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GOVERNA A52

Strong Republic Nautical Highway:

The Roll on/ Roll off (RO-RO) system

Balea, Raymond Ching, Catherine Anna Espiritu, Maria Nikka Guzman, Anne Clarisse 8/31/2010

I.

INTRODUCTION Archipelagic Southeast Asia (aSEA) covers five Association of Southeast Asian Nations

(ASEAN) member countriesBrunei Darussalam, Indonesia, Malaysia, the Philippines, and Singaporetogether with Papua New Guinea (PNG) and Timor-Leste.1 The aSEA region includes the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) and the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT). aSEA has a unique geography characterized by more than 24,000 islands spread across 5,200 km from east to west and 3,400 km from north to south. It has a population of over 350 million, 225 million of whom live in Indonesia with a further 87 million living in the Philippines (Green, 2008). To the inhabitants of the archipelago, the sea is at once a link and a barrier, as well as a resource and a challenge. On the positive side of the ledger, the sea provides food and employment, while the danger of an unsustainable marine environment and the fact that proximity to the sea heightens vulnerability to national disaster are potential negatives. Improved connectivity, especially through transport links, is an essential condition for economic growth. Transport links not only provide physical access to resources, but also enable producers to take advantage of opportunities in domestic and foreign markets, leading to economies of scale and specialization. At the grassroots level, local transport linkswhether provided by road, rail, air or water transportare essential if local communities are to sell their produce in neighboring markets and purchase a range of manufactured goods with the proceeds. The existence of local transport links make possible specialization of production according to comparative advantage and facilitate the emergence of a local and regional economy. In many areas of archipelagic Southeast Asia, poor roads and non-existent rail communications mean that sea or river transport is required to access local urban centers.

Since poverty and isolation (the absence of basic transport services) are closely correlated, improved connectivity is a necessary condition for poverty alleviation. World Bank experience with rural highways in Africa and South Asia has shown that the provision of basic access through all-weather roads contributes to the reduction of poverty in rural areas, especially when combined with programs for socioeconomic development. Economic growth, made possible by the provision of improved transport links, contributes to poverty reduction by generating income-earning opportunities for the poor and by increasing government capacity for income redistribution (Liu and Gannon 1999). The impact of improvements in connectivity on poverty may be direct or indirect . Connectivity has a direct impact on poverty where improvements in transport or communications create additional income and employment. The construction of an all weather local road, a bridge linking two islands or the provision of a regular shipping service where none existed before will lead to an expansion of employment opportunities in local industry. Transport improvements have an indirect impact when investment in a new facility sets off a chain reaction that creates upstream or downstream employment benefits. Improved connectivity at a regional level widens the potential market available to local producers, providing opportunities to specialize in agricultural or industrial production according to comparative or competitive advantage. The economies of scale generated may enable firms to lower the unit price of their products and further widen their market. Links between regional economies may develop within the borders of a country or between regions located in neighboring countries. In a globalized world, efficient connections between the aSEA region and international markets are absolutely essential. The Philippines model of nautical highways, which has resulted in seamless connectivity from north to south across seas and islands, is seen as having great potential for aSEA. Inter-island shipping in an archipelagic economy like the Philippines is a critical element of development and poverty reduction. As mentioned, the Philippines, as part

of the aSEA, provide evidence that the absence of connectivity is a significant factor contributing to poverty and underdevelopment. Maritime transport is the major means by which the islands are connected, and the movement of commodities and people is facilitated. The Philippines is likewise primarily linked to the international trade system via maritime transport. By the 1990s, many countries had adopted a development strategy that emphasizes integration with the global economy (Clark et al. 2004). Because the Philippines seeks to integrate itself into the global trading system, an efficient maritime transport, composed of ports and shipping, is a necessary condition for successful integration. However, the countrys inefficient maritime transport has effectively acted as a barrier to domestic and international trade integration. It has stymied countryside development because of the high cost of transporting people and goods and has stunted efforts to improve productivity and the competitiveness of exports and tourism. Inefficiencies in maritime transport intensify transaction cost, resulting in higher goods prices and the erosion of the competitiveness of exports. Transport infrastructure plays an important role in integrating the island economies of an archipelago such as the Philippines. The country relies heavily on its road network to handle most of the passenger movement and about half of freight movement. Ports are important for long-distance logistical needs and inter-island routes provide regular roll-on roll-off vessel operations that connect the main islands of Luzon, Visayas and Mindanao. Airport and rail infrastructure provide alternative means of transporting people and goods to major economic hubs around the country. During the last decade, the Philippines has attained important improvements in transport infrastructure and services. A road users fund was established and various modes of private sector participation in toll roads, rail and airports were undertaken after the Build-OperateTransfer law was passed. The Government also adopted liberalization and deregulation polices in the shipping industry in 1994 and civil aviation in 1995, which resulted to increased competition, lower tariffs and better services.

