Government Interventions in the Domestic Shipping Industry: A Discussion on Market Competition and Maritime Safety

The domestic shipping industry has a crucial role in the Philippine economy as it supports domestic trade and provides an affordable means of interisland transfer. However, the industry is riddled with inefficiencies with interrelated consequences such as high cost of shipping, low quality of services, and increased frequency of maritime accidents. The government has implemented policy reforms to improve the industry’s performance by issuing guidelines and regulations to induce market competition, encourage investments, and enhance maritime safety. This study discusses the evolution of policies and examines some market indications of progress vis-à-vis the areas of reform. Overall, it finds some positive developments concerning market competition resulting from the government’s efforts to deregulate the industry. It also observes some indications of increased investments in domestic vessels. However, comparative data reveal that, on average, the country’s shipping vessels remain older and smaller than in other Asian countries. This signifies the need for more intensive strategies to induce modernization of the country’s fleet. In terms of maritime safety, a significant difference in maritime safety indicators is yet to be observed despite government efforts to curtail the frequency of maritime accidents. Comments to this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph.