Nationalizing the strategic port could save jobs and build a national industry

It is high time for the Philippine government to build a domestic naval industry. © Hanjin Heavy Industries and Construction Philippines

The possible Chinese purchase of a strategic shipyard in the Philippines has provoked an angry backlash in the country, reflecting simmering anxieties regarding President Rodrigo Duterte’s Beijing-friendly stance. But there is an alternative solution which would save jobs, build a key national industry and maintain security.
Unable to service $1.3 billion in debt, the Philippine subsidiary of South Korean shipbuilder Hanjin filed for bankruptcy protection in January. It sought help from the Philippine government to rescue its Subic Bay facility, once the world’s fifth largest shipbuilding yard, and save the jobs of its 3,000 workers.

The Duterte administration then announced Chinese interest in the purchase of the 300-hectare yard. Ceferino Rodolfo, managing head of the Philippines’ Board of Investments, said last month that at least two Chinese companies had expressed an interest.
Without providing details, officials implied that the facility was being offered for a bargain price, having lost close to 80% of its value in the past two years alone. The identity of the two Chinese bidders has not been disclosed, reflecting government concern over a potentially negative public response. The authorities have mentioned no other potential bidders.
The Subic complex, once home to America’s largest overseas naval base, is a highly strategic site facing the South China Sea. The U.S. Navy continues to enjoy regular access to the area with its prized deep-water port facilities, which also host visiting warships from Manila’s traditional allies, including Japan and Australia.

Unsurprisingly, the Philippine military establishment has vehemently opposed a Chinese takeover of the site, reflecting lingering concerns about Beijing’s intentions. Defense Secretary Delfin Lorenzana has instead advocated for Philippine Navy takeover of the facility than handing a strategic shipyard to the Chinese.

Since the launch of the Belt and Road Initiative in 2013, Chinese companies have become involved in the construction and operation of more than 40 ports in 34 countries. Two Chinese companies, China Ocean Shipping Company (COSCO) and the China Merchants Group, have taken over operations at a number of strategic port facilities across the world, from Piraeus in Greece to Darwin in Australia.

On paper, the acquisitions are purely for commercial purposes, with Chinese companies providing capital and logistics capacity for the sustained operation of several busy ports.

Yet, there are legitimate fears that China’s intentions transcend purely commercial purposes and are intended for different ends, namely securing a grip on strategic assets and facilities on global shipping lanes.

In particular, the Philippines defense establishment is concerned about replicating the experience of Sri Lanka, where the state-affiliated China Harbor Engineering Company has secured a 99-year-lease over the Hambantota port under a controversial debt-for-equity settlement.

During a visit to Manila in November, Chinese President Xi Jinping signed a package of agreements, including on Philippine participation in the BRI. The Hanjin port facility takeover is likely part of China’s broader efforts to secure access to key facilities in the Philippines under a Beijing-friendly presidency.

Duterte has warmly welcomed big-ticket Chinese investments, including the prospective entry of China Telecom into the heavily protected telecommunications sector. The State Grid of China already has a 40% stake in the Philippines’ national grid.
Chinese companies have also stepped up investment in sensitive locations, including the Clark special economic zone, the former site of America’s largest overseas air base, as well as in the vicinity of key military bases such as the Bautista air base, which lies close to several disputed features in the Spratly Islands.

Filipino strategists fear an “economic cabbage strategy,” similar to what has occurred in the South China Sea, where Chinese entities surround and dominate an area layer by layer with an expansion of their investment footprint.
Subic, which lies less than 100 km northwest of Manila and just over 100 nautical miles from the contested Scarborough Shoal, is an enticing prospect for China. Under a previous administration, Manila proposed American positioning of equipment as well as upgrading military facilities in the area.

At least two Chinese companies had expressed an interest in the purchase of the 300-hectare shipyard. © Hanjin Heavy Industries and Construction Philippines

Duterte, however, has blocked the move, limiting American access to visits by its warships. Now, China has a historic opportunity to take over large portions of the area and monitor other countries’ military activity in the area.
Leading legislators such as Senator Grace Poe have openly opposed any Chinese takeover of “critical and strategic national assets.” Last month, senators, led by deputy senate President Ralph Recto, cited national security considerations in blocking a $400 million deal between the China International Telecommunication Construction Corporation and Philippine security agencies for the installation of 12,000 surveillance cameras across the country.

The Philippine defense establishment has instead proposed nationalization of the shipping yard to save the jobs and develop the industry.

Recognizing public sentiment and sensitive to the demands of the military, Duterte seems to have welcomed the suggestion. Under Phase 2 of the Philippine defense modernization program, the country is allocating $5.6 billion for new acquisitions, with growing focus on naval assets and platforms.

With defense spending rising and a generally healthy economy, it is high time for the Philippine government to build a domestic naval industry. The Duterte administration has consistently touted the need for an “independent” foreign policy and build-up of domestic steel and manufacturing sectors.

Conscious of the risks of nationalizing the industry, the Philippine government is considering some private non-Chinese investment in the yard, which will not only save jobs but also contribute to the development of domestic shipping for commercial and military purposes.

Neighboring countries such as Indonesia have already produced their own warships, with the Philippines among their clients. By taking over the Hanjin shipyard, potentially through a public-private consortium, Manila would acquire greater strategic self-reliance, build new employment opportunities, and gradually scale up a nascent military-industrial complex. Above all, it would protect strategic Philippines assets and facilities from potentially hostile actors.

