INTERNATIONAL STUDY TOUR REPORT – MALAYSIA, PHILIPPINES & SINGAPORE

As part of my research work, I have visited Malaysia, the Philippines and Singapore to understand how these countries have developed their respective Short Sea Shipping (SSS) sector into a strong industry and what lessons India can learn from them.

1 RATIONALE FOR THE STUDY TOUR

The reason for selecting these ASEAN maritime nations was that, among and within these countries, the maritime transport plays a vital role in regional socio-economic development by enhancing the transport of goods. In fact the developments in the maritime sector of  Malaysia and Singapore are well ahead of India and the continuous measures taken by them are worth studying. And Philippines’ Roll on - Roll off (Ro-Ro)/Ro-Ro Passenger(Ropax) /CHARO network is something India could successfully implement without much infrastructure investment. Also, there is much to learn from the fast ferry services connecting Singapore and Indonesian islands.

2 STUDY TOUR WORKING SCHEDULE

Date/ Time	Activities	Participants	Venue
MALAYSIA VISIT  - 27TH JUL  TO 29TH JUL
27 Jul , Mon 09:00 –  10:00 AM	Meeting with Trans Asia Line, Malaysia	MrAnand Kumar , Branch Manager Mr Suresh , Operations & Services Manager Trans Asia Line (M) SDN. BHD, Klang , Malaysia	Venue : Trans Asia Line , Malaysia
11:00  -  01:00 PM	Meeting with West Ports, Malaysia SdnBhd and Port Tour	MrSuthahar  , Marketing Manager MrShashidaran K Krishnan, Marketing Manager MrMathanaseelan, Marketing Manager West Ports Malaysia SdnBhd, Pulau Indah, Port Klang, Malaysia	Venue : West Ports Malaysia Office
02:00 – 03:00 PM	Meeting with Transworld, Malaysia	Mr Rajesh Pillai , General Manager, Transworld GLS	Venue : West Ports Malaysia Office
28 Jul , Tue 10:00-12:00	Meeting with Penang Port Sdn. Bhd Visiting Customs Office , Penang	Mr Ismail Bin Mohamed Ghouse , Head Operations North Butterworth Container Terminal , Penang Port, Penang, Malaysia	Venue : NBCT Office , Penang
02:00- 03:00 PM	Meeting with QEL Shipping Services SdnBhd	Mr Michael Loh , Sales Manager MrIdris Bin Othman , Operation Manager QEL Shipping Services SdnBhd, MWE Plaza, Penang	Venue : QEL Shipping Office
03:30 – 05:00 PM	Meeting with The Society of Logisticians, The AK Academy and X-Press Feeders	Mej. Chang Kah Loon , President, The Society of Logisticians and Regional Manager , X-Press Feeders, Malaysia Ms Amy Ooi , Manager, Academic Affairs , The AK Academy, Penang , Malaysia	Venue : AK Academy Office
29th Jul, Wed 11:00 – 01:00 PM	Meeting with MAC Asia Line SdnBhd, Selangor, Malaysia	Capt Justus Kumar , General Manager MrLiong Wu Lung , Sales &  Marketing Manager	Venue : MAC Asia Line office
03:00- 04:00 PM	Meeting with Transpole Logistics SdnBhd	MAC Asia Line, Klang, Selangor, Malaysia MrPrakash Kumar Malakar ,Ast. General Manager,  Transpole Logistics, Klang, Selangor , Malaysia	Venue : Transpole Logistics office
PHILIPPINES VISIT – 30TH JULY TO 01ST AUG 2015
30 July , Thu 10:00 - 11:30	Meeting with AGILE Marine Resources Inc. and/or Lubeca Protection & Indemnity Phils. Inc.	Atty. Imelda L. Barcelona , President Lubeca Protection & Indemnity Phils., Inc. Suite 205 Marbella 1 Bldg. 2223 Roxas Blvd., Pasay City 1300	Venue: The Manila Hotel
2:00 - 4:00 PM	Meeting with officials of Department of Transportation and Communication Maritime Industry Authority  and Philippine Port Authorities (PPA).	Mr Nick Conti, Dep. Administrator, MARINA Ms Esperanza C Santos, Port Operations Specialist, PPA Ma. Lourdes T Pagtalunan Ms Belinda C Salvosa Mr Homer T De La Paz Sr. Communications Development Officers, Water Transport Planning Division DOTC Mr. Samuel C. Custodio (Former Director, Planning Service of DOTC) Independent Transport Planning Consultant Mr. Ronald G. Sison Independent Planning Consultant	Venue: DOTC Conference Room 15th Floor, The Columbia Tower Ortigas Avenue, Barangay Wack-Wack Mandaluyong City 1555, Metro Manila
4:00 - 6:00 PM	Meeting with Ms. Bondoc.	Ms. Josephine Bondoc , (Former Chief, Water Transport Planning Division of DOTC)	Venue: Robinson's Galleria Mall Ortigas cor. EDSA, Pasig, Metro Manila
31 Jul, Fri 9:00 - 12:00	Meeting with PPA Port Manager and observation tour of port operations. Meeting with officers of Manila North Harbour Ports Inc.	A. Pillai, R. Sison Ms Clarissa S Ignacio, Port Manager Mr. Raul T. Santos ,Asst General Manager for Ops, Ms Esperanza C Santos, Port Operations Specialist, Philippine Ports Authority (PPA) , Bonifacio Drive, South Harbor ,Port Area, Manila Mr Erik F Reyes , Project Coordination Manager Mr Adnan G Alzaga, Pier Operations Manager Ms Phoebe J Riva , Gates & Traffic Department Manager Manila North Harbor Ports Inc , North Harbor, Port Area, Manila	Venue: Manila North Harbor
3:00 - 4:30 PM	Meeting with freight forwarder/ logistics provider	A. Pillai, R. Sison Mr. Renato T. Pamintuan CEO Asian Freeports, Inc. Unit 506 Global Tower 2029 Hen. Mascardo cor. Capt. M. Reyes St. Bangkal, Makati City 1233	Venue: The Manila Hotel
01 Aug, Sat 10:00 AM -12:00	Meeting with Dr. Hussein Lidasan et al.	A. Pillai, R. Sison Dr. Hussein Lidasan Professor/Director of Graduate Studies School of Urban and Regional Planning (SURP) The University of the Philippines Diliman, Quezon City Dr. Enrico L. Basilio Chief of Party, USAID Advancing Philippine Competitiveness (COMPETE) Project	Venue: University of Philippines,SURP Diliman, Quezon City
SINGAPORE VISIT -  03RD AUG 2015
03AUG , Mon 11:00 – 01:00 PM	Visiting Harbour Bay Ferry Terminal  and  Singapore – Indonesia Ferry operators	Majestic Fast Ferry , Maritime Square , Harbourfront Centre, Singapore Horizon Fast Ferry Pte Ltd, Maritime Square ,Harbourfront Centre, Singapore	Venue : Respective offices, Harbour Bay Ferry Terminal

