Philippine President Benigno Aquino on Tuesday signed off on legislation to open up the shipping sector and encourage more competition in the cloistered industry.
A new statute will provide greater access for international firms to the Philippines' shipping routes, replacing a 79-year-old law put in place to protect local firms.
"The old law was apparently meant to encourage the development of the domestic shipping industry, to encourage them to compete. The problem was our fleet hardly grew," Aquino said at a signing ceremony.
"This led to an absurd situation where the entire market was controlled by a few."
Despite the shipping sector's vast potential in the archipelago nation, the industry accounted for a measly 0.23 percent of the Philippines' gross domestic product in 2013, according to a government study.
During the ceremony, Aquino claimed that the lack of competition had made shipping cargo across the Philippines with domestic companies more expensive than exporting goods with foreign carriers to nearby countries.
In accordance with the new law, foreign-flagged vessels will be allowed to ship imported goods and transport Philippine-made exports within the country.
Aquino also signed the Philippines' first anti-trust act, which aims to prevent businesses from stifling competition and bans companies from pricing goods below cost.
Individuals or companies found violating the new law can be fined 100 million pesos ($2.2 million) and sentenced up to seven years in prison.
The passage of the legislation comes a week before Aquino is set to deliver his final state of the union address, where he is expected to tout the raft of reform measures enacted by his administration during his five years in office.