The Maritime Industry Authority (Marina) has committed to formulating an attractive financing scheme and reviewing existing incentive programs for players in the domestic shipping and shipbuilding industries.
The agency will also review regulations with a view to accelerating fleet modernization programs, as well as modernizing naval ships and maritime security assets, Marina said in a statement. In addition, the authority will prioritize enhancement of shipbuilding research and development, modernization of shipyard facilities, and regular training for shipyard personnel.
These commitments were made during a recent forum conducted by Marina together with the World Bank-International Finance Corporation on the results of the assessment on implementing Republic Act (RA) No. 9295, or the Domestic Shipping Development Act of 2004.
Marina revealed during the forum the need to increase awareness among stakeholders about the provisions of RA 9295, one of which is the grant of incentives. It noted that from 2014 to 2017, only 103 of the 2,148 imported ships were granted value-added tax (VAT) exemptions.
Philippine Inter-island Shipping Association executive director Atty. Pedro Aguilar earlier said member shipping lines usually don’t take advantage of the VAT exemption because of the difficulty in securing it.
Petrona Gatdula, executive director of Philippine Liner Shipping Association, told PortCalls in text messages that they suggested during the forum that VAT exemption should be retained but made “more friendly and easier to avail, especially for ships built locally.”
Another suggestion is to grant fuel subsidies and fuel tax exemptions. Fuel is the biggest component of operating costs in domestic shipping and accounts for 40% to 50% of a ship’s total operational costs. Domestic shipping lines are levied duties and taxes for fuel used.
Aside from VAT exemption, the Board of Investments also provides incentives for shipping operators, but only for importation of new ships.
Gatdula noted, however, that the reason cargo liners still cannot acquire new ships is that besides acquisition being highly capital intensive, the lack of equipment in some Philippine outports requires vessels that are outfitted with gears. Ships with gears are 30% costlier than gearless ships.
Gatdula said shipping lines are requesting for “proportional incentives for relatively new container cargo ships,” and more attractive financial terms/schemes to encourage shipowners to purchase new ships at lower interest rates.
Gatdula said adequate incentives will help shipowners modernize their fleet, especially with the government’s thrust on fleet modernization. She added that new and efficient ships could translate to cost-effective measures such as more fuel savings, which could eventually lower freight. – Roumina Pablo
