman ng port mo. Hindi ka gumagawa ng mga measures na palakihin at palakasin ito.

Hopefully, this will also lead to a serious reflection on our infrastructure in the Philippines and see if even now, we can really start the process of planning ahead.

We’re a growing economy. I believe that we can be a middle-income economy in a decade but that means that our ability to trade needs to be protected also and to be safeguarded. That means a long-term vision to our port infrastructure.

Ang mga usaping ito, it all leads to that. Kumbaga, nagtatahi-tahi ang issues. We have short-term solutions, we have policies that we can push but at the end of the day, ang hinahanap talaga natin ay mas mahabang pagtingin sa situation ng mga port natin.


Q: How will this solve port congestion?

Technically, the goal of this hearing is to lower prices. Kung ang port mo congested, tataas talaga ang presyo mo dahil very inefficient ang ports natin.

In short, if our ports are congested and we haven’t solved that problem, even if we pass this bill, haharapin pa rin tayo ng problema ng congestion.

But hopefully, if we able to decongest the ports and have a better policy framework for shipping, mas mura ang cost natin, posible talagang bumaba iyong presyo ng bilihin because of this measures.

But if our ports continue to be congested, maliliit, inefficient at any single point, posibleng magkagulo dahil kulang talaga ang infrastructure, then prices will go up.

If we have better infrastructure there at kung maipasa ang mga polisiyang ito, bababa naman ang presyo ng bilihin. Of course, ang hinahanap ng maraming Pilipino, bumaba ang presyo ng bilihin.



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