Peer Review of the Philippines’ Shipbuilding Industry

6. Government policies impacting the shipbuilding sector

Abstract

The Philippines has a targeted policy approach to shipbuilding, implementing measures across various government agencies to enhance the sector's long-term competitiveness. This chapter discusses the general policy environment, with a focus on strategies to support the investment climate and ease of doing business and gives an in-depth assessment of two key strategies shaping the industry: the Maritime Industry Development Plan 2019–2028 (MIDP) and the forthcoming Shipbuilding and Ship Repair (SBSR) Development Bill. It also includes a discussions of financing mechanisms targeted at the SBSR sector.

6.1. The wider policy and legal context

Key findings

• The Philippine SBSR sector is shaped by a broad and evolving maritime policy environment. While shipbuilding and repair have not traditionally been the central focus of maritime legislation, the sector is influenced by general maritime laws and labour regulations. These frameworks prioritise seafaring, trade facilitation, and vessel operations, with more recent attention turning toward industrial development, safety, and sustainability.

• Co-ordination challenges persist due to decentralised governance, despite increased policy recognition. Multiple national and subnational agencies—including Investment Promotion Agencies and Local Government Units— contribute to SBSR-related decision-making, resulting in strong regional oversight. However, the inclusion of SBSR in new policy tools like the Maritime Industry Development Plan 2019–2028 reflects a growing recognition of its strategic potential within the national industrial base.

• The CREATE Act provides the fiscal foundation for attracting investment into capital-intensive sectors like SBSR. It offers performance-based incentives such as income tax holidays, reduced corporate tax rates, and import duty exemptions. SBSR firms, particularly those in economic zones like Cebu and Subic, benefit from these provisions through support from relevant IPAs including PEZA and SBMA.

• The SIPP and Green Lanes Initiative align industrial priorities with investment facilitation. SIPP classifies eligible activities into three tiers, with SBSR qualifying under Tier I and potentially under Tiers II and III for green or advanced technology projects. The Green Lanes system streamlines permitting for strategic investments, including shipbuilding, enhancing the ease of doing business. A revised SIPP is expected in 2025 to ensure alignment with evolving national priorities.

The Philippines has adopted a multi-layered policy approach to the maritime sector, with a range of legislative and regulatory measures introduced across agencies to enhance competitiveness, improve infrastructure, and support workforce development. While some of these measures specifically target shipbuilding and ship repair (SBSR), the sector also operates within a broader legal and institutional framework that shapes its development trajectory.

The SBSR sector is influenced not only by sector-specific regulation but also by the general maritime legal framework that governs vessel operations, port activities, safety, trade, and labour. The Philippines' maritime policy tradition has been shaped by its status as a major archipelagic nation and a global supplier of maritime labour. As a result, the legal framework is particularly well-developed in areas such as shipping operations, seafarer protection, and international compliance—reflected most recently in the enactment of the Magna Carta of Filipino Seafarers (Maritime Mutual, 2025[1]). However, policies supporting industrial upgrading, infrastructure development, and innovation in SBSR have historically received less direct attention.

General maritime laws— such as those on ship registration, port regulation, and trade facilitation— provide limited direct support for SBSR. For instance, streamlining the Philippine Ship Registry System may encourage vessel registration under the national flag, but its impact on newbuild demand or shipyard activity depends on complementary measures. Similarly, legislative proposals like the International Maritime Trade Competitive Act aim to strengthen the overall maritime sector (Senate of the Philippines, 2023[2]), but their practical implications for SBSR will depend on how implementation mechanisms are designed and linked to industry needs.

The policy environment is further shaped by a decentralised governance structure involving national agencies, Investment Promotion Agencies (IPAs), port authorities, and local government units. This layered system creates both opportunities for tailored regional support and co-ordination challenges for SBSR stakeholders, particularly when navigating multi-agency permitting processes or aligning infrastructure investments with national industrial priorities. Recent reforms, notably the Maritime Industry Development Plan (MIDP) 2019–2028, reflect a shift toward a more integrated, investment-driven approach.

6.1.1. Investment policies relevant to the SBSR sector in the Philippines

Robust investment policies play a key role in supporting the long-term growth and competitiveness of the Philippine SBSR sector. As a capital- and infrastructure-intensive industry, SBSR depends heavily on enabling policy frameworks that reduce investment risk, facilitate access to incentives, and streamline regulatory processes. Horizontal investment policies— notably, the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) Act, the Strategic Investment Priority Plan (SIPP), and administrative reforms like the Green Lanes Initiative— are particularly relevant, as they apply across industries and can directly support shipyard modernisation, the adoption of new technologies, and localisation of manufacturing.

The Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) Act

The CREATE Act forms the core of the Philippines’ fiscal incentive system. It offers time-bound and performance-based incentives to attract both domestic and foreign investment. Registered projects can access a 4–7 year Income Tax Holiday (ITH), followed by either a 5% Special Corporate Income Tax (SCIT) based on gross income earned or enhanced deductions for qualifying expenses. Additional incentives include duty and VAT exemptions on capital equipment, raw materials, and spare parts, as well as VAT zero-rating on local purchases. The CREATE Act applies across all 19 Investment Promotion Agencies (IPAs), with IPAs authorised to approve projects up to PHP 15 billion, and larger projects reviewed by the Fiscal Incentives Review Board (FIRB). These provisions are especially relevant to SBSR, given the scale of investment required in infrastructure, machinery, and imported inputs (Congress of the Philippines, 2020[3]).

Among the IPAs, the Philippine Economic Zone Authority (PEZA) and Subic Bay Metropolitan Authority (SBMA) are particularly relevant for SBSR. PEZA supports foreign shipbuilders and marine equipment producers, especially in Cebu, where major players like Tsuneishi and Austal operate. SBMA oversees Subic Bay, historically one of the country’s most important shipbuilding hubs, with ongoing redevelopment efforts for offshore wind and marine infrastructure.