3 KEY FINDINGS

3.1 Malaysia

Malaysia’s land is separated by the South China Sea into two similarly sized regions, Peninsular Malaysia and East Malaysia (Malaysian Borneo). Peninsular Malaysia shares a land and maritime border with Thailand and maritime borders with Singapore, Vietnam, and Indonesia. East Malaysia shares land and maritime borders with Brunei and Indonesia and a maritime border with the Philippines. Malaysia is strategically located on the Strait of Malacca, one of the most important shipping lanes in the world.

3.1.1 Ports in Malaysia

Ports in Malaysia are established either as a Federal or State ports under the jurisdiction of respective Governments. There are also ports that are the jurisdiction of the Marine Department, fishing ports and jetties under Fisheries Development Authority and dedicated jetties for handling oil by Oil majors. Under the port privatization Act, Federal ports are either corporatized or privatized. The port authorities regulates the Private Operators .  Malaysia has two ports that are listed in the top 20 busiest ports in the world, Port Klang and Port of Tanjung Pelepas, which are respectively the 2nd and 3rd busiest ports in Southeast Asia after the Port of Singapore. 

Malyasia – Federal and State port locations.

 Source : Transport Statistics Malaysia 2013 , Ministry of Transport, Malaysia

Fig : 1

 The port tariff rates are regulated by the port authority. It is to be noted that, the tariff   is same for both domestic and international operators. Also, understand from the port operators that the vessels are normally berthed based on fixed windows and hence both domestic and international shipping gets same treatment. 

