The purpose of this policy note is topresent reform options on cabotage liberalization. The goalof cabotage liberalization is to help i) foster morecompetition in the domestic shipping industry, ii) reduceshipping cost, and iii) improve efficiency, maritimeservices, and safety standards. These, together withcomplementary reforms in domestic shipping and ports, canhelp enhance consumer and producer welfare through lowerconsumer prices, higher household real income, timelydelivery of goods, and ultimately, job creation and povertyreduction through greater market access. This policy note oncabotage is organized as follows. Part one provides anoverview of the domestic shipping industry and discusses thekey issues that it faces. Part two discusses the underlyingreasons for the industry’s inefficiency. Part threediscusses the concept of cabotage, the cost and benefit ofcabotage liberalization, and the cabotage regimes of thePhilippines and of selected countries. Part four closes witha discussion of reform options.
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