The Strategic Investment Priority Plan (SIPP)

SIPP operationalises CREATE by identifying eligible activities and assigning incentives based on priority levels. Prepared by the Board of Investments (BOI) in consultation with other agencies and stakeholders, and approved by the President, the SIPP is structured into three tiers:

• Tier I: Covers traditional priority industries listed in the 2020 Investment Priorities Plan. Shipbuilding is explicitly classified under Tier I, qualifying it for baseline tax incentives under CREATE.

• Tier II: Focuses on sectors that address key development gaps such as green ecosystems, defence capabilities, food security, and industrial value-chain development. SBSR projects contributing to decarbonisation or naval production could also qualify under this tier.

• Tier III: Targets advanced, innovation-driven activities such as R&D, high-tech manufacturing, and digital technologies. Shipyards engaged in developing alternative fuel vessels or integrating smart manufacturing systems may be eligible under this category (Fiscal Incentives Review Board, n.d.[4]).

Each tier influences the type and duration of incentives a project may receive, with higher tiers typically granted longer ITH periods and additional support. The SIPP thus plays a critical role in aligning SBSR investments with broader national priorities such as sustainability, innovation, and industrial upgrading.

The Green Lanes Initiative complements these incentive frameworks by streamlining regulatory processes for strategic investments to increase the ease of doing business. Issued under Executive Order No. 18 (2023), the Green Lanes system aims to expedite the issuance of permits and licences through a single-window certification process and co-ordinated government support. Eligible investments include highlight desirables projects, foreign direct investments (FDIs) and projects listed under the SIPP. To qualify, projects must align with the Philippine Development Plan or similar frameworks, and contribute significantly to economic development through capital inflows, infrastructure investment, or balance of payments improvements (President of the Philippines, 2023[5]). While shipbuilding projects have not yet accessed Green Lanes, they are eligible and could benefit from simplified procedures and reduced administrative delays— particularly for large-scale infrastructure upgrades or new green shipbuilding projects.

The BOI plans to release an updated SIPP in the first half of 2025. This revised SIPP will identify key economic activities eligible for fiscal incentives under the CREATE Act. The SIPP undergoes updates every three years, with annual reviews to ensure alignment with current economic priorities (Philippine News Agency, 2025[6]).

6.2. The Maritime Industry Development Plan 2019-2028 (MIDP)

Key findings

• The Maritime Industry Development Plan (MIDP) sets a strategic vision for a globally competitive and integrated Philippine maritime industry by 2028. Adopted through Executive Order No. 55 (s. 2024), the MIDP was updated in 2023 to align with the Philippine Development Plan (PDP) 2023-2028 and address new global maritime challenges. While its implementation was delayed due to the COVID-19 pandemic, the MIDP remains the central roadmap for maritime sector development, including targeted support for SBSR.

• The MIDP outlines eight flagship programmes to strengthen maritime infrastructure, workforce skills, and industrial capacity. These programmes focus on developing and modernising the shipbuilding and repair sector, enhancing the sustainability and safety of maritime transport, and investing in workforce reskilling and upskilling. The plan also aims to support the transition to green technologies and promote a modernised, resilient SBSR sector.

• At its core, the MIDP promotes safe, efficient, and sustainable maritime transport and industry modernisation. It envisions: (a) improved access to reliable and affordable sea transport; (b) increased domestic shipbuilding and repair output; and (c) enhanced employability of maritime professionals through expanded training and education initiatives.

• State-owned banks play an important role in financing shipbuilding and maritime infrastructure through targeted loan programmes aligned with the MIDP.

  The Development Bank of the Philippines (DBP) supports vessel construction, retrofitting, and shipyard expansion under the CRUISE programme, covering up to 70% of project costs and offering long-term loans at competitive interest rates. As of December 2024, 37 projects had been financed, with a PHP 50 billion loan facility earmarked for further MIDP-aligned development. Similarly, the Land Bank of the Philippines (LBP) provides up to 80% credit support for acquiring fishing vessels and implements the Ferry Boat Inclusive Programme, which finances the transition to safer and modern ferry fleets.

The Maritime Industry Development Plan 2019–2028 (MIDP), adopted under Executive Order No. 55 series of 2024, sets a vision to establish a nationally integrated and globally competitive maritime industry by 2028. Updated in 2023 to align with the Philippine Development Plan (PDP) 2023-2028, the MIDP faced significant delays due to the COVID-19 pandemic, requiring adjustments to address emerging global maritime challenges.

The updated MIDP envisions: (a) improved access to a safe, reliable, efficient, affordable, and sustainable sea transport system for passengers and shippers; (b) increased capacity and production in shipbuilding and ship repair; and (c) enhanced employability through reskilling and upskilling the maritime workforce. It comprises eight targeted programmes designed to promote sustainability, expand shipbuilding capacity, and modernise the SBSR industry.

6.2.1. Eight programmes for industry growth 

Core Programmes (4)

 