Important challenges remain with serious consequences for the countrys competitiveness and for meeting its growth and poverty reduction targets. Although the road network is quite extensive, less than half is considered to be in good condition; roads leading to many tourist destinations and in conflict-affected areas in Mindanao are inadequate and road congestion has become a major problem in highly urbanized Metro Manila. Reforms envisioned for the ports, airports, heavy rail transport have yet to be realized. Private sector participation experience in the transport sector has likewise been less than optimal. With weaknesses in planning, preparing and executing projects, combined with the highly politicized decision making, increase uncertainties and risks thereby deterring increased private sector involvement. According to Asian Development Bank (ADB), five of the ten poorest provinces in the country fall into what they termed island provinces. These provinces include Sulu and Masbate, both having the largest percent of poverty incidence (63%), third Tawi-Tawi (56%), next Romblon (55%), and lastly Camiguin (53%). The isolation and lack of connectivity of these provinces does not allow them to share the benefits of trade. The absence of connections with other islands (where larger markets exist) serves as a major constraint on economic and social interaction and integration. There are limited incentives to increase production and farm productivity (mainly agricultural products) as their markets remain relatively small. This translates into low incomes for farmers and fishers. Moreover, inefficiencies and high transport costs exacerbate the problem. There are 2,456 ports in the country and most of them are small. The government corporation Philippine Ports Authority operates the biggest public ports while the Philippine Fisheries Development Authority manages the big fishing ports/wharves. For municipal ports, funded by the Department of Transportation and Communication operation and ownership is devolved to the Local Government Units. There are four other independent port authorities involved in public port operations:

the Cebu Port Authority operates Cebu Port and several small neighboring ports in Cebu island;

the Subic Bay Metropolitan Authority operates the Subic freeport; the Bases Conversion Development Authority (BCDA), which has jurisdiction over the San Fernando Port in La Union; and

the Cagayan Economic Zone Authority operates the Port Irene freeport.

The National Economic and Development Authority provided a classification of existing ports in the Philippines, as of November 2003, the total number of ports is 2456 composing of 17% private ports, 17% fishing ports, 65% public ports and 1% others. The biggest common-user ports in the Philippines are in Manila the South Harbor (for international cargo), the Manila International Container Terminal, and the North Harbor (for domestic traffic). These are publicly-owned ports under the purview of the Philippine Port Authority but are privately operated under long-term concessions. Apart from owning and operating public ports, the Philippine Port Authority also has the mandate to regulate private ports. There are about 400 private ports regulated by them. These ports are mostly for industrial use though some operate as commercial ports. In addition to traditional shipping services, the Government launched in 2003 the Nautical Highway system to maximize the use of the roll-on, roll-off system to connect Luzon and Mindanao through the Visayas islands. The project involves rehabilitating existing ports and construction of new ones to accommodate roll-on, roll-off vessels. Construction of intermodal links is also being initiated such as the Western Seaboard Intermodal Link project to complement part of the roll-on, roll-off terminals in the Eastern Seaboard. The domestic shipping industry has been deregulated since 1994 and the benefits of the reforms are already felt through the introduction of better quality shipping services. The government of the Philippines consciously set out to accelerate the development of its maritime industry. Under Presidential Decree 474 (Maritime Industry Decree), the government sought to enhance the competitive position of Philippine flag vessels operating in foreign trades; strengthen the balance of payments by increasing the inflow of foreign exchange; and generate job opportunities. Shipping companies are predominantly privately-owned and operated. In

2001, there are 585 registered shipping companies in 2001, compared to 223 in 1997. Some industrial firms own and operate vessels to carry their specialized cargoes, like Liquefied Petroleum Gas and chemicals. The shipping industry however continues to be highly concentrated with five major shipping lines accounting for 90 percent of passenger and cargo markets. Prior to the beginning of the Ro-Ro policy, the predominant method for shipping was the load on/load off (Lo-Lo) system. In the Lo-Lo system or conventional liner system, goods were shipped in containers and were loaded and off-loaded by cranes and other dock equipment. This presented significant cargo handling and wharfage costs. Usually, cargo handling charges are priced on a per unit basis such as per sack, per crate, etc. Wharfare is the fee paid by the shipper for using the port area. Conventional ships still use this method today. The following characteristics may characterize Ro-Ro policy from Lo-Lo policy: No cargo handling charges since the cargo is rolling; No wharfage dues (specified under EO No.170); Toll fee consists of unbundled items: terminal self-powered vehicle passengers terminal; berthing levied the on and for (ii) fee the (i) four cost a fee

charged on the

the use of the

RORO vessel by terminal operator for mooring and berthing; (iii) freight or rolling cargo fee, based on the lane meter or