3.1.2 Cabotage Policy

As per Article 65KA of the Merchant Shipping Ordinance 1952 of Malaysia , the cabotage policy permits only domestic vessels of Malaysian flag that holds valid license for domestic shipping to ply on domestic trade.   However,  the Malaysian  Government relaxed the cabotage policy with effect from 3rd Jun 2009 , which permits foreign flag vessels to transport  containerized transshippment cargo  among the Malaysian ports   . This helped both Port Klang and Port of  Tanjung Pelepas to become the transshippment centre of Malaysia and the region.

Total cargo throughput of Malaysian Ports by Export, Import and Transhipment ,2004 -13.

Source : Transport Statistics Malaysia 2013 , Ministry of Transport, Malaysia

Fig : 2

In addition, foreign flag vessels can obtain temporary permits form the Ministry for any specific route and cargo, if there is no availability of domestic vessels

3.1.3 Domestic Shipping

The shipping industry in Malaysia is being managed by the Marine Department and the Ministry of Transport (Maritime Division) is responsible for legislation with regard to the shipping industry.  The Malaysian Government has designed programs and incentives that encourage the growth of shipping industry in the country. As such, there are policies in place that persuade nationals to invest in the industry. The objective of such policies is to have self-sufficient supplies of Malaysian-flagged vessels—promoting internal supply of national vessels.

Table : 1

Total number of licence issued by Malaysian Domestic Shipping Licencing Board (DSLB), 2009-13.

Source : Transport Statistics Malaysia 2013 , Ministry of Transport, Malaysia

Shipping companies are eligible for tax exemptions if their income is derived from the operation of Malaysian ships. This incentive is applicable to a Malaysian national only.    Incomes of crews are also eligible for tax exemptions if their operations are derived from exercising duties on board the mentioned Malaysian ship. Income received by non-resident from the rental of ISO containers to Malaysian shipping companies is also exempted from income tax. The Malaysian government also provides incentives for prime movers and trailers for port operation. Container hauliers qualify for sales tax exemptions on new prime movers and trailers that are locally produced. Additionally, Ships above 26 GRT are exempted from import duty and surtax.( Source ¹⁹ :  Draft Report : “Seamless Integrated Domestic and International Shipping in Archipelagic ASEAN” by Dr Basilio et al)

Domestic traffic of all kinds of goods is heavy between Peninsular and East Malaysia. Understand from stake holders that the customers are encouraged to containerize all possible commodities so as it can be moved by container , Ro-Ro / RoPax vessels.

Domestic Vs Foreign cargo handled in Malaysian Ports, 2013

Source : Transport Statistics Malaysia 2013 , Ministry of Transport, Malaysia

Fig : 3

  

Domestic vessel and cargo are subject to Malaysian Customs regulations, however, the procedures and documents are computerized and hence there is no need for the customers to visit Customs office for processing documents. Also, to avoid delays and to increase the awareness of customers , detailed process charts of each and every activity  is exhibited in the customs office . A sample is attached here under.

Customs office counter , Penang Port, Malaysia

Fig : 4

From various meeting with the trade and authorities in  Malaysia , it is understood that all stake holders of the trade  work complimentary to each other for the development of shipping , both domestic and international sectors.

3.2 Philippines

The Philippines is an archipelago consisting of about 7,100 islands and islets. It is divided into 3 major island groups, (1)  Luzon , where Manila, the  capital of the Philippines is situated (2) Visayas and (3) Mindanao. Because of Philippines’ geographical location,  the interisland shipping , which is the main transport system in the country, plays a vital role both in international and domestic transport.

The development of the Philippines Nautical Highway system, which integrates the land and water transport system using roll-on/roll-off vessels, started in 2003. Today the Strong Republic Nautical Highway (SRNH) consists of three main trunk routes – the western , central and eastern nautical highways. The Department of Transportation and Communication (DOTC)is in charge of policy, planning, programming, coordinating, implementing and regulating the network transport system.