Programme 1: Modernisation and Expansion of Domestic Shipping
Key Objective
Creating a modern, safe, and efficient domestic fleet.
Mid-Term Assessment (Available Policies & Regulations)
Domestic shipping circulars issued: Nine significant circulars were issued to modernise the sector: MC DS 2022-01: Standardised guidelines for Annual Tonnage Fee collection. MC DS 2021-01: Granting missionary routes for RORO ships. MC DS 2021-02: Temporary ship registry suspension for overseas leasing. MC DS 2021-03: Pioneer status incentives for domestic ship owners. MC DS 2020-01: Preferential Cargo Rates for Food Security. MC DS 2020-02: Maritime Enterprise Accreditation. MC DS 2019-01: Recreational Boat Regulation. MC DS 2019-03: Mandatory Insurance for Damage. MC DS 2018-05: Cruise Ship Operation for enhanced compliance and safety. Establishment of more shipping routes: New Sea routes under the Philippine Nautical Highway System. Monitoring domestic shipping operations: Two tools introduced to assess operations: Maritime Route Rationalization and Information System (MARRIS): Estimates vessels needed per route and assesses route feasibility. Port Capacity Analysis and Route Optimization for Local Maritime Administration (PAROLA): Analyses port capacity, with one completed route analysis in 2022 Fiscal incentives and financial assistance: Income Tax Holidays and Duty-Free Importation for investors Memorandum of Understanding (MoU) between MARINA and the Development Bank of the Philippines (DBP) to support modernisation with a Php50-billion loan facility. DBP and MARINA collaborate on financing programmes to assist shipyards, shipping companies, co-operatives on maritime-related investments. CRUISE (Connecting Rural Urban Intermodal Systems Efficiency): a system adopted to encourage increased investments in transportation and logistics, promote rural-urban integration and connectivity, and accelerate economic growth. Modernisation of domestic shipping vessels: The Public Service Act Amendment (RA 11659), effective April 2023, allows 100% foreign ownership in domestic shipping, replacing the previous 40% cap to boost investment and competition. Upgrading passenger shipping service: Continuing implementation of Passenger Service Ratings System (PSRS) established in 1997 to assess passenger service quality. Replacement of aging fleet: MC 2016-02: Phase-out of wooden-hulled ships carrying passengers as part of mandatory classification or retirement of aging vessels. Port & road rehabilitation: Ongoing internal co-ordination for implementing the MARRIS Project, Phase 2, to provide data and analysis for port development and improvement. Development of Coastal and Inland Waterways Transport (CIWT) System: Ongoing discussions for a Cavite Ferry System. Shipping services for Tourist Destination Areas (TDAs): Government agencies co-ordinating infrastructure development to improve connectivity to tourist and cruise destinations.
Challenges
Policy formulation: The need for new policies to modernise, expand, and upgrade the industry, including expanding authority for international operations. Implementation of RA 11659: The full implementation of the Public Service Act, allowing 100% foreign ownership, has sparked mixed reactions—welcomed for introducing foreign capital and competition, but raising concerns about the impact on local players. Unattractive financing: High interest rates and collateral requirements for loans hinder access to capital, making entry into the industry difficult, particularly for smaller players. Excessive taxation: The 6% tax on fuel and 12% VAT on bunker fuel significantly increase operating costs, impacting margins and passenger/cargo fares. Inadequate infrastructure: Poor port facilities, road access, and infrastructure connectivity result in congestion, delays, and higher operational costs. Data management gaps: Inconsistent and inadequate data collection and management across the industry, particularly in smaller ports and informal operators, obstacles effective decision-making and oversight. Compliance and Monitoring Issues: Weak enforcement of policies and lack of systematic monitoring and evaluation hinder policy implementation, making it difficult to track compliance and assess effectiveness.
Planned Initiatives for the Next Five Years
Implement a domestic shipping policy framework	Codification of existing domestic shipping policies, rules, and regulations.
	Streamlining of existing domestic shipping policies, rules, and regulations to promote competition and ease of doing business.
	Continued adoption and implementation of policies, rules, and regulations.
Modernisation of domestic merchant fleet	Establishing and rationalising of domestic shipping route feasibility studies (e.g. Passenger and cargo traffic).
	Enhancing measures to promote and improve competitiveness in domestic shipping.
	Vessel Modernization Programme (VMP).
	Categorisation of navigational areas.
Enhancement of incentives and financing	Provision of tax incentives for the domestic shipping industry (e.g., fuel cost impact study).
	Development of financing schemes between MARINA and government financial institutions to modernise domestic shipping.
Enhancement of RRTS systems and infrastructure	Development of berthing spaces/ramps for domestic ships (e.g., port enhancement in congested routes.
	Cruise ship port and terminal development (infrastructure surveys).
	Road expansion in port-congested areas.
	Expansion of the Philippine Nautical Highway System.
Digitalisation and promotion of shipping operations	Automation of domestic shipping processes (e.g., blockchain-enabled certification system).
	Development of a Domestic Shipping Portal System.
Strengthen research and development	Development of Coastal and Inland Waterways Transport (CIWT) Routes.
	Development of interisland cruise routes.
	Profiling of cruise routes.
	Promotion of domestic shipping investment folio.
Programme 2: Promotion and Expansion of the Overseas Shipping Industry
Key Objective
Strengthen the Philippine ship registry and develop a merchant fleet that supports both domestic and international trade, while attracting foreign investment by promoting an appealing ship registry
Mid-Term Assessment (Available Policies & Regulations)
The competitiveness of the Philippine ship registry is crucial for expanding the country's merchant fleet. However, efforts over the past 40 years have been hindered by restrictive policies and slow adaptation to maritime innovations. Declining foreign registrations underline the need for reforms in taxation and policy frameworks to boost its appeal.
Challenges
Tax regime: Unlike other ship registries, the Philippines imposes taxes on shipping income and chartered ships instead of tonnage fees. Shifting to tonnage fees could attract more ships. Maritime policies: Frequent policy changes and outdated laws discourage shipowners. Modernising and harmonising regulations is essential to ensure consistency and investor confidence. Financing: High interest rates and limited financing programmes hinder ship acquisition. Accessible financing is critical for international competitiveness. Ease of doing business: Complex and bureaucratic ship registration processes increase costs and delays. Simplification and digitalisation are needed to enhance efficiency. Adapting to trends: Philippine-flagged ships must embrace innovations like green technology, autonomous vessels, and blockchain to stay competitive globally.
Planned Initiatives for the Next Five Years
Create an attractive ship registry system	Enact the Philippine Ship Registry Law to modernise outdated registration processes.
	Ratify and implement international maritime conventions (e.g., 26 IMO instruments ratified, but only 3 transposed into national legislation)
	Development of an attractive incentive programme for ship registration.
	Improve the competitiveness of Philippine-flagged ships in foreign trade by enhancing international cooco-operation, facilitating global operations for domestic ships, and increasing operational flexibility.
Enhance systems and infrastructure	Digitalise integrated ship registry systems and processes.