the actual space occupied by the vehicle, charged to the rolling cargo by the carrier vessel operator; and (iv) a passage fee levied to the passengers by the RORO vessel operator; Simplified documentary requirements; and Waiver of port authorities share in revenues, with PPA and MARINA receiving a fixed annual administrative supervision fee. Ro-Ro is a system designed to carry rolling stock cargo which does not require cranes for loading or off-loading. Because the cargoes are rolling cargoesi.e., cars, buses, trucks, etc. which simply roll on and off the Ro-Ro ships, Ro-Ro does not require cargo handling services. This eliminates cargo handling labor and equipment, and reduces the amount of time required to be in a port which can lead to considerable reductions in sea transport costs. It is meant to provide greater access to island provinces and better integration among the different regions. It is a response to the clamor for greater efficiency and lower cost in transporting passengers and goods from Mindanao to Luzon. Various types of RORO vessels include ferries, cruise ferries, cargo ships, and barges. New automobiles that are transported by ship around the world are often moved on a large type of RORO called a Pure Car Carrier (PCC) or Pure Car Truck Carrier (PCTC). Unlike elsewhere in the shipping industry where cargo is normally measured by the metric tonne, RORO cargo will typically be measured in the more convenient unit of lanes in meters (LIMs). This is calculated by multiplying cargo length in meters by the number of decks and by its width in lanes (lane width differs from vessel to vessel and there are a number of industry standards). Aboard PCCs cargo capacity is often measured in RT or RT43 units which is based on a 1966 Toyota or by car equivalent units (CEU). RO-RO system is said to be the most appropriate mode of inter-island transport for an archipelagic economy like the Philippines. The Philippines Ports Authority (PPA), which had the sole power to set cargo handling rates and the one which received a percentage of the cargo handling fees collected, has a lack of interest regarding about this system. Although this is the case, there is still an increasingly private sector support for the RO-RO concept. At the regional level, the business community in Mindanao was particularly active. Many could not understand

why it was less expensive to ship to Manila from Hong Kong, China or Bangkok than it was from Mindanao. Mindanao business communities advocated a RO-RO policy that would primarily encourage private sector investments in the development and operation of RO-RO terminals and ships. A strong support in the key government agencies in the RO-RO policy can also be seen. The principal supporters within the government included the National Economic Development Authority, Department of Agriculture, Department of Environment and Natural Resources, Department of Interior and Local Government, and Development Bank of the Philippines. The key features of the Ro-Ro policy include the removal of cargo handling charges, removal of wharfage dues, simplified documentary requirements, fixed regulatory supervision fees, fee based on a lane meter basis for all rolling cargoes (as opposed to weight), the encouragement of existing private portoperators to convert their operations to RRTS (Ro-Ro Ferry Terminal System) The countrys Ro-Ro system is governed mainly by the Maritime Industry Authority (MARINA) and PPA, both of which are under the Department of Transportation and Communications (DOTC). The main objectives of the RO-RO policy are:

To reduce transport costs from Mindanao to Luzon, through the Visayas, and specifically the cost of inter-island transportation through the establishment of a safe, efficient, and cost-effective RRTS. This would enable people to transfer goods and products more effective and less costly to other islands.

To enhance tourism, transportation, and commerce throughout the country. Since travelling to inter-islands is easier and less costly, people can then travel to other islands that can increase one islands tourism as well as commerce.

To facilitate the governments agro-fisheries modernization and food security programs.

To promote private sector participation in the establishment, construction, and operation of RRTS facilities. To establish a new policy to promote the development of RRTS.

Moreover, the Ro-Ro policy explicitly sought to encourage private sector participation. The options for private investment include integrated investment in Ro-Ro links. This includes (i) the construction, development, and operation of the terminals (origin and destination) as well as the acquisition and operation of Ro-Ro vessels; (ii) investment in Ro-Ro terminals (including their construction, development, and operation); and (iii) investment in Ro-Ro vessels (including the acquisition and operation of Ro-Ro vessels to service the RRTS routes). The idea of roll-on/roll-off (RO-RO) shipping did not surfaced up until 2002 when it was proposed as one of the solutions to the problem/issue the shippers had raise; that is the high cost of transport from Mindanao to Manila. Prior to this, the Philippine shipping industry was on a bad shape; that it is lagging in the international arena and that there is so little government attention being given to improve the use of our waterways for the transportation of people and goods, or for that matter, in the crafting of laws that would encourage industries related to shipping. Before we entered the 21st century, our shipping industry, which is tasked to ferry passengers and cargoes in between islands, was mired by floating coffins, that is wooden hulled bancas, and new or appropriate second hand vessels were lacking in service. Aside from this, maritime schools were sub-standard and inadequate, thus producing seafarers that are uncompetitive and unqualified to such jobs/positions in the said industry. Workable programs or financing schemes which is a key in attracting investors or new players to venture and participate in the shipping industry were still a need. Also, policies and laws whose terms and conditions are acceptable to the industrys players and to which can broaden the scope and benefit the industry were either pending or have yet to be made. Hence, an ugly picture, that is inefficient, ineffective and inefficacious, can be depicted and drawn from the Philippine shipping industry.

