Maritime industry of the Philippines

As a result of the Philippines’ unique geography, the nation’s socioeconomic progress has largely been affected by the maritime industry. The Philippine economy is growing rapidly and the maritime industry is among the key contributors to the country’s growth.

The sector encompasses a wide range of activities from shipbuilding to shipping and ports, to fisheries and aquaculture, to recreational activities and tourism, to offshore energy exploration and extraction and to a large number of related economic services, which are all significant contributors to the national GDP and job creation.

The Philippines is currently the fourth largest shipbuilding nation in the world in capacity, following Japan, Korea, and China.

Moreover, according to a 2015 study conducted by the International Chamber of Shipping and the Baltic and International Maritime Council, the Philippines ranks as the top supplier of seafarers globally. In 2013, it was reported that roughly 20 percent of the 1.2 million seafarers are Filipinos.

While European shipping lines are the biggest employers of Filipino seafarers globally, preferring Filipinos for their high level of skills, capacity in the English language and work ethic. However, the competitiveness of the Filipino seafarer is being compromised due to the pro-claimant trend in National Labor Relations Commission (NLRC) rulings, which has led to substantial financial losses for ship-owners and an increased perception of risk in employing Filipino seafarers.

Moreover, with its strategic geographical location, archipelagic nature and internationally integrated value chain, the Philippines has the opportunity to position itself as a regional hub for the maritime sector.

Here are some recommendations that aim to develop the Philippines as a leading maritime nation, with direct and indirect benefits on the wider economic environment:

I) Establishment of an objective, trustworthy claims system

It is strongly recommended to review the NLRC and NCMB rulings process by an independent third party and the subsequent publication of a report outlining the main shortcomings of the process in terms of establishing a fair, objective ruling process on seafarer claims, which can then be acted on by relevant government authorities.

The rules on execution pending appeal should be amended so as not to render nugatory the final decision of the highest court in the event that it is in favor of the employer. The immediately executory nature of rulings pending appeal which results in garnishment of employer’s funds should be revisited so that dissipation of funds by either the employer or the employee is prevented.

Such funds should be held for safekeeping for the party ultimately prevailing in the case (e.g. put in ESCROW), whether it is the employer or the employee. The EU maritime industry commends the enactment of the Anti-Ambulance Chasing Act and looks forward to the strict implementation and enforcement of its provisions. II) Enactment of legislation to strengthen MARINA’s capacity to develop the Philippines as a maritime nation

It is recommended that legislation is enacted to mandate MARINA’s with the full implementation and enforcement of international maritime conventions that the Philippines is party to.

The legislation should encompass the adoption of additional international maritime conventions, which the Philippines is not yet part too and which are integral to the ongoing development and modernization of the Philippines maritime sector. Those include the SOLAS Protocol of 1988, the MARPOL Protocol of 1997 and the Load Lines Protocol of 1988, as amended in 2003. III) Reorganization of POEA functions for seafarers The recruitment of Filipino seafarers by international ship owners and managers is managed by POEA. It has been observed that international ship owners and managers face lengthy processes and excessive administrative burden in order to register the recruitment of Filipino crews with POEA.

Additionally, under POEA guidelines, foreign principals are not allowed to have contact or interview the crew they are recruiting; rather, only Philippine manning agencies can interview recruits.

The burdensome process of registering Filipino crews handicaps their recruitment by international ship owners and managers. Indeed, as the maritime sector is a highly unpredictable and fast moving sector, last minute recruitment is often required. However, the length and burden of the process to register crews with POEA has often meant that Filipino crews cannot be deployed fast enough and ship owners resort to crews from other nationalities.

Consequently, the creation of a separate body for the recruitment of seafarers that focuses specifically on the needs of seafarers, in line with international conventions and agreements for the protection of seafarers that the Philippines is party to and with a focus on a developmental, rather than regulatory role, is strongly recommended..

Also, there should be amendments made to relevant legislative and administrative frameworks to allow the inclusion of foreign principals in the recruitment process, in compliance with the restriction on foreign ownership of manning agencies provided for by the legislative framework.

This will facilitate the process of recruitment and reduce the perceived risk of ship owners when selecting a Filipino crew, thus increasing the competitiveness of the Filipino seafarer.

IV) Development of the Philippines as an attractive ship registry

For the Philippines to become a truly competitive maritime nation, one of the imperatives is the development of a modernized, attractive ship registry. The Philippines has approximately only 100 ocean going ships (international fleet) with a total tonnage of 3.1million GRT registered.

This is despite the country’s expansive pool of national crew, its excellent geographical location and its high level of integration in international supply chains.

The enactment of legislation to create a modern, attractive Philippine ship registry, with competitive incentives for registered ships and strengthened ties between ship and flag state is recommended.

The registry will provide set benefits for EU ship owners and strengthen the Philippine maritime sector, fulfilling the vision of the Philippines as a maritime nation.