	Adopt national guidelines on compliance, monitoring, and enforcement.
Strengthen research and development	Digitalise ship registry systems to align with international maritime conventions and improve efficiency.
	Promotion of associated maritime services.
	Enhance operational flexibility for Philippine-registered ships to transition seamlessly between domestic and international operations.
Programme 3: Modernisation, Expansion and Promotion of the SBSR Industry
Key Objectives
Strengthen policy and regulatory frameworks, including incentives and financing mechanisms, to support the modernisation, expansion, and promotion of the SBSR industry. Modernise, improve, and expand SBSR infrastructure. Upskill and reskill the shipyard workforce to adapt to challenges brought by modern and green technologies in SBSR. Increase investments in the SBSR industry. Promote technical co-operation for the development of the iron and steel industry and other ancillary industries that support the SBSR industry. Initiate the Eco-Industrial Maritime Park, integrating sustainability into the industry's infrastructure. Launch the Green Shipyard Programme, encouraging environmentally friendly and sustainable practices in SBSR. Strengthen research and development focused on: Ship recycling in the Philippines. Development and implementation of modern transport system technology. Advancing the iron and steel industry and other ancillary industries. Designing modern, low-carbon, and green ships for domestic voyages.
Mid-Term Assessment (Available Policies & Regulations)
The Domestic Shipping Development Act of 2004 (RA 9295) has been the key legal framework for the SBSR industry, with a new Shipbuilding Development Bill set for release in 2025. The 2021 SBSR Capability and Capacity Assessment Report provides insights into industry challenges, particularly in resource acquisition and shipyard upgrades. Meanwhile, the CREATE Act (2020) introduces tax reforms and incentives to attract investment and support business recovery, benefiting SBSR and other sectors impacted by the COVID-19 pandemic.
Challenges
Outdated facilities: Around 66% of shipyard facilities nationwide require upgrades or rehabilitation, with modern equipment mainly available in Class A shipyards or those with foreign partners. Emigration of skilled workers: The sector faces a shortage of skilled workers due to emigration, as workers seek better opportunities abroad. Scarcity of materials and equipment: There is a lack of essential machinery, equipment, and materials such as marine-grade steel in the local market, hindering the industry’s growth. Non-attractiveness of locally built ships: Despite the importation of new ships, 98% of those are recreational boats, indicating a preference for foreign-built vessels. Environmental concerns: Environmental issues like GHG emissions, and waste discharge challenge the industry’s sustainability, though MARINA has launched measures to address these. Lack of contingency plans: The COVID-19 pandemic highlighted the need for contingency plans to sustain operations during national crises, as temporary closures affected the sector’s financial performance.
Planned Initiatives for the Next Five Years
Upgrading and Enhancement of the capacity of Shipyards	Legislative issuance for the comprehensive development of the SBSR industry.
	Increase investment in the SBSR industry by developing investment programmes.
	Improve SBSR infrastructure and systems by conducting feasibility studies for localising shipbuilding materials.
	Upskill and reskill the shipyard workforce through skill mapping projects.
Promotion of Research and Development	Develop and operationalise the ship recycling industry in the Philippines.
	Develop and implement modern transport system technologies.
	Establish and operationalise a national steel industry and other ancillary industries to support the SBSR sector.
	Promote and develop green shipyards.
Establishment of an Eco-Industrial Maritime Park	Conduct a feasibility study and develop a maritime park.
Development of Financing and Incentives Programme	Develop of attractive Financing programmes for the SBSR industry.
Programme 4: Promotion of Highly Skilled and Competitive Maritime Workforce
Key objective
Developing a qualified maritime workforce.
Mid-Term Assessment (Available Policies & Regulations)
Adoption and implementation of policies, rules, and regulations on safety and security: MARINA has issued Maritime Circulars covering tonnage measurement, stability, safety systems, drug prevention, vessel inspection, chemical handling, cadet training, and seafarer rest hours. The 1997 Philippine Merchant Marine Rules and Regulations (PMMRR) are being revised to establish vessel-type-specific safety standards. Effective compliance, monitoring, and enforcement system for safety, security, and operational standards for Philippine-registered ships: eight of the thirteen international conventions on maritime safety ratified by the Philippines have been transposed into national laws/policies. Fishing vessel safety: the Philippines is working toward ratifying the 2012 Cape Town Agreement (CTA) and the STCW-F Convention (2012). Digitalisation of maritime safety and transport security processes: MARINA is advancing the digitalisation of maritime safety and security by developing integrated databases for fishing vessels and crews to combat illegal, unreported, and unregulated fishing (IUUF). Education and training on maritime safety and security for government surveyors and auditors: ongoing training for government personnel to enhance safety and security standards in maritime operations.
Challenges
Educational and training gaps: There is an overemphasis on seafaring programmes, while other maritime professions like naval architecture and marine science receive less attention. This limits workforce diversification. Moreover, the lack of onboard training opportunities for cadets hinders graduation rates, affecting the supply of qualified maritime professionals. Compliance and international standards: The Philippines must continue improving its compliance with the STCW Convention and other international maritime standards. While it maintains its position on the IMO Whitelist, limited onboard training opportunities and the need for continuous regulatory upgrades remain challenges for sustaining global recognition. Workforce development and gender issues: Despite many Filipinos holding certifications for higher shipboard positions, there is reluctance to assume leadership roles. Gender disparities also persist, with low female participation in maritime professions. More efforts are needed to address gender imbalances from the educational level onwards. Technological and systemic advancements: Technological advancements like automation and AI are transforming the maritime industry but require a skilled workforce capable of adapting to new tools. Additionally, the lack of integrated systems for tracking seafarers' credentials and deployments creates inefficiencies and opportunities for fraud. This highlights the need for a co-ordinated effort to modernise the sector.
Planned Initiatives for the Next Five Years
Broadening Maritime Career Entry and Sustained Competence Upgrading	Develop ladderised Maritime Education and Training (MET).
	Establish new professional education and training standards.
	Develop of specialised maritime expertise.
	Adopt maritime career advocacy programme.
Enhance systems and infrastructures	Develop an integrated Filipino seafarer’s information system.
	Fully digitalise theoretical education/training, documentation, licensing, and certification of seafarers.
	Strengthen maritime education, training, and research centres.
Promotion of fair treatment, welfare, and well-being	Promote fair treatment, welfare, and well-being, including equality and empowerment of women in the maritime industry.
Strengthening of research and development	Conduct studies to support the development of a future-ready maritime workforce, addressing emerging technologies affecting the maritime industry.