The said picture of the Philippine shipping industry can be rooted to two things, namely, regulation and competition. Before, the Philippine government had a monopoly on the said industry. It handles and operates all by itself; that is from the creation and development of ports, to the administration and management, to the services being provided. But because the government is not an expert in some fields, it had failed to satisfy the growing demand for better and lower-priced infrastructure services and greater access by the population. Hence, tapping the private sector for help was made. In doing this act, competition was made possible. However, the government cannot easily be disregarded, for its role now is to regulate and protect the said industry from exploitative and warring firm behavior. Regulation and competition should neither be that simple (would cause abuse) nor over (would cause negation of benefits). Rather there should be a right combination of regulation and openness to potential competition in an industry such as the shipping industry. The two should not be treated and looked as either mutually exclusive or contradictory, but rather mutually reenforcing. (Llanto et.al, 2005).

Opposition to RO-RO in the early 2000 was primarily made by some of the PPA officials whose in mind was the corporations profits and status once the program and policy is passed. If implemented, its collection of fees would be smaller because of the simplification of payments and dues. Also, conflict of interest between the regulator (government/PPA) and the operator (private) may happen if corresponding convention would not be put in place. Routes of Ro-Ro The Ro-Ro systems were composed of three major routes: The Western, Eastern and the Central Nautical Highway. The Central Nautical Highway connects Batangas City, Oriental Mindoro, Aklan, Iloilo, Negros, and Zamboanga del norte. All in all there are 8 ports that are operating under this route, two in Oriental Mindoro and in Negros. The Central Nautical highway connects Sorsogon, Masbate, Cebu, Bohol, Camiguin and Misamis Oriental. There are 10 ports in this route, two in Camiguin, Masbate, Cebu and Bohol. The Eastern Nautical

Highway on the other hand connects only four ports. One in Samar, Leyte, Sorsogon and in Surigao del Sur. The Western Nautical Highway As mentioned earlier, there is a total of eight ports that are operating in this route. Ever since its establishment in 2003, passenger and vehicle traffic have increased drastically. The people were given a choice whether to travel by land and sea or by air. People who couldnt afford airfares could still travel through the Ro-Ro network.

*In millions. (Source Phil. Port Authority) The figure above indicates that there has been an increase the number of passengers that have been using the Western nautical highway. The slight decrease in 2006 may have been caused by the increase of transportation costs due to the increase in oil prices. Not only did the number of passengers increase, but also the number of vehicles passing through the nautical demonstrated by the figure below. system. This is further

*in millions. (Phil. Port Authority)

Lastly, the frequency of trips has also increased in the Western Nautical ports which made services in this area a lot faster and more reliable. The increase in the frequency of shipping slots was caused by the increasing number of passengers and vehicles passing through the Western nautical system.

*in millions. (Phil. Port Authority) The Central Nautical Highway The Central nautical highway was inaugurated in April 2008. The central components of the highway include Pilar (Sorsogon) Aroroy (Masbate), Cawayan (Masbate) Daang Bantayan (Cebu),Mandaue (Cebu) Tubigon (Bohol), Jagna (Bohol) Mambajao (Camiguin), Benoni (Camiguin) Balingoan (Misamis Oriental). Trade especially in Masbate, one of the developing provinces in the country significantly increased due to the easy transport of goods through the Ro-Ro system. The opening of the port in Aroroy served as a major entry point to the province of Masbate. The port in Cawayan was expanded by the PPA in order to increase its vehicle and passenger capacity, and to cater to the growing numbers of rolling cargoes in the area. The frequency of shipping slots also increased in the Visayas area. Lastly the PPA also increased the port capacity in Jagna which now caters to shipment of agricultural products which includes copra, bananas, lanzones etc. daily. The Eastern Nautical Highway Unlike the previous route, the Eastern nautical highway is shorter and fewer ports are included in its range. This route included the Philippine-Pan highway or previously known

Maharlika highway which links Samar to Luzon. The Eastern Nautical highway connects Samar to Mindanao. Just like in other highways, the roads which were in bad shape were fixed specifically in the Hinabangan-Catbalogan-Calbayog area. One of the ports, which is in Surigao was not completed until April last year. With this new Ro-Ro facility, shipments to and from the province are no longer off-loaded for re-transporting. This resulted to a decrease in cargohandling time and costs and, consequently, ensuring better quality and lower prices of goods. Additional ports were also opened in Eastern Visayas which would help in the ensuring the quality of delivery of services in the eastern part of the country. These ports are the 71.63 million San Ricardo Port in Southern Leyte and the 55.98 million Naval Port in Biliran. Routes

*Source- PPA Impact of Ro-Ro on the Public and Private Sectors Since the operation of RoRo, the dynamics of inter-island shipping has significantly affected various sectors in the country. The introduction of this new transportation and cargo system has rendered effects which are positive or negative, depending on the point of view of a

member from a certain sector in the society . This portion of the paper is intended for the review of the impacts brought about by the RoRo project.

