Amended Cabotage Law

A freighter docks at Puerto Princesa Port in Palawan as it prepares for cargoes to be shipped to the major ports in the Philippines and other neighboring countries.

 

DAVAO CITY, Philippines – Key government leaders and business players from Mindanao expressed full support to the approved amendments to the Cabotage Law, citing the move will result to healthy competition, make rates more competitive, and eventually bring down shipping costs.

"The President's approval of the amendments to the Cabotage Law would be expected to hasten improvement of Mindanao's cargo shipping industry and encourage efficient services that will result to more a competitive business climate," said Secretary Luwalhati Antonino, chair of the Mindanao Development Authority (MinDA.)

She added the amendments to the law could usher increased services of foreign shipping players that will create a more productive and profitable import and export mechanism, which is considered an advantage for Mindanao's growing industry.

President Benigno Aquino III signed into law on Tuesday the Foreign Ships Co-loading Act, which amends the decades-old Cabotage law. The law allows foreign ships carrying imported goods and cargoes for export out of the country to dock in multiple ports.

Under the law, foreign vessels will be allowed to transport and co-load foreign cargoes for domestic trans-shipment. The law also seeks to lower the cost of shipping export cargoes from Philippine ports to international ports and import cargoes coming from international ports.

In his speech, President Aquino said because of lack of competition, the current cost of transporting cargo container from Cagayan de Oro City to Hong Kong totals to P56,880, with P50,400 from that amount covering the cost for shipment from Cagayan de Oro City to Manila. The other remaining P6,480 will cover for shipment cost from Manila to Hong Kong. With the amended Cabotage Law, shippers can directly transport goods from Cagayan de Oro City to Hong Kong for a cost of P22,500, allowing them to save P34,380 or 60 percent from the current shipment costs.

MinDA, through its priority policy agenda has been pushing for the amendment to the law seeing it as a move that will strengthen connectivity and help Mindanao maximize its economic potentials.

"With this law already in place, we can fully tap the potentials of the Mindanao Development Corridors and focus on building a more connected and globally-competitive Mindanao," said Antonino.

She added the law will also will facilitate a more competitive Mindanao business environment in terms of trade with BIMP-EAGA and ASEAN, and other countries around the globe.

BIMP-EAGA stands for Brunei Darussalam Indonesia Malaysia the Philippines East ASEAN Growth Area, a sub-regional grouping formed with the goals of promoting trade, investment, and tourism within the sub-region.

"We laud this development, as Mindanao products bound for export will become more competitive in the world market," said Vicente Lao, chair of the Mindanao Business Council.

He added that imported raw materials that are needed for production in Mindanao will also become cheaper due to the anticipated cuts in shipping costs.

The Mindanao Business Conference (MinBizCon), an annual gathering of the region's key business leaders has been pushing for the approval of the amendments to the Cabotage Law. The Mindanao Exporters Congress (MEC), a regular assembly of Mindanao export industry stakeholders has also been urging the Aquino Government to approve the amendments to the law.

A discussion on the approved amendments will be conducted today and Friday as the MEC reconvenes for a three-day congress here in this city at SM Lanang Premier's SMX Convention Center.

"This is a good move of the Aquino administration, and we welcome this development as it will foster competition among domestic shipping companies in the country," said Ferdinand Marañon, president of the Philippine Exporters Confederation (Philexport) – Davao in a news statement.

Marañon, a key convenor of the MEC added the new law will pave way for lower shipping costs since logistics costs are expected to drop.

"This will give big contributions to the country's economic activity, which in the long run will reinforce sustainable growth and development of the Filipinos," he said.

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