Overriding Programmes (3)

 

Programme 1: Enhancement of Maritime Transport Safety and Security
Key objective
Ensure the safety and security of all ships operating within Philippine maritime jurisdiction.
Mid-Term Assessment (Available Policies & Regulations)
There is a need for a broader focus on developing maritime human capital in the Philippines, extending beyond seafaring. While Filipino seafarers are globally recognised, other crucial roles—such as shore-based workers, naval architects, shipyard professionals, port workers, and maritime educators—must also be prioritised to meet the diverse needs of the maritime sector.
Challenges
Awareness and education: Limited information campaigns on safety and security standards. Implementation issues: Inconsistent application of CME systems and procedures. Fleet modernisation: Slow progress in modernising merchant and fishing fleets. Investment priorities: Low prioritisation of maritime safety, security, and infrastructure investment. Data management: Incomplete and outdated vessel lifecycle databases. Resource constraints: Insufficient administrative, financial, and human resources. Regulatory streamlining: Need to codify and simplify existing regulations to eliminate redundancies. Overlapping mandates: Redundancies and inefficiencies due to overlapping functions among maritime agencies. MARINA’s role: Extensive regulatory oversight across vessel registration, safety certification, compliance monitoring, and facility accreditation.
Planned Initiatives for the Next Five Years
Implement a Maritime Safety and Security Policy Framework	Codify maritime safety and security rules and regulations.
	Streamline maritime safety and security rules and regulations.
	Establish a national protocol for emergency measures to protect commercial shipping and Filipino seafarers in Philippine waters.
	Institutionalise the national ships and ports security code.
Enhance systems and infrastructures	Reconstitute the National Maritime Safety Coordinating Council (NMSSC).
	Ratify and/or fully implement all relevant international maritime safety and security conventions, including those affecting fishing vessel safety standards.
Upgrade System and Infrastructure	Enhance emergency response capabilities.
	Modernise communication systems and aids to navigation.
	Update hydrographic services for navigational sea lanes.
	Categorise navigational areas and develop a maritime safety and security portal.
Promote Maritime Safety and Security Culture and Awareness	Integrate maritime safety and security modules into maritime school curricula (k-12).
	Strengthen Information, Education, and Communication (IEC) campaigns.
Strengthen Research and Development	Develop e-learning programmes for maritime safety and security training.
	Create an integrated database system for Philippine merchant and fishing fleets.
	Digitalise compliance monitoring and enforcement processes.
Programme 2: Promotion of Environmentally Sustainable Maritime Industry
Key Objective
Build a sustainable maritime industry and liveable communities, while also creating green jobs.
Mid-Term Assessment (Available Policies & Regulations)
International conventions and frameworks: the Philippines is committed to international agreements like MARPOL, the Ballast Water Management Convention, UNCLOS, and the Paris Agreement, guiding efforts on marine conservation and emissions reduction. National policies and climate action: the country adopts policies like the Philippine Biodiversity Strategy (PBSAP) and National Climate Change Action Plan (NCCAP), promoting green maritime practices. MARINA regulations: MARINA enforces regulations on ballast water, anti-fouling systems, sulphur emissions, and waste management. Maritime infrastructure and research: efforts include improving port facilities, researching biofouling, and collaborating on ballast water treatment. Single-use plastic bans are in place at ports. Oil spill prevention and coastal cleanup: MARINA enforces oil spill regulations, and the Philippine Coast Guard leads coastal cleanups to protect marine environments.
Challenges
Slow legislative process: Delays in translating international conventions into national laws. Lack of strategy: No comprehensive roadmap for marine environmental protection in shipping. Inefficiency in agency roles: Overlapping responsibilities of agencies create gaps in enforcement. Insufficient infrastructure: Inadequate port reception facilities for waste disposal. Capacity-building needs: A lack of training for maritime workers on environmental compliance. Monitoring and enforcement gaps: No systems to track and enforce environmental regulations. Missing Strategic plans: Absence of plans to address issues (e.g.,GHG emissions, air pollution, decarbonisation, and green ports.
Planned Initiatives for the Next Five Years
Implementation of a Marine Environment Protection Policy Framework		Ratification of Hong Kong Convention.
Enhancement of Systems and Infrastructure		Establish a dedicated office for programme implementation, monitoring, and evaluation.
		Create a digitised information system for data collection and awareness.
Promotion, Development, and Implementation of a Green Maritime Strategy		Develop a National Strategic Plan for Marine Environment Protection.
		Institutionalise a National MEPS Forum.
Strengthen Research and Development		Develop technological solutions to prevent marine pollution from ships.
		Develop solutions for managing biofouling and decarbonization.
		Create technologies to reduce GHG emissions and underwater noise from ships.
Programme 3: Implementation of a Sustainable Maritime Innovation, Transformation, Digitalisation and Knowledge Centre
Key Objective
Enhance the competitiveness of the Philippine maritime industry by improving service efficiency, performance, and productivity through modern technologies and best practices.
Mid-Term Assessment (Available Policies & Regulations)
Efforts have included the development of the Seafarers Verification System in 2014, which allows for online verification of seafarer certificates. In 2019, MARINA implemented the MARINA Integrated Seafarers Management Online (MISMO) System, enabling seafarers to access and print their certificates online. Additionally, MARINA is working on a blockchain-enabled certification system to streamline regulatory processes and improve compliance monitoring. Despite these advancements, a recent ICT mapping revealed that MARINA's infrastructure lacks the capacity to support further digitalisation initiatives.
Challenges
Data exchange and access: Emerging maritime technologies like green technology, electric ships, and blockchain struggle with data exchange and connectivity issues across sectors. Limited digital infrastructure: Despite progress in digital platforms, MARINA faces challenges due to limited infrastructure and insufficient funding for digital tools. Lack of digital literacy: Success in digitalisation requires users to have skills in data privacy, analysis, and communication. A lack of digital literacy remains a significant barrier. Unstable internet connectivity: Slow internet speeds, particularly in remote areas, affect maritime operations. Semi-structured data: Many maritime systems still use outdated semi-structured data, limiting effective decision-making. Data integration and standardisation are essential for operational efficiency. Unstructured disaster recovery: The pandemic exposed weaknesses in disaster recovery plans. Remote operations were challenging without proper infrastructure, and data security vulnerabilities increase. Outdated communication infrastructure: MARINA and other agencies face challenges with outdated communication systems, which hinder effective governance and service delivery.
Planned Initiatives for the Next Five Years
Sustain Digital Technology Transformation and Innovation	System design, development, and implementation.
	Develop MARINA Application Programming Interface (API) integration for data sharing.
	Promote ICT awareness and competency development.
Enhance Systems and Infrastructure	Develop an Information Systems (IS) disaster recovery plan and facility.
	Digitalise information and education campaign (IEC) materials.
	Strengthen Research and Development.

