DoTr bares plans for Subic port, small shipbuilders

usec sarmiento

August 11, 2022

The Department of Transportation (DoTr) is eyeing Subic port as another maritime hub for Asia and a level playing field for shipbuilders.

The agency also plans to tackle the overlapping regulation of the maritime industry, ballooning shipping cost and port congestion.

DoTr Undersecretary for Maritime Cluster Elmer Francisco Sarmiento said it is not impossible to realize President Ferdinand Marcos Jr.’s vision of making the Philippines the next Asian maritime hub after Singapore and Malaysia.

“We are currently looking for ports that will suit that dream. Manila is excluded because we have a scarce port terminal here, aside from being congested. MICP (Manila International Container Port) has only eight berths compared to Port Klang of Malaysia. What comes to our mind is the Port of Subic, the ideal, but we need a huge investment,” Sarmiento said during the Daily Tribune’s “Usapang OFW: The Maritime Corner” episode today taped on Wednesday.

The approach for transforming Subic port into a maritime hub is through private-public partnership (PPP), according to Sarmiento.

He said the 2022 Strategic Investment Priority Plan (SIPP) of the Board of Investments (BoI) can be tapped for that purpose.

Incentives for shipbuilders

The SIPP identifies industries to which the government can attract investments and its implementing rules and regulations is now under review by various government agencies, Sarmiento added.

Under SIPP’s Tier 1 are investments with high potential for creating jobs, value creation, and providing essential support to sectors critical to industrial development, as well as emerging industries with potential comparative advantage.

Falling under this category are modern agriculture and food processing; agricultural production using modern technologies; design-focused industries such as furniture, games and toys, jewelry and garments; energy efficiency and environment-friendly activities; health and medical products; industrial parks; and ports, airports, and seaports.

Sarmiento said local shipbuilders, particularly those in Navotas and Cebu, should be given ample attention in terms of tax incentives to become as competitive as the bigger players, Tsuneishi Heavy Industries in Cebu and Keppel in Subic.

There is a window for local shipbuilders under the SIPP.

“It’s a tax issue beyond the DoTr but there is a window to help our local shipbuilders through BoI. I am encouraging them to approach BoI and enjoy the incentives,” Sarmiento said.

Tsuneishi and Keppel have long been enjoying tax incentives making their pricing for shipbuilding and ship repair very competitive.

Shipowners also pay 12 percent

value-added tax for imported materials for new vessels to be locally built while customers of their bigger rivals enjoy zero-tax for the same.

Currently, there are 118 firms engaged in shipbuilding and ship repair throughout the country.

“When we help them with these shipbuilding efforts, fishers will also benefit from this,” the undersecretary told “Usapang OFW: The Maritime Corner.”

Other solutions

Sarmiento revealed that he already met with the heads of different maritime regulatory agencies to review, simplify and align their overlapping rules.

During the show, he said there is overlapping of functions when it comes to safety and security at sea, which are regulated by the Maritime Industry Authority, the Philippine Ports Authority, and the Office of Transport Security.

“(DoTr) Secretary (Jaime J.) Bautista has a mandate for the rightsizing, and we will submit our suggested rightsizing and reorganization, not to the extent of downsizing, but putting competence where it lies. We will reorganize not just people but also assignments”, Sarmiento said.

President Marcos Jr., during his first State of the Nation Address, mentioned that his administration is aiming to “rightsize” the government bureaucracy by merging, splitting, transferring and abolishing some of its offices as a “reform mechanism that seeks to enhance the government’s institutional capacity to perform its mandate and provide better services while ensuring optimal and efficient use of resources.”


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