The arrival of foreign shipbuilders in the Philippines propelled the export growth of Philippine-made ships in the international market.
After being recognized as the fourth largest shipbuilder in the world, shipyeards established in the Philippines are now building more ships of larger tonnage capacities like bulk carriers, container ships and passenger ferries. The construction of 180,000-DWT commercial ship by Hanjin Heavy Industries Corporation, a South Korean shipbuilding giant, shows that the Philippines can really build world-class ocean-going vessels.Market Opportunity
- Shipbuilding has a big opportunity in the export market
- Shipyards in major shipbuilding countries are often fully booked for new orders.
- Existing shipbuilders expand their operations in neighboring countries in response to the increasing number of vessels being ordered by foreing shippers.
- Shipbuilding is now shifting to Asia. The Philippines, which specializes in production, will likely exceed market shares of the traditional shipbuilding nations.
- Ships built in the Philippines are partnered together with their durability and quality.
- The country has adequate supply of skilled manpower for shipbuilding and ship repair.
- Aware of the increasing number of workers required to be employed in the shipyards, the government laid out a Manpower Development Plan for the sector in coordination with the Technical Skills Development Authority (TESDA). To date, TESDA has about 95,000 certified welders in its registry.
- Filipino workers are trainable for the skills that would fit shipbuilders' requirements; hence, they can be sourced within the city or municipality where shipyards could be located.
- Existing shipbuilders find it worth to invest in additional technical training to their prospective and existing employees to improve their level of competencies. Hanjin's productivity in its shipyard in Subic now with more than 19,750 workers, for example, is fast catching up with Hanjin's shipyard in South Korea.
- Being the 2nd largest archipelago in the world, making it suitable to build a shipbuilding base, Philippines' geographic structure and location became one of the primary factors for it to be the shipbuilding and ship repair hub in Asia.
- Establishment of a shipyard in the Maritime Industrial Park within the Phividec Industrial Estate in Misamis Oriental is open.
- The 54,000-hectare business hub in Port Irene at the Cagayan Economic Zone Authority (CEZA) is being primed to be the country's next world-class shipyard.
- Also there are, owners, including the government, of existing shipyards that are strategically located in the country who are determined to enter into shipbuilding arrangements with foreign investors.
- Most companies get their required components and raw materials from foreign sources, i.e., US, Europe, or Asia.
- Importation of major raw materials has been liberalized since 1989 that allows companies to get good quality inputs at favorable prices considering that raw material costs and their availability affect the competitiveness of the shipbuilding industry.
- In addition, shipbuilders located in economic zones enjoy tax and duty exemptions.
- The increase in shipyard operations is establishing a trend in employment that is unfavorable to the sector.
- Table below shows the profile of manpower employed by the shipyard operations as of 2010. The biggest bulk of workers comprise the skilled and semi-skilled workers with a total number of 27,688 or 70% of total manpower.
- About 63,000 welders are listed in the Registry of Certified Welders by TESDA
- More than 50,000 graduates of engineering and architecture courses in 2009 employable in the industry.
|Category||2010||per cent||Skill Set||Salary range|
|Technical Personnel||5,096||13||Architects and Engineers, Electricians||25,000-35,000|
|Skilled Workers/Semi-skilled Workers||27,688||70||Welders, Crane Operators, Steel Cutters, Outfiller Painters, etc.||15,000-25,000|
|Source: Marina & BOI|
- Republic Act No. 9295 of 2004 promotes the development of Philippine Shipbuilding Industry.
- It provides incentives to encourage investments and the development of a viable shipbuilding industry.
- Shipbuilding is not covered by limitations or foreign ownership, which means foreign investors can own their companies 100%.
a.)Exemption from value-added tax on the importation of capital equipment, machinery, spare parts, life-saving and navigational equipment, steel plates and other metal plates including marine-grade aluminum plates to be used in the construction, repair, renovation or alteration of any merchant marine vessel operated or to be operated in the domestic trade.b.) Net operating loss carry-over c.) Accelerated depreciation For Projects registered with the Board of Investments a.) Income tax holiday - six (6) years for projects with pioneer status and four (4) years for non-pioneer status. Any of the following may qualify for pioneer status:
- Ship yard operation with a minimum berthing capacity of 7,500 DWT; or
- Project cost of at least the PHP equivalent of USD 10 million.
- Salary Range (Average monthly salary, Php)
- Managerial Position - 35,000-50,000
- Engineers/Architects - 20,000-30,000
- Welders/Electricians/Steel Cutters/Outfitters/Painters - 15,000-25,000
- Administrative Personnel - 10,000-15,000
- Industrial Land Lease Rate/Year
- US$ 50-55 per square meters
- Two notable Filipino-owned shipbuilding companies are Herma Shipyard, Inc., which has recently gone into double hull petroleum tanker shipbuilding, and Colorado Shipyard Corporation, which can build medium to large cargo ships.
- The Tsuneishi Cebu shipyard, operated by Japan's Tsuneishi Holdings Corp., in partnership with Cebu's Aboitiz Group had produced about 77 ships by the end of 2007.
- Starting in 1997 with the 23,407-DWT M/V sea Amelita, a log/bulk carrier named after then-First Lady Amelita Ramos, the company proceeded to make history in the local shipbuilding industry.
- Hanjin, which started building its USD 1.7 Billion shipyard on a 200-hectare in Subic in early 2006, has increased the momentum of big ship production recently.
- Launched in the first container ship to be built in the Philippines in July of 2008
- The huge capacity of Hanjin's dry dock in Subic, where four vessels can be built at a time, resulted in faster production
- It is interested in pursuing a US$2 billion expansion project in Phividec Industrial Estate in Misamis Oriental, which is bigger than Subic because it is going to occupy 450 hectares.
- Keppel started operating its shipyard in the Philippines in early 1994 with a capacity of 28 vessels per year. It expanded its operation by fabricating tugboats and oil rig hull.
- It now operates two (2) shipyards, namely Subic (350,000 DWT) and Batangas (50,000 DWT).
- It offers a complete solution in offshore rig constructions, shipbuilding, ship repair and conversion with a full range of drydocks in its three shipyards strategically located in the PH.
|Name of Project||Hanjin||Keppel||Tsuneishi||Herma|
|Capacity||18 Vessels/year 2,489,700 DWT||8 Vessels and 16 tugboats/year (up to 480,000 DWT per facility)||Can build up to 250,000 DWT vessel||6 vessels/year|
|Project cost||Php 79.6 billion||Php 1.5 billion||Php 12 billion||Php 215 million|
|Employment||19,750 employees||1,520 employees||8,800||290|