Enabling Programme (1)

 

Adoption and Implementation of an Effective and Efficient Maritime Administration Governance System
Key Objective
Establish a well-coordinated, efficient, and effective institutional framework that strengthens MARINA’s capacity to implement the Updated Maritime Industry Development Plan (MIDP) 2028 through stronger inter-agency co-ordination, policy cohesion across government, and good governance.
Mid-Term Assessment (Available Policies & Regulations)
The mechanism for institutional co-ordination that was established when the MIDP was launched in late 2019, was disrupted by the COVID19 pandemic. As a result, the plan underwent a review to align with emerging challenges. Nonetheless, some programmes were implemented: Automation of seafarer-related document processing was accelerated, allowing online applications, payments, and issuance of QR-coded Certificates of Proficiency (COPs) and Certificates of Competency (COCs). Inter-agency co-operation was strengthened through eight formal partnerships (2019–2022) via Memorandum of Agreements (MOAs) and Memorandum of Understanding (MOUs). Virtual platforms were adopted for capacity building, stakeholder consultations, and public information campaigns. Government training facilities were expanded, including the launch of the MARINA Training Institute (MarTI) in Bacolod City.
Challenges
Limited Organizational Structure MARINA’s structure is lacking a presence in key regions like Cagayan Valley, Central Luzon, National Capital Region, and Mimaropa. The agency is seeking approval to retain 50% of its revenue from fines, penalties and fees to fund development initiatives. Weak institutional capacity by limited staff and budget. Complex co-ordination as independent operations of maritime-related agencies make policy cohesion and programme implementation challenging. Limited data for target setting the sector’s complexity—spanning transport, agriculture, manufacturing, tourism, and education—complicates data collection, hindering informed decision-making. Lengthy legislative processes delay the adoption of international maritime treaties, affecting compliance with global standards. Need to strengthen Narratives to highlight the importance of the Maritime Sector in the over-all national economic Agenda.
Planned Initiatives for the Next Five Years
MARINA will expand its offices and create new job openings to enhance institutional capacity, supported by a Human Resources Competency Framework and a core curriculum to equip personnel with essential skills. MARINA will strengthen co-ordination with foreign maritime agencies to promote the Philippine flag registry and ensure the recognition of Philippine-issued certificates. It will also establish stronger partnerships with local maritime industry groups through consultations and enhance the country's presence in international fora. To promote good governance, MARINA will pursue ISO 9001:2015 certification for all offices, attain high-level accreditation under the Performance Governance System (PGS), and gain recognition from the Civil Service Commission (CSC). Efforts will also focus on improving customer service and streamlining maritime regulations. MARINA will implement a strategic communication plan to raise awareness of the MIDP 2028 through media campaigns, conferences, and stakeholder engagement. A dedicated Risk Management Policy will be developed to anticipate and address potential challenges.

6.2.2. State financial instruments for shipbuilding

By the Development Bank of the Philippines (DBP)

In developing some of the core programmes of the MIDP, the Development Bank of the Philippines (DBP), has provided some financial instruments. For instance, under Core Programme 1 of the MIDP for the Modernisation and Expansion of Domestic Shipping, the CRUISE (Connecting Rural Urban Intermodal Systems Efficiency) package, offered by the DBP, provides financing support for the maritime sector through credit assistance and loan packages covering up to 70% of the validated total project cost. Eligible projects that are overseen by MARINA, need to be previously approved and these could include:

• Maritime transport initiatives.

• Construction or acquisition of brand-new and modernised vessels, including bulk carriers, Ro-Ro vessels, tugboats, container ships, fishing vessels, cargo ships, passenger ships, tankers, and reefers.

• Retrofitting of vessels to comply with MARINA Circulars.

• Construction, upgrading, or expansion of shipyards, Roll-On/Roll-Off Transport Terminals (RRTS), seaports, and offshore facilities such as piers, ramps, dolphins, and floating docks.

• Acquisition of maritime-related machinery, equipment, and transport vehicles, including cargo handling equipment, gantry cranes, and forklifts.

As of December 2024, a total of 37 projects had been financed under this programme, approximating to PHP 12.21 billion approved amounts. On a similar vein, the DBP has created a PHP 50 billion loan fund for the development of the MIDP, to be implemented in co-ordination with MARINA. This initiative offers loans with interest rates as low as 5.5% and repayment terms extending up to 15 years.

By the Landbank of the Philippines

Additionally, state-owned banks such as the Landbank of the Philippines (LBP) offer loans that provide up to 80% credit assistance to existing or prospective commercial fishing operators for acquiring new, second-hand, or refurbished fishing vessels of 3.1 GT and above, along with related marine equipment, with interest rates of 5% per annum for the first three years and repayment terms that extend up to the vessel’s remaining economic life.

