is the high cost of electricity and supply chain issues though customs handling and congestion is also a problem that every ship builder faces. “But, by far the biggest challenge for the government is the need to revamp the MARINA, the maritime administration. They are completely incompetent and understaffed for the challenges they face! Tis of course led to communication issues with other government agencies and a complete false picture of the country’s situation.” Far from being the world’s fourth largest


shipbuilding nation, the Philippines’ shipbuilding prowess is predicated on erroneous information, says Wissmann. “To state that the Philippines is number four in the world as a shipbuilding nation is pure nonsense and was based on fake orderbook reports…ie. based on a VLCC order that never materialised,” explained the consultant. In Wissman’s view there are only seven


yards in the country that could be used for any significant shipbuilding and ship repair services. All others are limited by their location, water depth, facilities, and environmental standards. Te seven yards are: Hanjin Shipyard,


Subic; Keppel Subic Shipyard; Subic Drydock; Keppel Batangas Shipyard; Herma Shipyard, Bantaan; Tsuneishi Shipyard, Cebu and Mactan Shipyard Corp., Cebu. Aside from the Herma yard, which only


builds vessels for its parent company, the foreign owned yards build ships mainly for foreign owners and have benefitted from either the Domestic Shipping Development Act and the Philippine Overseas Shipping Development Act of 10 years ago that exempted shipbuilders from tax, allowed for income tax holidays and exemptions on import duties in an effort to stimulate the growth of shipbuilding in the country. Both these acts have now expired


with no replacement yet to be penned and the government continues to offer the subsidies inherent in the defunct acts until such a time as new legislation is agreed, says Wissmann. “The Board Of Investment is still granting the same incentives… But anyway, the incentives in general are not very attractive as they don’t promote building ships, but help developing shipyards,” explains


The Naval Architect January 2015


A subsidiary of Keppel Singapore uses the same technologies and standards as those of Keppel Singapore


Wissmann. “Countries like China or even France and the USA have much better incentives that actually finance both the ship buyers and the yards,” he added. According to the Society Of Naval


Architects and Marine Engineers (SONAME) of the Philippines if the Manila Government offers the same tax breaks and support to domestic yards as it has to foreign yards entering the country to take advantage of the government’s inducements and the comparatively low cost of labour, then the domestic yards will be able to compete better with their foreign competitors. SONAME chairman Samuel Lim


argues: “The government needs to do more to provide the business environment that will encourage shipbuilding,” he added that if “the government offered the same tax free incentives to domestic yards that they gave to foreign shipbuilders then the domestic yards would develop.” “The Philippines’ yards can be


successful,” he said. However, Lim also pointed out that


the Philippines could not be a significant player in the global shipbuilding stakes without the development of a steel industry. “Steel and machinery all comes from abroad,” and this acts as a hindrance to the Filipino industry. Currently The Philippines is the


world’s fourth largest shipbuilding nation (according to official statistics, see above), in gross tonnage terms, with 1.3 million gt built in 2013, more than double the work of the fiſth placed nation, Vietnam, but a considerable distance behind the big three nations, Japan, 14.5 million gt,


South Korea, 24.5 million gt, and China 25.9 million gt. Tere is a small steel industry and there


are ambitious plans to rebuild the industry to regain some momentum. Wissmann says there are plans to open a Green Ship Recycling facility in the Phividec Economic Zone that would give the steel industry a new boost. “In general it can be said that the


largest hindrance for any investments in the sector are the dumping prices for steel from China and the constant smuggling of steel into the country. The Chinese may have to raise the prices eventually to more realistic values but the policing of smugglers will stay a major affair unless the politicians really want to deal with it and put measures into action that will stop the smugglers,” Wissmann argues. In conclusion Wissmann details


• High numbers of imported second hand vessels


• Long delivery time of newbuilding projects


• Insufficient financial incentives for building locally


the main problems in brief: “With the Philippine Islands’ industry and general economy growing consistently it is obvious that more goods need shipping every year. Terefore the local shipbuilding and repair market should also be increasing. Nevertheless, not much can be seen in terms of shipbuilding activity in the country - in respect to the local transport market. Tis appears to have the following reasons:


• Insufficient marketing of local shipbuilding capability


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