The most significant impact of the project is the reduction in transportation cost. In the research conducted by the Asian Development Bank, USAID and cost RoRo of The Asia Foundation, it was deduced that transportation through the shipping is system

inexpensive as compared to the costs of traditional shipping. The ADB said in April 2010 that the RoRo system has allowed transportation costs to decline by as much as 105 to 60% since the system was put in place in 2003. The report showed that savings in shipments of beer amounted to 57% or P13,000 from P30,400 in traditional shipping; dry goods, 20% or P40,000 from P50,000; medical kits, 60% or P4,000 from P10,000; live cattle, 43% or P51,500 from P90,465; liquid carbon dioxide, 68% or P71,664 from P225,000; and assorted fish, 27% or P23,360 from P32,000. The logic behind these decrease in transportation costs is due to the reform in the procedures one must go through in order to transport goods . The reduction in cost of transportation logistics has caused the transportation of tomatoes from Misamis Oriental to Manila post net savings of 33% compared with the containerized mode of shipment .The removal of cargo-handling costs and wharfage under the Roro policy are important factors in the lowering of transport costs. Since the introduction of the Roro policy in 2003, the yearly increase in cargohandling charges has stopped. One impact of the project is that it has ameliorated the way goods are shipped throughout the archipelago. One advantage of the RoRo transport system has resulted to a quicker procedure

at the terminals: the elimination of cargo handling, quick loading and unloading, and collection of charges. The efficiency of product transportation has lead to the smooth flow of trade across the Philippine islands. There has been rapid growth in cargo volumes on the RoRo network. For example, on the Western Nautical Highway, rolling cargo traffic has experienced steady increases since its inception in 2003. During the inaugural year of the network, 254, 029 rolling cargoes passed through. Five years after its opening, rolling cargo traffic has increased by 65%, reaching 419, 740 vehicles in 2008 (ADB, 2010).

The RoRo connections have been playing an important role as one of the north-south trunk corridor together with inter-island shipping routes . What makes the RoRo system better is that short-distance ferries have been serving locations which have not been covered by interisland shipping routes. The RoRo route provides a transverse service route that complement national hub-and-spoke network formed by the inter-island shipping . With the RoRo ferry service in Visayas Region, the distance of transportation is shortened by direct delivery from

production zone to consumption zone without the double handling at NCR . Since the RoRo system eliminates the handling between ship and truck at the ports, duration of the transportation can be drastically reduced. This means a truck can cover a wide area in other islands and this encourages the suppliers to reduce the number of warehouses . This all the more justifies how RoRo could bring down the prices of commodities . Moreover, the shortened transportation of products can help avoid damaging the products brought about by an excessively long travel . The consumers can assure that the commodities they purchase are of good quality . On the side of the producers or suppliers, this means more profit and more willingness to manufacture their products. The innovation in the routes created by the RoRo transportation system has fortified the inter-island ad regional relations across the archipelago. RRTS has provided more convenience not only for the passengers but for the transported goods as well . The RoRo ferry service between Batangas City and Calapan, Mindoro which was operationalized in the 1970's has been the food supplier to Metro Manila and rich in coastal resorts . The Mindoro-Panay RoRo ferry link has given Panay Island full access to all the adjacent islands which make it possible to deliver goods in a day. Apart from cutting logistics costs of goods, the Roro system has also been instrumental in opening up new markets, developing previously isolated island provinces, improving cargo handling and efficiency in cargo delivery, and facilitating tourism development . The opening of the Strong Republic Nautical Highways has not only linked the countrys major islands of Luzon, Visayas and Mindanao, but has also had positive network effects on the economies of the smaller islands along the major routes. In the case of Southeast Asia, the ADB said that Roro networks could be centered on Java, Luzon, Bangkok, Singapore and Port Klang in Malaysia. The tourism industry is also one of the sectors that has greatly benefited from RoRo . The RoRo infrastructure has greatly boosted the growth of tourism in several areas covered by RoRo services along the nautical highway. It is very accessible for travellers who want to enjoy the tourist spots on islands where RoRo ports are situated. In example, the Batangas-Mindoro RoRo