Another example is the Ferry Boat Inclusive Programme, also implemented by LBP, which aims to develop modern and safer ferry boats. Under this initiative, LBP reached an agreement for a PHP 135 million loan with the Caticlan Boracay Transport Multi-Purpose Cooperative (CBT MPC), the principal ferry boat operator on the Caticlan-Boracay route, to replace existing wooden boats with fiberglass vessels.

6.3. The SBSR Development Bill of 2025  

Key findings

• The proposed SBSR Development Bill marks a major legislative effort to revitalise the domestic shipbuilding and ship repair sector. Complementing the MIDP, the Bill aims to strengthen the industry by aligning ship construction with national registry standards, fostering a competitive investment climate, and offering capital incentives. It also targets fleet modernisation and places particular emphasis on environmental sustainability through the promotion of green shipyards and decarbonisation initiatives.

• The Bill promotes workforce development and innovation as central pillars of industry transformation. It prioritises targeted reskilling and upskilling programmes to address existing skills gaps and improve the employability of the maritime workforce. Innovation is supported through R&D measures, including the establishment of a dedicated SBSR Technology Research and Development Centre focused on green technologies. Environmental measures are closely integrated, aiming to reduce emissions and align shipyard practices with global standards, while regulatory streamlining and financial incentives are designed to attract investment and modernise infrastructure.

• Ship recycling is incorporated, underscoring its role in sustainable industrial development. By including ship recycling within its scope, the legislation recognises the importance of end-of-life vessel management and promotes environmentally sound practices that align with circular economy principles.

The Philippine government is drafting a New SBSR Development Bill, a legal instrument directly targeted at the SBSR sector. This legal instrument will shape the future policy approach for the industry.

Through the New SBSR Development Bill, the role of the SBSR industry is formally recognised as a vital component of the maritime sector and a driver national economic growth. This legislation establishes the state’s policy to develop and enhance the quality and capacity of domestic shipbuilding, with a particular focus on expanding and modernising the domestic fleet. The New Development Bill outline five key objectives:

1. Building ships that adhere to safety standards established by the Philippine Ship Registry.

2. Creating a competitive business climate to attract investment and boost capital.

3. Providing capital incentives for long-term, sustainable growth.

4. Enhancing labour skills to facilitate adaptation to new technologies and emerging trends.

5. Promoting the industry’s green transition.

The ship recycling industry is also included within the scope of the New Development Bill.

6.3.1. Legal framework and key initiative

To implement the five key objectives outlined above, the New SBSR Development Bill proposes to include a series of measures designed to be legally binding upon its adoption by the Philippine legislature.  With a view to synthesising these measures, they will be categorised into distinct groups based on their nature:

6.3.2. Financial support measures

These incentives apply to MARINA-registered SBSR entities, defined as commercial partnership or corporations authorised by MARINA to engage in SBSR activities. These entities must be mostly Filipino-owned or operate under Philippine law. The primary incentives consist of tax exemptions, including:

• VAT exemption:  Exemption from Value-Added Tax (VAT) on certain purchases or imported goods, such as raw materials, machinery, and spare parts, used for SBSR activities. This exemption applies upon approval by MARINA and under specific conditions, including that the goods are not manufactured domestically in sufficient quantity or comparable quality, and their import is deemed necessary.

• Income tax holiday: An income Tax Holiday for entities involved in expanding or modernising shipyards facilities or operations, provided there is a direct increase in personnel and investments.

• Tax credit: A 100% Tax Credit on tariffs and custom duties that would have been waived on imported goods but are instead purchased domestically.

Additionally, financial institutions are encouraged to develop financing programmes that support MARINA-registered entities, including financing assistance, training, and consultancy services.

Box ‎6.1. Redirecting tax resources to a Shipyard Development Fund (SDF)

Resources initially allocated for the payment of a Percentage Tax (Section 91 of the Philippines National Internal Revenue Code) will be redirected to a Shipyard Development Fund (SDF). The SDF will be used to modernise or improve SBSR facilities, subject to approval by MARINA.

The New Development Bill also includes tax exemptions aimed at promoting the decarbonisation of the SBSR industry:

• Tax and duty exemptions: Exemption from taxes and duties on imported used exclusively for promoting green jobs, green ships, and green shipyards, provided they are not produced locally in sufficient quantity, quality or at a reasonable price.

• Special tax deductions: A special deduction from taxable income of 50% of the total costs for skills training and R&D expenses related to green technologies, in line with Article 5, literal a, b of the Philippine Green Jobs Act of 2016.

Incentives for green shipyards will be promoted to meet environmental targets in accordance with national and international regulations, including the Energy Efficiency & Conservation Act and the Green Jobs Act.

Additionally, the New Development Bill provides incentives for R&D and Innovation. The Department of Science and Technology (DOST) has available a Grants-In-Aid Programme (GIA)2, aimed at funding initiatives aligned with the country’s priorities for sustainable economic growth. The New Development Bill indicates that new ship prototypes utilising alternative sources of energy and other emerging technologies related to maritime activities, developed through GIA, may operate for one year for performance tasting. Furthermore, ship operators and shipbuilders adopting locally produced technologies through licensing agreements will be granted a five-year Research Tax Deduction.

Measures to co-ordinate efforts for streamlined operations

The New Development Bill aims standardises the issuance of permits, licences and approvals between the central government and Local Government Units (LGU), eliminating the need for additional conditions at the decentralised level. It also detailly assigns roles and responsibilities to relevant government agencies and bodies to ensure a comprehensive and co-ordinated approach to the SBSR industry. Notably, this includes a detailed outline of the roles of key institutions such as the Maritime Industry Authority (MARINA) under the Department of Transportation, the Board of Investments (BOI) and the Bureau of Philippines Standards (BPS) under the Department of Trade and Industry, the Bureau of Internal Revenue (BIR) under the Department of Finance, the  Philippine Council for Industry, Energy and Emerging Technology Research and Development (PCIEERD) under the Department of Science and Technology (DOST), the Department of Labor and Employment (DOLE), and the Technical Education and Skills Development Authority (TESDA).

