The Philippine shipbuilding challenge



I was clearing the stack of papers that have piled up on my desk, intent on resuming the much interrupted reading of books written by Philippine contemporary writers Sionil Jose and Ambeth Ocampo when I glanced over a set of powerpoint presentation of the Shipyards Association of the Philippines (ShAP). I did a speed-read and the last two slides caught my attention. The penultimate slide asks: “Whose side are you, anyway?” The last slide makes an appeal: “Side with us.”

Carefully reading from the first slide, I was both amused and surprised that there was no reference to seafarers—only shipbuilders and shipyard workers. The focus was on building ships probably confident the seafarers will come, anyway. And I agree! Ships are built and seafarers will come to sail them. It is not the other way around! Ships are built to move people and cargoes. In fact, the boatbuilders of Mindanao were known to have produced those sturdy balanghays used by the forefathers. They were not built because there were seafarers. Seafarers were trained and produced so they can sail the ships.

Don’t get me wrong; I have nothing against Filipino seafarers. I am proud of them. In my short stint with the International Maritime Organization (IMO), I came to realize there are three Filipinos who made the Philippines known throughout Asia: “Anak” of Freddie Aguilar, Manny Pacquiao and the Filipino seafarer.

Shortage of shipyard workers

ShAP highlights the dwindling workforce at the shipyards. Careers in artisanal “trades” have declined as “call center” and other white collar jobs become more popular. ShAP’s presentation further notes there is a dearth of naval architects and marine engineers (the latter is not to be confused with the merchant marine engineers) to fill the local demand for their expertise. Overseas employment opportunities beckon as an attractive option, although some of the licensed professionals and skilled workers have stayed to work in local shipyards and help construct those “proudly Philippine-built ships.”

Aside from efforts of keeping shipyard manpower in the country, ShAP expresses optimism on the opportunity offered by the K-12 curriculum in producing a bigger number of young job-ready labor force that could work at the shipyard. However, attracting these senior high-school completers will largely depend on generating their interest to build a career at the shipyard. Application of technology may be a come-on; still, employment opportunities for shipyard workers are hardly known or advertised. Career orientation events for high school graduating classes usually do not mention naval architecture nor are information flyers citing anecdotal successes relating to the profession distributed. Moreover, activities at the shipyard are hardly considered newsworthy, except when accidents occur or occasionally, a ship is launched at a Philippine shipyard. ShAP must realize there is need to be more visible. Make the wider population know that opportunities abound at the shipyard!

More challenges

Aside from insufficient manpower, Philippine shipyards are struggling to overcome bigger issues and challenges relating to materials, machinery, methods and money, factors that determine a shipyard’s competitiveness.

Steel constitutes the most part of a ship’s structure and is sourced from overseas; so are ship engines, propellers and generators. High handling costs, duties and taxes imposed on these materials add to the cost of building ships locally. On the other hand, tax incentives are extended to those who import ships, thus making locally-built ships lose out even in the inter-island shipping market. A case in point is Republic Act 9337 that amended the Internal Revenue Code (IRC) of 1997 and exempts domestic shipowners from paying value added tax on importation of vessels, engines, supplies and equipment, a privilege not enjoyed by those who construct ships for domestic shipping. Closely reading Section 109 (S) of the IRC may provide a different construction of what the law provides, although generally a tax legislation is to be strictly interpreted in favor of the taxing authority and that exactly was done.

Shipowners are expected to source their ships where they can get the best bargain. Understandably linked to this and which ShAP recognizes, is the limited financial capacity of its customers – the shipowners. It is therefore not surprising for shipbuilders to make an appeal on behalf of local shipowners for the expansion of the country’s ship financing facilities.

For a country that professes to be a maritime nation, one expects to see a robust and flourishing shipbuilding sector. This does not seem so. Second-hand ships acquired from Asian neighbors and plying in domestic waters continue to thrive, never mind if these are rendered unseaworthy as these undergo re-configuration or are allowed to serve in routes different from their intended areas of operation, i.e. in calm seas or protected waters.

Thus, issues of unseaworthy ships pop up and the use of imported second-hand ships re-surface whenever maritime casualties occur. As many fact-finding inquires were conducted as there were maritime accidents, yet capacitating local shipyards to build fit-for-purpose ships for inter-island shipping was rarely cited as an option to enhancing maritime safety in this country.

The issues and challenges confronting the shipbuilding sector are not new. One can only surmise government recognized the important role of the sector in realizing the country’s aspiration of socio-economic development as to identify it as one major components of the Philippine maritime industry. Such was clearly stipulated under Presidential Decree 474 that created the Maritime Industry Authority (MARINA). After four decades, the same problems appear although articulated in different formulations.

One can sense from the challenge that ShAP throws to government and concerned stakeholders a feeling of exasperation, but the association is not giving up in convincing government to take the side of Filipino shipbuilders. After doing that long enough, ShAP is willing to take another shot.
Government may finally take notice!


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