Nautical Highways of the Philippines

Source : The Master Plan and Feasibility Study on the Establishment of an ASEAN RO-RO Shipping Network and Short Sea Shipping, JICA²⁷

Fig: 5.5

3.2.1  Ports in the Philippines

 As per the handbook published by the Department of Transport and Communications of the Philippines, there are 2451 ports in the country , of which 1607 are public ports , built and managed by the public sector , 423 private ports built and managed by the private sector and 421 fishing ports. These Philippines Port Authority (PPA) regulates all public and private ports. Many of the fishing ports are managed by the Philippine Fisheries Development Authority (PFDA) which is under the department of Agriculture.

In the Philippines, the domestic and international traffic is handled in separate ports. As per Philippine Port Authority’s statistics there are 211 domestic and 38 international ports are operational on a commercial basis. Because of this practice, both domestic and international vessels get equal priority in the respective ports.  Also, there is a “ one stop shop”  facility for the customers , where they can avail PPA, terminal operator , Customs and shipping line’s services under one roof.

One Point Process Centre ,North HarborPort , Manila, Philippines

Source : Picture taken on 31^st Jul 2015 while visiting the port

Fig :6

The port tariff is fixed by PPA and the amendments, if any, will be made by PPA after consulting with concerned stake holders. The domestic port tariff is less compared to the international port tariff.

3.2.2 Cabotage Policy

 Under the provisions of the Philippines’ Constitution and existing shipping-related laws, the shipment of domestic cargoes from one domestic port to another should be carried only by domestic shipping lines. Foreign ships are allowed to call in designated Philippine international ports or other ports to load and unload foreign cargoes but not domestic cargoes and passengers.

However , the Philippines Government vide Republic Act No.10668 dated 21st Jul 2015 ( Annexure-16), relaxed the cabotage policy to permit foreign vessel to dock and c-load ( cargo discharged by one foreign ship can be loaded on to another operator’s ship for transporting to other domestic ports) in multiple ports . This policy expects to reduce logistics costs considerably .

3.2.3 Domestic Shipping Industry

Domestic (Inter-island) shipping in an archipelagic economy like the Philippines is a critical element of development. As per the statistics provided by PPA ( Annexure- 17)  the domestic shipping facilitate about 98% of domestic inter-island trade. Roughly 80 million tons of cargo and more than 50 million Filipinos as well as foreign tourists are getting transported annually by the inter-island shipping.

In the Philippines, as per records there are 2932  cargo fleet and 5956  passenger fleet registered under domestic  trade in 2014 ( Ref. Annexure - ). In addition to this, 15 domestic container vessels and 40 domestic RO-RO-passenger (ROPAX) vessels are registered under the domestic trade. Average age of the vessel is about 20 years. 

The Maritime Industry Authority (MARINA) undertakes maritime safety regulatory functions such as ship registration, inspection, licencing and crew qualification and competence for all Philippine registered ships. Also, customs clearance is not required for both domestic vessels and cargo.

The most recent domestic shipping policy of the Philippines is defined under Republic Act (RA) 9295. The law provides incentives to domestic ship operators such as exemption from value-added tax on importation and local purchase of passenger and/or cargo vessels and from equipment relating to safety and security of the passengers and crew.

3.2.4 Developments in Domestic Ro-Ro Shipping

In 2003, the Government of the Philippines issued a policy to promote Ro-Ro, a system designed to carry rolling stock cargo which does not require cranes for loading or offloading. This policy , which provided an alternate mode of transport to the market, heightened the level of competition within the domestic shipping industry. The reduction in cost coupled with efficiency in Ro-Ro shipping made the shippers transport their goods across the domestic market.

Comparison between Container Vs RO-RO Operation

            Source : Linking the Philippine Islands through highways of the sea,

Fig :7

The truck and bus operators changed their mode of operations to suit to the Ro-Ro connectivity, which helped them to expand their services to wider market area.

Ro-Ro and CHARo vessels under operation

Source : The Master Plan and Feasibility Study on the Establishment of an ASEAN RO-RO Shipping Network and Short Sea Shipping, JICA

Fig :  8

3.3 Singapore

One of the busiest shipping industries in the world is located in Singapore. This is primarily because the Government of Singapore has put in place policies which are made to be investment friendly.  The shipping industry is being overseen by the Maritime and Port Authority (MPA) of Singapore under the Ministry of Transport (MOT).