It is important to highlight that MARINA plays a central role in the regulation and implementation of the New Development Bill. Other governmental bodies, with expertise in areas such as investment, taxation, labour safety, research, and training, will carry out their designated tasks in close co-ordination with MARINA. MARINA is given a leadership role in the implementation of the New Development Bill, along with supervisory and inspection authority. Its core responsibilities include:

• Developing guidelines, regulations, and rules of procedure for the implementation of the New Development Bill.

• Promulgating safety standards for the SBSR industry and conducting audits to ensure compliance, including during the construction, modification, or conversion of vessels.

• Recommending actions such as upgrading or closure of SBSR facilities.

Measures to promote R&D and innovation

The New Development Bill places special emphasis on developing new ship prototypes that use alternative sources of energy and other emerging technologies. Beyond the financial incentives mentioned earlier, R&D initiatives led by the Department of Science and Technology (DOST) will be exempt from the regulatory guidelines related to the ship registration and classification, provided that their plans are duly reviewed and approved by MARINA.

Box ‎6.2. Establishment of a SBSR Technology Research and Development Centre (STRDC)

The STRDC, under the leadership and purview of MARINA and with research capabilities provided by the Department of Science and Technology (DOST), aims to accelerate technological innovation within the SBSR industry. By bridging regulatory requirements with R&D capabilities, the STRDC seeks to enhance the industry's competitiveness by developing solutions to address specific challenges and increasing global market positioning.

With MARINA’s regulatory authority and DOST’s research output, the STRDC is envisioned as a collaborative hub where regulatory expertise and scientific innovation intersect. This synergy ensures that advancements in technology translate into industry standards, fostering a more cohesive regulatory environment.

Workforce development measures

The New Development Bill emphasises strengthening the domestic workforce within the SBSR sector. While foreign nationals in supervisory, technical, and advisory roles can be employed for an initial period of five years—extendable at MARINA’s discretion—MARINA-registered entities are mandated to train Filipino workers in administrative, supervisory, and technical skills.

MARINA, with support from the Technical Education and Skills Development Authority (TESDA) and the Commission on Higher Education (CHED), is tasked with developing comprehensive training programmes. These initiatives include creating competency standards, training regulations, assessment tools, and competency-based curricula for the SBSgrR industry.

In collaboration with the Society of Naval Architects and Marine Engineers (SONAME), MARINA will also enhance educational pathways in naval architecture by facilitating the development of master's and doctorate programmes offered by state universities.

Box ‎6.3. Targeted Measures to Boost Investment and Industry Growth

The New SBSR Development Bill introduces innovative measures to attract investment and provide greater certainty for stakeholders, fostering growth in the SBSR sector through the following key provisions:

1. Extended Lease Periods for SBR Lands

To facilitate development of SBSR activities, the New SBSR Development Bill offers extended lease periods for essential lands. It proposes the adoption of a Foreshore Lease Agreement (FLA), executed between the Department of Environment and Natural Resources (DENR) and a firm, allowing for land occupation, development, and management for a period of 50 years, renewable for an equal term, maximum.

2. Integrated Iron and Steel Industry to Support the SBSR Sector

The Board of Investments (BOI), in co-ordination with MARINA, will establish a rationalised programme to ensure state-owned steel enterprises meet SBSR sector demands. This includes setting up an integrated, globally competitive, and cost-efficient iron and steel plant, complemented by quality and industry standards for iron and steel products.

3. Establishment of a Marine Spare Parts Depot

MARINA will oversee the creation of a marine spare parts depot to reduce operational costs and minimise downtime in SBSR operations. This initiative ensures the availability of essential spare parts and machinery, enhancing operational efficiency and mitigating delays caused by supply chain disruptions.

4. Creation of Maritime Industrial Parks (MIPs)

Designated areas will be transformed into hubs for SBSR activities, offering access to skilled labour and efficient services. These MIPs aim to position the Philippines as a premier location for SBSR operations. They also promote Filipino seafarer reintegration, encourage foreign and local investments, and foster industry collaboration. Select areas within MIPs may be designated as independent customs regions, with initiatives driven by private, local, or national efforts.

5. Progressive Assessment of SBSR Capacity

Every three years, MARINA will conduct an assessment of the capacity levels of domestic shipbuilders and registered shipyards. If the capacity for ships below 1 000 CGT is found to meet domestic market demand, the importation of such ships—whether new or used—will be discouraged to prioritise and support local production.

References

[3] Congress of the Philippines (2020), Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), https://firb.gov.ph/download/create-act-ra-11534/?wpdmdl=657.

[4] Fiscal Incentives Review Board (n.d.), What incentives are available?, https://firb.gov.ph/incentives-available/ (accessed on 12 March 2025).

[1] Maritime Mutual (2025), THE PHILIPPINE ‘MAGNA CARTA OF SEAFARERS’:A BEACON OF PROMISE FOR MARINERS AND SHIPOWNERS., https://maritime-mutual.com/risk-bulletins/the-philippine-magna-carta-of-seafarersa-beacon-of-promise-for-mariners-and-shipowners/.

[6] Philippine News Agency (2025), New Strategic Investment Priority Plan out H1 2025, https://www.pna.gov.ph/articles/1242458 (accessed on 15 June 2025).

[5] President of the Philippines (2023), EXECUTIVE ORDER 18. CONSTITUTING GREEN LANES FOR STRATEGIC INVESTMENTS, https://lawphil.net/executive/execord/eo2023/eo_18_2023.html (accessed on 15 June 2025).

[2] Senate of the Philippines (2023), International Maritime Trade Competitiveness Act, https://legacy.senate.gov.ph/lis/bill_res.aspx?congress=19&q=SBN-2147&utm (accessed on 15 June 2025).