MILESTONES FOR THE 30 YEARS OF INVOLVEMENT WITH THE MARITIME INDUSTY The Maritime Industry Authority (MARINA) marks its 30th Anniversary since its establishment on June 1, 1974 through the issuance of Presidential Decree No. 474. The creation of MARINA is a recognition of the importance accorded by the Government to the archipelagic nature of the country and the willingness to harness the resources and opportunities being offered by the sea to the Filipino. The establishment of MARINA was the first real attempt to put under one government agency maritime related functions as can be drawn from the mandate so given to the Authority. MARINA under PD 474 is to pursue the integrated development of the maritime industry through, among others, the effective supervision and regulation of the different players in the industry. While the exercise of governmental supervision and the conduct of the varied facets of maritime activities remain fragmented, the roadmap towards attaining the vision of an integrated maritime development consistent with the objectives of PD 474 had been laid down by the MARINA. Four major sectors have so far been considered as within the specific concern of the Authority and these are: overseas (international) shipping; domestic (interisland) shipping; maritime manpower; and shipbuilding/shiprepair. All the attendant functions relative to aforesaid sectors are deemed to be part of the mandate of the MARINA such as but not limited to ship registration, maritime safety regulatory functions and expansion/generation of employment opportunities for maritime manpower including seafarers, shipyard and shiprepair manpower, shipmanagers and all other maritime workers. The MARINA therefore, as part of its 30th anniversary celebration, has undertaken the preparation of the Milestones for the 30 years of Involvement with the Maritime Industry to highlight the accomplishments not only of the Authority but to include that of the maritime industry as a whole. DOMESTIC SHIPPING SECTOR The significant role of the Domestic Shipping Sector in furthering the growth and development of the country is underscored as follows: S A vital component to agricultural and regional development providing needed transport links for the country’s island economies; S A significant source of employment opportunities; S A major contributor to economic growth through investments; S A considerable source of government revenues through taxes, licenses and fees paid; and S Fosters economic, social and political integration of the various parts of the archipelago. For the past 30 years, MARINA’s accomplishments involving the Domestic Shipping Sector can be summarized as follows: Page 1 of 27 A. FOSTERED A FAVORABLE INVESTMENT CLIMATE TO ENCOURAGE FLEET REPLACEMENT/ MODERNIZATION 1. Implementation of the bareboat chartering program which provides domestic shipowners/ operators and would be investors with a less expensive alternative for vessel acquisition other than outright importation in order to operate a vessel to meet increasing demand or introduce a new shipping service. 2. Provision of financial assistance and incentives through the following programs/ projects: 2.1 Public Utilities Priorities Plan (PUPP) – grants exemptions to domestic shipowners/ operators from import duties and taxes on vessels, machinery and parts, as well as income tax deductions. 2.2 Development Bank of the Philippines (DBP) – led IBRD Loan Facility of $ 20.0 Million – provides financial assistance for the replacement and repair of vessels in the interisland fleet. 2.3 World Bank – assisted Industrial Restructuring Project – a DBP-led Project implemented in 1991 which covered four (4) critical industries including domestic shipping involving a loan facility made available in local or foreign currency to accredited financial institutions for re-lending to domestic shipping companies for purposes of financing their long-term requirements. 2.4 Investment Priorities Plan (IPP) – as contained in the Omnibus Investment Code of 1987, the plan provides tax and duty exemptions to Board of Investment (BOI)- registered imports of vessels to be used in domestic trade and to include spare parts and equipment. R.A. No. 7918, however, limited the availments for the program until 31 December 1997, or until 31 December 1999 for those enterprises located outside the National Capital Region (NCR) and registered on or before 31 December 1999. 2.5 Domestic Shipping Modernization Program (DSMP) – this program, likewise being administered by the DBP, which formally commenced on 15 May 1995 involved a Y 15 Billion credit facility under the 19th Yen Loan Package of the Overseas Economic Cooperation Fund (OECF) aimed to promote the efficiency and safety of the domestic shipping industry. This program is a policy-based lending project to support the modernization of the country’s domestic shipping fleet and shipping-related industries particularly shipbuilding, ship repair, cargo handling and terminal operations. 