There are two general policies that govern port authorization and merchant shipping in the country. These are the Maritime and Port Authority of Singapore Act and the Merchant Shipping Act, respectively. The former is responsible for the establishing and incorporating the Maritime and Port Authority of Singapore providing for its functions, powers and other related matters. The latter, on the other hand, is responsible for anything related to merchant shipping such as ship registration.

The Government of Singapore created financial institution called the Marine Financial Incentive (MFI) to help investors and ship owners to avail “packaged” deals. An example of the benefits of this program is cheaper sources of capital and high yield investments. There are also different banking infrastructures that have competitive loan rates to complement the advocacy of the government to be a world-class shipping hub.

Singapore has no cabotage principle because it only has a single port.

3.3.1 Singapore cruise / ferry terminal

The Singapore Cruise Centre is a cruise terminal located in the south of Singapore and it comprises of two terminals, namely the International Passenger Terminal (IPT), and the Regional Ferry Terminal (RFT).  The IPT handles international cruise ships the RFT handles ferry services to the neighbour Indonesia Island, such as Batam and Karimum.

Fast Ferry , to and from Indonesia from Singapore, at the RFT

 

Source : collected while visiting Singapore on 3^rd Aug 2015

Fig : 9

4 Lessons learnt

The study tour helped me to learn about the ASEAN shipping sector in general and the shipping sectors of Malaysia, the Philippines and Singapore in particular. Maritime transport system , both domestic and international , plays a vital role in the socio-economic development of these nations.

During the tour I could visit various ports, both domestic and international and also could meet important stake holders in the shipping sector, like Govt. and port officials, trade experts, academics/researchers, consultants, shippers, forwarders etc, of the respective nations.  From various meetings and discussions had with these stake holders, I gathered notable information about the government policies which support both the domestic and international shipping sectors of the respective nations.

The visit to visit the “ One Point Process Centre”  in Manila North Harbour Port was an enriching experience.  I could understand that the customer can avail all facilities,Port / terminal operator / Customs / Shipping line,  related to his vessel /shipments  from this centre.

I also had an opportunity to see the RoPAX( Ro-Ro Passenger) and CHARo ( Chassis Ro-Ro for container transport)  ships operations at the Manila North Harbor Port . The Philippines’ Roll on – Roll off policy which was introduced in 2003 to reduce the high cost of transporting people and goods among the Islands worth a special mentioning. The concept of National Highway System , connecting both land and water transport system was introduced to facilitate seamless movement of people and goods among the Islands at a low cost.

Also, I could learn more on the ASEAN intermodal highway planned by ASEAN nations for the establishment of an ASEAN Single Shipping Market ,from  various discussions had with the experts.  This network helps integration and development of domestic shipping as well as the international shipping sector of each member nations.

ASEAN Highway Network

Source : The Master Plan and Feasibility Study on the Establishment of an ASEAN RO-RO Shipping Network and Short Sea Shipping, JICA

Fig: 10

To summaries, below mentioned are the measures taken by these ASEAN member nations for development of domestic shipping ( Short Sea Shipping)  in their country , which can be implemented in India too for the development of coastal shipping.

a.            Introduced favourable fiscal policies to promote domestic shipping

b.            Involvement of private sector in infrastructure development.

c.             Relaxed cabotage principle for the movement of containerized transhipment cargo on foreign vessels to promote their national transhipment terminal and in turn to promote the domestic shipping sector too.

d.            Customs procedures made easy and fast  by introducing electronic transmission of documents.

e.             Equal importance given to coastal ships by establishing separate domestic ports  /or dedicated berth for coastal vessels

f.              Customer friendly “One stop shop”  facility in all ports / terminals.

g.            Promoting containerization in domestic shipping sector for a seamless and cost effective movement of goods through inter modal transport network.

h.            Most importantly, along with conventional shipping they do promote Ro-Ro / RoPAX / CHARo network system to strengthen the national and ASEAN intermodal highway system for the seamless movement of cargo and people across the country.

The visit indeed was an enriching experience and strengthened my vision of  an integrated national inter modal transport network system , connecting the land and water transport system to connect and facilitate both domestic and international supply chain networks.