Shipping Industry

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.



High Local Shipping Cost Increases Prices of Goods – Sen. Bam

The costly and cumbersome inter-island shipping is one of the roadblocks in increased prices of goods that will be a burden for consumers and will hamper the growth of the micro, small and medium enterprises (MSMEs) in the country, a senator said.

“As an archipelago composed of more than 7,100 islands, the country relies heavily on sea routes interconnecting the islands. Inter-island shipping is crucial in the transport of goods especially this coming Christmas season,” said Senator Bam Aquino.

However, inter-island shipping is exclusively reserved for ships bearing the Philippine flag and shipping cost impacts the movement and price of traded goods in the country.

“While this helps the domestic shipping industry, the cost of shipping is hampering trade especially for the MSMEs,” said Aquino, chairman of the Senate Committee on Trade, Commerce and Entrepreneurship.

As a response to the call of the President and key stakeholders, Aquino has filed a bill seeking to allow foreign ships to call in multiple ports provided that their cargoes are intended for import or export and duly cleared by the Commissioner of Customs.

Aquino’s Senate Bill No. 2364 will amend Section 1009 of the Presidential Decree No. 1464, otherwise known as the Tariff and Customs Code of 1978 to introduce reform in the shipping industry.

During one of the committee hearings, 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.

“MSMEs who are importing or exporting goods will be able to access a cheaper alternative in transporting their goods through co-loading in foreign ships. Ultimately, this leads to lower prices of goods for the Filipino public,” Aquino said.

If passed, the bill will allow importers and exporters to co-load in foreign ships going in or out of the Philippine jurisdiction.

Moreover, this bill gives clarification on the definition of common carriers and public service in the shipping industry.

With this bill, foreign cargoes shall not be subjected to the law concerning common carriers and public services as defined in the Civil Code and the Domestic Shipping Development Act, respectively.

Lower Prices still Possible – Sen. Bam

Lowering the prices of goods is still possible, if key reforms in the shipping industry are undertaken, including a review and amendment of the Cabotage Law.

This was stressed by Senator Bam Aquino, chairman of the Senate Committee on Trade, Commerce, and Entrepreneurship, at a hearing conducted by the committee on Thursday morning.

“Reviewing and amending the Cabotage Law is one of the many reforms that need to be pushed in the shipping industry. Ultimately, this will benefit millions of Filipinos because it will help bring down the prices of goods in the country,” the senator emphasized.

During the hearing, Aquino explained that high shipping costs around the country

largely contribute to the high prices of goods.

In fact, Sen. Aquino noted 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.

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

“If we look at it, local shipping costs are more than three times the cost of shipping costs to and from overseas.Hindi tama na mas mahal pa ang presyo ng local shipping sa pagbiyahe ng mga lokal na produkto,” he stressed.

With the current prices, local businesses have no other choice but to increase the prices of their products to cover for the high transport costs.

“Kung magsasagawa tayo ng mga kinakailangang reporma sa shipping industry, bababa ang halaga ng pagbiyahe ng produkto na mauuwi naman sa mas murang bilihin,” Aquino explained.

Aside from lowering prices, local businesses and the agriculture sector will be strengthened as farmers and local traders will be encouraged to transport their products to different parts of the country.

“We are confident that, with the help of our colleagues in government and the private sector, we will be able to find more ways to lighten the burden of our countrymen caused by high prices,” Aquino said.

“Our goal here is really to lower the prices of goods, but we also need to consider the welfare of our local shipping companies who will be affected by the proposed amendments,” the lawmaker added.

In his 2013 State of the Nation Address, President Benigno Aquino III asked Congress to amend the Cabotage Law, as it will lower the transport cost of products.


Photo source: Subic Bay Official Website

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