system can enable the tourists to enjoy world-class beaches at Puerto Galera . The Dangay port in Roxas, Oriental Mindoro serves as a springboard to the world-renowned Boracay Island in Aklan. This also brings in more investments from wealthy foreigners who wish to build their beach resorts in the Philippines. Since transportations costs are lower in RoRo, tourists and travellers are more encouraged to use this as a mode of transportation . Not only will they be able to save money, they will also save a lot of time to explore the wonders of the Philippines . RoRo paves way for other scenic spots in the Philippines to be recognized and appreciated by visitors . A boost in tourism also means an economic boost in the provinces who would be expecting more travellers. The development of RoRo ports serves as a catalyst for the development of their respective areas of influence. Ports as gateways facilitate the flow of goods and people. This development could result in increased investments, production, employment, income, consumption, savings and more tax revenues for LGUs . The commercialization of rural areas means that there would be more efforts to beautify the area in order to attract more tourists . Moreover, with products reaching more markets via RoRo, there is a greater incentive to produce more and develop new products. With the expansion of the RoRo network, this experience can be replicated in other areas situated along the nautical highways, especially in those poor municipalities or provinces that are now linked with major market economies because of RoRo. The establishment of the RoRo network has had a tremendous impact on many companies which previously shipped via conventional shipping. The reduction in transport costs couple with efficiency has transformed how companies and shippers transport their products throughout the country. Since the RoRo system is emerging as a more efficient mode of transportation, this poses a challenge to the shipping lines in terms of trade and passenger transportation. In order to keep the shipping industry, it needs restructuring and it has to be more competitive by trying to impose lower rates and more convenience in terms of transportation. The full implementation of the RoRo transportation system will reduce cargo handling costs and result in more efficient transport of goods . However, port workers who used to handle

cargo and related services may be adversely affected . The government has recognized this potential problem and needs assistance in developing an action plan that provides a safety net for affected port workers. The team responsible for the implementation of the project was tasked to draft an action plan outlining a program for affected port workers, including possible sources of funds to finance the program. An action plan was drafted by the team and was included in the original version of the proposed Executive Order. The proposed program for displaced port workers was included in the original draft of EO 170-B as one of its provisions. Essentially, under the EO, the Philippine Ports Authority (PPA) shall collaborate with the Office of Transport Cooperatives (OTC) of the DOTC in order to organize the port workers into transport cooperatives so that they can participate in the RRTS as transport service providers . Moreover, an amount of Php.100 M shall be allocated to finance the undertaking. The said amount shall come from the PPA's port development fund. Port workers can avail of the fund via soft loans. Another option for the port workers is that they can also put up a workers enterprise where they can go into small business . The port workers may also undergo a retooling of skills with the help of TESDA. Government Policies The government issued policies in order to enhance the Ro-Ro systems. First is that PGMA directed DPWH to declare all roads connecting Ro-Ro terminals part of the Strong Republic Nautical Highway as national roads. PGMA also issued EO 170-A which removed the 50- Nautical mile which basically made all the roads in the country part of the Ro-Ro operations. This intervention is designed to improve the development and maintenance of roads forming the national highway, eradicate illegal imposition of toll fees, as well as increase the participation of the Department of Public Works and Highways (DPWH) in the strategic development of road networks that will further expand the SRNH system.(Agribusiness Week, 2008) She also ordered that private ports be converted into commercial ports in order to support the

development of the RO-Ro system. This was stated in EO 170-B, issued in September 2005. The EO 170 outlines several advantages that will enhance the Ro-Ro system. No cargo handling charges (since RO-RO shipping deals with rolling cargoes) No wharfage dues Freight based on lane meter Toll fee consisting of freight, berthing, terminal and passenger fees Simplified documentary requirements Waiver of port authorities share in port revenues (limited to registration/supervision fee) Privatization of public RO-RO ports Minimum permit requirements in port construction and operation Available financing from the Development Bank of the Philippines (DBP) *Source Agribusiness Week, 2008 To further bolster and expand the said Executive Order, in June 9, 2003 and September 19, 2005, EO170-A and EO170-B were signed and acted respectively. The former amendment practically declared any route within the entire country eligible for RO-RO operations while the latter amendment fast-track the expansion of the RRTS through the inclusion of the private ports into the system. In order for these policies to be effective, supplementary declarations were made.Aside from the issuing of the EO 170, the Philippine Port Authority also came up with several Memorandum Circulars that supports the Ro-Ro network. They passed the first circular in November 2003 (PPA MC 17-2003) which provides standard tariff rates to all ports that are part of the Ro-Ro network. Following this circular in 2004, were three other MCs that included other Ro-Ro ports in the standardization of terminal fees, and declared several routes as part of the Strong Republic Nautical Highway. This included Batangas Mindoro (Puerto Galera); Mindoro (Calapan Puerto Galera); Mindoro (Roxas) Romblon; Mindoro (Pola) Marinduque

