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Pressure
on a complacent maritime sector The July 1 compliance deadline for the International Ship and Port Facility Security or ISPS Code has passed, and as expected, the Philippines again is finding it difficult to fully comply with the new global standards on port and seafaring security. ISPS compliance is an International Maritime Organization requirement adopted by about 165 countries, including the Philippines, in December 2002. The new ISPS Code amends the 30-year-old Safety of Life at Sea Convention or SOLAS and regulates all passenger and cargo vessels over 500 gross tonnage plying international routes as well as the ports receiving. The ISPS Code, one of the many upshots of the 9/11 terrorist attacks, is prescribed by the United Nations. The Code is a set of new maritime regulations designed to help detect and deter threats to international security. Local Compliance Behind Schedule Even the country’s biggest shipping company, the Aboitiz Transport System Corp. (formerly WG&A) admitted about a week ago that its fleet would only be 100 percent ISPS compliant by July 15. If a big company like Aboitiz that controls more than 25 percent of the passenger market and more than 40 percent of the cargo shipping business had not fully met the July 1 deadline, you wonder how the smaller ones had fared in meeting the ISPS target. Restricting Outfow/Inflow Of Goods Unknown to many, the ISPS Code carries serious implications for those that don’t meet it. For instance, Philippine exports to the United States whose ports tend to be strictest could be in danger of being refused entry if our ports and vessels fail to comply with new international maritime safety standards. As of last week, less than 70 percent of the locally registered ships plying overseas routes had secured their international ship security certificates. Without this document, the Philippine vessels may not be allowed to dock at a foreign port. Equally important is that foreign vessels carrying essential imports like petroleum could refuse to dock at ports that have not complied with the new global standards. Of the 91 ports in the country that have transactions with international vessels, less than half have received the ISPS Code stamp of compliance. Extended CSI Coverage The ISPS is not even the last step. There is also such a thing as the CSI or the Container Security Initiative, which is something that exporters to the United States must worry about. The CSI is a requirement of the US Department for Homeland Security that monitors the flow of cargo, and not just the vessels or the ports. CSI provisions are designed to identify, target and search high-risk cargo. CSI has been expanded to strategic locations beyond the original 20 major global ports. This now accounts for 68 percent of all cargo containers arriving at US seaports, and covers areas including Hong Kong, Kaoshiung and Singapore – all major transshipment hubs for Philippine cargo going to the United States. Will Maritime Industry Shape Up? Members of the maritime industry and those transacting with ports and seafarers are worried that all the additional port and cargo security requirements could push transport, cargo and even port rates higher. Since these additional costs will surely be passed on to the riding public, those in the maritime business should worry more about other things. One is its history of sea mishaps, the last being the Super Ferry 14 debacle off the coast of Corregidor last February where presumably over 100 lost their lives. The seafaring sector is also the breeding ground of smugglers in an archipelago like the Philippines. And smuggling, according to the latest estimate of the Federation of Philippine Industries, deprives the government of at least P100 billion annually in taxes and duties. The public, therefore, is wondering. Will the ISPS Code really push domestic shipping industry to upgrade itself? Will the additional port security measures stop smuggling? Will the additional cost that will be passed on make sea travel safer for you and me? Or will the ship owners, port operators, the MARINA and Coast Guard officials merrily just sail along until the next sea disaster strikes? Focusing On SME Issues On TV "Isyung Kalakalan at Iba Pa" on IBC News (4:30 p.m. and 10:30 p.m., Monday to Friday) starts today with a discussion of issues affecting the country’s small and medium enterprises or SMEs. The growth of SMEs since the passage of the 1991 Magna Carta for small enterprises has been slow. SMEs comprise more than 95 percent of Phillippine businesses and employ over 65 percent of the working population. Sadly, however, they account only for less than 30 percent of the country’s production revenues. Cognizant of the huge potential that our small and medium scale companies have, the government is providing several opportunities that could nurture their growth. Join us as we discuss what is being done and what needs to be further strengthened. ‘Breaking Barriers’ With GSIS President W. F. Garcia "Breaking Barriers" on IBC TV-13 (11 p.m. every Wednesday) will feature GSIS president and general manager Winston F. Garcia on Wednesday, 7th July 2004. Every administration invariably looks at the SSS and the GSIS as potential source of funding for programs promised during election campaign. As a result, these institutions have billions of pesos of uncollected funds in social projects like low cost housing. Public perception is that heads of these financial institutions are political appointees of whoever are at the seat of executive power. And therefore, will not be able to withstand political pressure. Unless radical changes in the structure are instituted and management professionalized with an independently appointed president and CEO with fixed office term, there may be no SSS or GSIS to talk about in 10 to 15 years. With all their members holding an empty bag. Watch it. Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reygamboa@linkedge.biz. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz.
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