3. Liberalization/ Deregulation of domestic shipping operations 3.1 Department of Transportation and Communications (DOTC) Department Order No. 92-87 issued on 30 March 1992 defines the policy framework on the regulation of transport services. Accordingly, MARINA Memorandum Circular (MC) Nos. 71 and 80 were issued in October 1992 and November Page 2 of 27 1993, respectively, providing the policies and guidelines to implement the liberalized/ deregulated environment for domestic shipping operations. 3.2 Executive Order (EO) Nos. 185 and 213 were issued on 28 June 1994 and 28 November 1995, respectively, which served to sustain and support the deregulation policies of the MARINA under MC No. 80. Implementing rules and regulations were issued by MARINA through MC Nos. 106 (E.O. No. 185) and 117 (E.O. No. 213). On rates deregulation, the Domestic Shipping Consultative Councils (DOSCCONs) composed of shippers, NGOs, LGUs and media were institutionalized in Cebu, Zamboanga and Davao. The Councils shall serve as form for discussing proposed rate increase/s and negotiating rates. 3.3 MARINA MC No. 104 issued on 12 May 1995 provided the omnibus guidelines for the acquisition of vessels for domestic operations and fishing vessels/ boats. 3.4 MARINA MC No. 153 issued on 16 December 1999 provided the revised rules and regulations implementing deregulation of domestic shipping rates. 3.5 MARINA MC No. 161 issued on 16 November 2000 provided the revised rules and regulations to implement EO 185 on opening the domestic water transport industry to new operators and investors. 3.6 MARINA MC No. 195 issued on 15 December 2003 amended MC No. 153 which revised further the rules and regulations implementing deregulation of domestic shipping rates. Page 3 of 27 4. Issuance of Republic Act 9295 The government and private sector partnership in promoting the development of the domestic shipping is best exemplified with the enactment into law of Republic Act No. 9295, otherwise known as “Domestic Shipping Development Act of 2004” on 03 May 2004 which aims to empower the development of Philippine Domestic Shipping, Shipbuilding, Shiprepair and Shipbreaking through investment incentives, deregulation of the rates/operation, enhancement of safety standards, compulsory insurance coverage for passengers and cargoes, reasonable fines and penalties and other constructive measures for a strong and competitive domestic merchant fleet. B. PROMOTED PUBLIC INTEREST, WELFARE AND SAFETY 1. Rationalization and improvement in the efficiency of domestic shipping operations 1.1 Implementation of MARINA Memorandum Circular Nos. 16 and 26 issued in September 1978 and September 1982, respectively, to develop the inter- island shipping and rationalize its operations. 1.2 Conducted the following studies and special projects in coordination with other relevant government agencies and private sector concerned through the assistance of other foreign government/ institutions: S Project to Improve Efficiency of Philippine Coastal Fleet Operations under the assistance of the Norwegian Agency for Development Cooperation (NORAD); S Inter-island Liner Shipping Route Rationalization Study with the assistance of the United States Agency for International Development (USAID); S Nationwide Roll-on/ Roll-off (Ro/Ro) System Development Study with the DOTC as the lead implementing agency and under the assistance of the Japan International Cooperation Agency (JICA); and S National Riverine Transport Development Study which was initiated and coordinated by the DOTC. 1.3 Implementation of the revised policy on accreditation/ registration of domestic shipping enterprises with the issuance of MC No. 79 in November 1993 to insure management competence and financial capability for those companies who will be allowed to engage in domestic shipping operations. 1.4 In line with this program thrust, the following Memorandum Circulars were issued: S MC Nos. 51, 79/79A and 142 provided guidelines on the accreditation of domestic shipping enterprises/ entities. S MC No. 90 provided implementing guidelines for vessel registration and documentation. S MC No. 94 and 108 provided guidelines for accreditation of maritime surveying companies/ entities for purposes of vessel registration. Page 4 of 27 S MC No. 142 issued on 17 September 1999 amended MC No. 79 by deleting the exclusivity requirement for domestic shipping business. S MC No. 166 issued on 13 June 2001 provided Rules on the Utilization of Domestic Ships in the Overseas Trade/Operation. S MC No. 177 issued