(Balanacan); Mindoro (Apo Reef, San Jose) Palawan (Puerto Princesa) (PPA MC 29-2004). To provide efficient and quick services in these ports, the PPA also passed an MC that required the use of color-coded tickets in the processing of terminal fees. The DOTC also took part in enhancing the Ro-Ro system by encouraging the participation of the private sector. TIN 2007, the PPA put all the ports that are part of the Ro-Ro up for auction in order for the delivery of services to be more efficient. The imposition of additional fees and taxes to the passengers was prohibited by MC 2006-70, in December 2007. Additional policy recommendations were mostly directed towards the expansion of the SRNH network. Today the Phil. Port Authority and the DOTC are working together to insure the quality of services and the stable development in the privatized Ro- Ro ports. In providing support to the full implementation of the Road-RORO Terminal System (RRTS), first, Maritime Equity Corporation of the Philippines was established in 2005 whose primary objective is to provide finance leasing services for passenger, freight, cargo, vehicle, goods, and merchandise vessels. It is also tasked to provide sale-leaseback arrangements, hirepurchase agreements, and financing schemes. Second, RA9295: Promoting the Development of Philippine Domestic Shipping, Shipbuilding and Ship Repair and Ship Breaking, Ordaining Reforms in Government Policies towards Shipping in the Philippines, and for Other Purposes was passed and implemented to promote: Filipino ownership of vessels operated under the Philippine flag Attract private capital to invest in the shipping industry through healthy competition Provide assistance and incentives for the growth of the Philippine marine fleet Encourage the improvement and upgrading of the existing marine fleet and Filipino crew to meet international standards Ensure the continued viability of domestic shipping operations Encourage the development of a viable shipbuilding and ship repair industry for expansion and modernization of the Philippine shipping industry. One of the benefits the RO-RO project of the government is that it discourages and prevents monopolies and cartels to surface on the industry. It liberalizes and deregulates the

industry. It helps in correcting the dysfunctional arrangement of our countrys shipping industry by enhancing the processes one needs to take such as documentation and payments (e.g.
application of the SRNH-RORO tariff, which eliminates cargo-handling and wharfage costs). Other benefits of the project includes improvement of efficiency and reduce cost, flexibility to determine

the most efficient and cost-effective way of shipping cargoes, enhance tourism, commerce and unity of the country. Citizen and Experts Responses As discussed earlier, both the public and the private sectors have benefited largely from the introduction of the Ro-Ro in the system. The ADB seemed to favor the introduction of the Ro-Ro systems in the country. Several of their reports have shown that through the Ro-Ro system development became possible especially in the rural areas. This organization claims that the Ro-Ro network was able to cut down travel and transport expenses therefore increasing passenger and vehicle traffic. Big corporations have also largely benefited from this project such as Nestle, Lemon Squares, Gardenia and KFC. All four have been able to expand their businesses and reach rural areas through the Ro-Ro system. Local farmers have also been able to broaden their trading relations and have gained more incentive to produce more agri-products. Raul Rodgriguez, head of the Asian Marine Transport Corporation has claimed that a lot of small businessmen have reaped benefits from the newly established Ro-Ro system. Some of these benefits include lower fuel prices, cheaper and quicker transport of goods and easy access to raw materials. So far, the Ro-Ro system has been getting positive feedback from the citizens and the experts. It seems as if that the implementation of this government project was successful enough that everyone that is part of the system have benefited from it. CONCLUSION One of the accomplishments of the Arroyo administration is the creation of the Nautical Highway System using Roll-On/Roll-Off (RO-RO) vessels. It has reduced passenger and cargo transport costs as well as travel time within the Philippines. With its integration to the national highways, a bigger and connected nautical highway, which is valuable and important to the

