Abstract

Between 2000 and 2005, infrastructure contributed less than 1 percentage point to the Central African Republic's annual per capita GDP growth, despite substantial spending in the road sector. Raising the country's infrastructure endowment to that of the region's middle-income countries could boost annual growth by about 3.5 percentage points. The CAR has made significant progress in the transport, water, power, and information and communications technology (ICT) sectors. But the high cost of fuel, which raises transportation and energy costs, has been a vexing issue across all infrastructure sectors. The CAR's most pressing infrastructural challenge lies in the transport sector, which relies heavily on neighboring countries and could benefit from improved road conditions and enhanced performance at the port of Douala in Cameroon. In the power sector, the country suffers from a deteriorating infrastructure stock that it can no longer afford to maintain, and an inefficient and unreliable power supply. Additional challenges include a need for improved infrastructure in the water and sanitation and ICT sectors. Addressing the CAR's infrastructure challenges will require sustained expenditure of $346 million per year over the next decade. The nation already spends around $134 million per year on infrastructure, with $37 million a year lost to inefficiencies of various kinds. If those inefficiencies were fully eliminated, the country's annual infrastructure funding gap would be $183 million per year. Improvements in funding, coupled with the prospect of an economic rebound and prudent policies, could lift the country from its fragile state back to and beyond the prosperity standards it once enjoyed. Document type: Book

Abstract

For the economy to attain its full potential, the Philippines requires an efficient water transport system. However, this is presently not the case. The domestic shipping industry is characterized by high costs, low quality of service, and a poor safety record. Logistics cost accounts for 24-53 percent of wholesale price, while shipping and port handling cost around 8 percent of wholesale price and 5 percent of retail price. Philippine domestic shipping is generally more expensive than in Malaysia or Indonesia, 2 other archipelagos. Moreover, it is more expensive to transport goods between 2 Philippine ports than between 2 Philippine ports via an international port. In the East Asia region, the Philippines trails behind its neighbors in various logistics performance and connectivity indices. For instance, in liner shipping connectivity, the Philippines ranked 66th out of 157 countries in 2013, and performs the worst among a group of East Asian comparators. Delays in shipment, slow cargo handling, and frequent accidents are the top complaints of businesses. In the East Asia Region, the Philippines has the highest absolute casualty rate and this is 40 percent higher than the second ranked country, Indonesia. On average, there are 228 ships involved in accidents and 303 casualties per year in the Philippines. In seeking to enhance competition in the delivery of domestic shipping services, this assessment has therefore focused particularly on measures that would increase the opportunities and incentives for new players to enter the market, and for existing operators to expand or vary the services they offer.

Abstract

The purpose of this policy note is to present reform options on cabotage liberalization. The goal of cabotage liberalization is to help i) foster more competition in the domestic shipping industry, ii) reduce shipping cost, and iii) improve efficiency, maritime services, and safety standards. These, together with complementary reforms in domestic shipping and ports, can help enhance consumer and producer welfare through lower consumer prices, higher household real income, timely delivery of goods, and ultimately, job creation and poverty reduction through greater market access. This policy note on cabotage is organized as follows. Part one provides an overview of the domestic shipping industry and discusses the key issues that it faces. Part two discusses the underlying reasons for the industry’s inefficiency. Part three discusses the concept of cabotage, the cost and benefit of cabotage liberalization, and the cabotage regimes of the Philippines and of selected countries. Part four closes with a discussion of reform options.