NATIONAL Economic Development Authority (Neda)-Davao has joined the side of local traders in the region in their call for the repeal and review of the Cabotage Law.
Miguel Herrera III, chief of the Plans and Policy Formulation Division of Neda, told Sun.Star Davao that a cartel seems to exist in the country's shipping companies that ply the domestic routes, charging exorbitant fees on cargo.
"But one single factor is the high fuel costs that the local shipping industry has to deal with, unlike the international vessels which have access to fuel priced at lower costs," Herrera said Tuesday.
The existence of the Cabotage Law has prohibited foreign vessels from serving domestic shipment routes and only allowed the foreign vessels to serve international ports of different countries.
As defined by the Makati Business Club, the Cabotage Law in essence allows a country to reserve coastwise trade to national flag carriers to the exclusion of foreign vessels.
This principle is embodied in Sections 902 and 1009 of the Tariff and Customs Code of the Philippines, which was incorporated in Republic Act 5173.
The main intent of the law is to protect the domestic shipping industry, but amendments or even repeal of the cabotage principle has nonetheless been proposed by some of the country's exporters and various business groups.
"But the domestic shipping lines have not been very efficient," Herrera said.
Recent catastrophes in seafaring have renewed calls for the repeal of the Cabotage Law to lower the costs of domestic shipping and spur competition in the domestic shipping industry.
"It is actually cheaper to ship to Hong Kong from Davao than to ship from Davao to Manila," Herrera said.