country, was made possible and had played a big role in bridging the gap in between islands. To date, the shipping industry and in particular the usage of RO-RO made an impact by changing the orientation/view of the people towards water transportation. Now, people have the courage to ride a boat instead of taking a bus, train or an airplane in going to their destination. Now, people will not sigh or think twice using ferries for services. To make the project better, government should focus and be keen on developing a better network such as a spoke to hub or hub to hub network (Kobune, 2007). The industry is a spur of growth for the country, thus shouldnt be leftout. With the country now having a new president, a new administration, local shipping industry should not be afraid and timid to work and push forward the improvement of shipping laws and conditions, thus improving the lives of the many Filipinos who toil in the fields under the heat of the midday sun or who bring their boats in the dark of the night to haul in fish or those who wish for a safer, reliable and cost efficient means of water transport over our seven thousand islands. The roll-on/roll-off ship is one of the most successful types operating today. Its flexibility, ability to integrate with other transport systems and speed of operation has made it extremely popular on many shipping routes. The roll-on/roll-off ship is defined in the November 1995 amendments to Chapter II-1 of the International Convention for the Safety of Life at Sea (SOLAS), 1974 as being a passenger ship with Ro-Ro cargo spaces or special category spaces One of the RoRo ships most important roles is as a passenger/car ferry, particularly on short sea routes. But despite its commercial success, the Ro-Ro concept has always had its critics. There have been disturbing accidents involving different types of Ro-Ro ship, the worst being the sudden and catastrophic capsizing of the passenger/car ferry Herald of Free Enterprise in March 1987 and the even more tragic loss of the Estonia in September 1994. Although Ro-Ros have proved commercially very successful, some concern has been expressed about Ro-Ro ships from the safety point of view virtually ever since the first Ro-Ro ships were introduced. The whole design concept is different from that of traditional ships because of the introduction of a number of elements which make Ro-Ro ships unique. On conventional ships, the hull is divided into a number of separate holds by means of transverse bulkheads, many of which may be watertight.

In the event of the hull being holed, the bulkheads will limit or delay the inrush of water, resulting in the ship sinking slowly enough for the evacuation of those on board or even preventing the ship from sinking at all. With Ro-Ro ships the installation of unpierced transverse bulkheads is a major obstacle, at least on the upper through decks: the whole idea of the Ro-Ro ship depends upon being able to drive cargo on to the ship at one end and off again at the other. The installation of fixed transverse bulkheads would prevent this. Although Ro-Ros are all fitted with the watertight collision subdivision, and engine-room bulkheads below the freeboard deck prescribed by SOLAS, the huge vehicle decks make it possible for water to enter very rapidly and fire can also spread very quickly for the same reason. The fact that Ro-Ro ships generally have a very large superstructure compared with other types means that they can be more affected by wind and bad weather. The high sides of many modern Ro-Ros, including passenger ships, pose problems regarding lifesaving appliances: the higher a lifeboat, for example, is stowed the more difficult it can be to launch, especially if the ship is listing badly. These factors indicate that Ro-Ros are highly sophisticated ships which require very careful handling. This makes them exceptionally vulnerable to human error. With the government touting, and heavily promoting, the Philippine nautical highway there is no better time than to seriously examine the long-term efficacy of the use of Ro-Ro technology.With our domestic shipping firms deploying joint use passenger-plus-cargo Ro-Ros, the vessels are clearly playing the role of Grim Reaper in our inter-island waters The trend towards liberalization in all transport services pervades the Philippine policy framework. The major transformation however, is felt even more in domestic shipping than in the overseas maritime transport services. This is because it is in domestic shipping that restrictive policies have long been implemented. Nonetheless, review of the policy and regulatory regime of the Philippine international maritime services is being undertaken. The perception that investors tend to shy away from countries where doing business is deemed to be expensive because of bureaucratic processes and incompetence serves as one of the basic premises from which review of policies, laws and regulations is being drawn. Restrictive policies generally

contribute to the outlook of government officers and regulatory agencies to put unnecessary pressure on the service operators thereby engendering dissatisfaction among these service providers. One area of concern is the increasing interest to make the Philippines a leading maritime hub in the Asian region as an alternative to the existing leadership of such maritime centres as Hong Kong and Singapore. Moreover, the reservoir of maritime human resources consisting of competent and qualifiedmerchant marine officers and professionals as well as ship management executives shall, in the long run, lead to the development of the Philippines as a competitive maritime centre. No less than the Congress of the Philippines had shown enthusiasm towards achieving liberalizationthough to a limited extent this may cover domestic shipping. Just the same, policies and laws which will in any way lead to liberalization in the domestic shipping will in all eventualities affect the existing regime of the overseas shipping sector. As an emerging maritime centre, the Philippines can hope to generate employment opportunities for the almost half million maritime graduates and professionals. These professionals are not limited to those who are in the navigation of ships but also in other related maritime activities such as stevedoring, ship management, shipbuilding and ship repair as well as in related maritime consultancy activities. Expansion of shipping activities in the Philippines is expected to result from liberalization whereby more ship calls at the ports will also mean marketability of the shipbuilding/ship repair capabilities of the country. The natural harbours of the country make it one of the best locations for a shipbuilding industry. In fact, two major shipbuilding conglomerates have already made the country an extension of their operations. This will have a trickledown effect on the other service sectors like manufacturing of ship spare parts and other components of a ship. The ship agency sector will expectedly also expand as a result of this. The Philippines review of existing policies and laws is a manifestation of the very high expectations it has placed on the results of globalization/liberalization in the area of maritime transport, notwithstanding the stalled negotiations in the GATS. It is in the operationalization of the liberalization formula that the country hopes to achieve the accelerated development of the Philippine international maritime transport services.

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