What is a Blue Economy? Allow me to refer to Blue Denmark:
Denmark is among the world’s leading maritime nations, and Blue Denmark is one of Denmark’s industrial positions of strength.
Blue Denmark consists of shipowners and shipping companies and many businesses whose activities emanate from international and Danish shipping. They are, for example, shipbrokers, ports and logistic companies.
Shipyards and industrial and service companies that supply equipment, components, and services to ships are also part of Blue Denmark.
How does Blue Singapore compare?
Singapore is currently the second-largest port globally in TEU capacity, the largest transshipment hub, and the world leader in bunkering.
Today, more than 5,000 maritime establishments contribute about 7 percent to Singapore’s gross domestic product and employ more than 170,000 personnel.
So the big question is: Where is Blue Philippines?
We started discussing the Philippine Blue Economy in 2018. Indirectly, it formed part of Arangkada Philippines’s Policy Brief on Seaports and Shipping. We were happy to see that National Economic and Development Authority, under Dr. Ernesto Pernia, supported the Blue Economy.
Through the years, the Philippines has been the world’s largest supplier of maritime services. The maritime service sector is composed of four subsectors:
• Crew management: need to retain and expand the Philippines as the leading maritime country in the world;
• Ship management: need to promote the Philippines as the next maritime services center of Asia and the world;
• Business-process management services, including education and training: need to deepen this part of the BPO industry with the opportunity to develop business-outsourcing services for ship managers, marine insurance, legal services, and others;
• Shipbuilding and repair: the Philippines is one of the large players in this subsector.
Despite the impact of the Covid-19 pandemic, which has affected the blue economies around the world substantially, we firmly believe that the time is now to establish a world-recognized Blue Philippines: creating a Philippines International Shipping Fleet, carrying the National Flag.
Why now? Shipping in Asean becomes more critically crucial after global trade is affected by the policies of the man in Washington, and Europe is looking at Asean and Asia as a focus for trade and investments.
What needs to be done to achieve the potential?
• Attract investments in shipping that will allow foreign shipping companies to register their ships in the Philippines
• Enhance a Philippine Ship Registry, which will set the regulations that will encourage and facilitate the registration of safe and environmentally friendly ships
• Allow Philippine flag vessels to operate domestically and internationally in one registration to enhance their competitiveness
• Establish a tonnage tax regime in place of income tax, bareboat tax, common carrier’s tax, and all other taxes to be at par with the ship registries of other countries
• Promote access to foreign financing in the purchase of ships by amending the ship mortgage law
• Encourage and allow the participation of Philippine flag vessels in the carriage of government cargo to and from the Philippines
• Government imports should be secured on FOB (freight costs are separate from the cargo value of imports) to enable Philippine-flagged ships to participate in the carriage of government cargo and thereby earn foreign exchange for the country, and have the profits of these transactions made taxable in the Philippines
• Simplify port clearance requirements in the entry and exit of ships
• Allow voluntary pilotage services and impose liabilities for ship damage resulting from pilot errors.
What will the Philippines/the Philippine government gain from this?
• Philippine registered companies pay income tax to the government for businesses done here and abroad.
Foreign registered companies supposedly pay income tax on their businesses done locally, but in the case of destination charges/services, none as they incorrectly don’t declare these as local income. Their freight income generated abroad is correctly not being taxed by the Philippine government as well.
• Freight revenues stay in the country instead of being remitted abroad
• Importers will be protected from abuse of foreign shipping lines through the imposition of excessive surcharges. Importers will now have alternative options to bring in goods at lower costs in a real market environment
• Local consumers will buy imported products at a reduced landed cost as unnecessary surcharges are eradicated.
• This project will pave the way for all domestic carriers to consider going international, thereby giving work to displaced seafarers for as long as the local vessels comply with international maritime safety standards.
• Once domestic companies start to engage in international trade, foreign-flagged carriers will have competition from Philippine flag carriers
• Government imports such as rice, sugar, G to G projects can and will be carried by Philippine flags as the flag law requires
Per research done by the United Nations’s Comtrade, Thailand, and Vietnam, exports to the Philippines 2019 were $6.47 billion and $3.46 billion, respectively.
Based on data gathered, for 2019, the Philippines imported $112.9 billion and exported $70.3 billion worth of goods worldwide.
By value, the Philippines exported 67.7 percent to Asian countries and imported 78.8 percent from their fellow Asian countries. Imagine all the possible benefits if at least some of these trading activities will be carried by Philippine flag shipping lines servicing Intra-Asia routes. Intra-Asean cooperation will be strengthened as well.
Of course, there are other advantages of the Maritime Blue Philippines:
1.) Filipino Global Maritime Professionals
2.) Ship Building and Repair Sector
3.) Maritime Services Center Cluster, composed of
• Crew management, to retain and expand the Philippines as the leading maritime country in the world
• Ship management, to promote the Philippines as the next maritime services center of the region and eventually of the world
• Business-process management services, including education and training, to deepen this sector of the BPO industry of the Philippines
• Ship finance and insurance and maritime law and maritime arbitration, through the development of a professional cadre of maritime lawyers, bankers, and insurance professionals.
In conclusion, in partnership with the private sector, the government should aim to study the best way to attract shipping investments that will uplift our flag registry with the Philippines becoming a leading maritime services center in the region. The time to do this is now; I am aware of investors that are willing to invest in a Philippine Flag Container Shipping Line.
Feedback is welcome; contact me at hjschumacher59@gmail.com
Image credits: Tatiana Kornylyeva | Dreamstime.com