Source: asia.nikkei.com

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(Part 1)
MANILA, Philippines — The Philippines may not be the most populated country in Southeast Asia, but its capital, Manila, is now the most densely populated city in the world.

Manila has over 42,000 inhabitants per square kilometer with the city’s population estimated at 21.3 million, according to the Philippine Statistics Authority in an October 2018 report.

It’s no wonder that many private companies – local and foreign – are offering reclamation as a viable solution to decongest the metropolis.

But Manila is just one. There are so many other dense cities in the country and in many of these places, reclamation is also actively being pursued by various proponents.

Reclamation 101

Reclamation is the process of creating new land from oceans, riverbeds, lakebeds, or other bodies of water.

It’s also happening in many parts of the world, including dense places such as Hong Kong and Singapore.

In the Philippines, there are at least 19 reclamation projects in various stages of permitting, development and implementation, according to the Philippine Reclamation Authority (PRA).

These include the Horizon Manila Reclamation, a 419- hectare joint venture project between the local government of Manila and JBros Construction Corp.

The City of Pearl Reclamation Project, a 407-hectare project is another reclamation development, also by the local government of Manila and UAA Kinming Group Development Corp.

The Manila Waterfront City Reclamation Project is another project. It is a 318-hectare reclamation venture by the local government of Manila and its private sector partner, Waterfront Manila Premier Development Corp.

Another reclamation venture is the Tieng family’s Manila Goldcoast Development Corp. (MGDC), called the Solar City, which is a 148-hectare project. It is also joint venture with the Manila local government unit.

The Sy family’s SM Prime Holdings Inc., meanwhile, is the private sector partner of the local government of Pasay for the “SM Project” which covers 360 hectares.

Another project is Davao-based businessman Dennis Uy’s Pasay Harbor City reclamation which covers 265 hectares. It is also a joint venture with the Pasay local government.

The project is being developed by Uy’s Udenna and the China Harbor Engineering Co.

There are several other reclamation projects in the pipeline not just in the city of Manila, but in other parts of the country as well including Cavite and Cebu.

Tasked to regulate reclamation is the PRA, which was formerly the Philippine Estates Authority (PEA). It acts as the primary regulatory agency of the government to assess the technical, environmental, financial, and socio-economic merits of such projects.

Proponents of reclamation projects are the local government units (LGUs) and their private sector partners.

The PRA, in advocating for reclamation, believes that adding land area to Metro Manila will address the problem of “urban sprawl” and provide agglomerative effects that will eventually boost economic growth.

“Thousands of Filipinos have benefitted from completed reclamation projects that include the Cultural Center of the Philippines, Philippine International Convention Center, the financial center area – which includes the Philippine National Bank, Government Service Insurance System, the Senate and the Department of Foreign Affairs – the Mall of Asia complex, Cavitex, the South Road Project (SRP) in Cebu and numerous ports and causeways nationwide,” PRA general manager and CEO Janilo Rubiato said.

He said LGUs bordering Manila Bay are all in need of additional space because of rapid growth.

They cannot encroach on the areas of their neighboring LGUs.

“The natural tendency, therefore, is to explore the possibility of a seaward extension within the area of the LGU’s territorial jurisdiction,” Rubiato said.

He noted that it is the waterfront that has attracted settlements and economic activity for generations all over the world.

“Most developed countries have responsibly utilized their waterfronts for coastal development, while at the same time protecting the environment and the welfare of their people,” he said.

Target

The PRA’s target, based on its 2016 annual report, is to contribute and promote economic and social progress through environmentally sustainable land reclamation of approximately 700 hectares and effective public estates development and management by 2020.

Despite trumpeting the benefits of reclamation, however, the PRA and reclamation proponents have constantly faced stumbling blocks for the different projects.

The issues are varied as they are endless – environmental issues, livelihood and disaster risks, among others.

EO 146 vs EO 74

Because of the controversies, the administration of former president Benigno Simeon Aquino III issued EO 146, a law that tightened the noose on reclamation projects.

The order designated the National Economic and Development Authority (NEDA) Board as the final approving authority on reclamation projects.

At the time, business groups such as the Makati Business Club (MBC) and the Management Association of the Philippines (MAP) lauded the measure, saying that “it is a prudent response to public apprehension over the risks posed by proposed reclamation projects, most extensively along Manila Bay.”

The EO essentially limited the PRA’s regulatory role to evaluating and recommending to the NEDA Board the approval of all proposed reclamation projects.

The business groups said “EO 146 sends an encouraging signal that the national government is more conscious of pursuing a holistic approach to progress, one that balances the need to generate government revenue streams and employment with the protection of the environment and public safety.”

However, reclamation proponents did not like the EO, as their unsolicited proposals had to be subjected to a second round of bidding.

Some players said this was the reason many reclamation projects did not progress during the Aquino administration.

Industry sources also believe that some sectors, including other property developers, were the ones who lobbied for the passage of E0 146.

“A certain property company felt threatened by the competition that reclamation developments would bring,” one source noted.

The Duterte administration, in stark contrast to the Aquino government, issued EO 74 which effectively rescinded EO 146.

Under the EO, the authority to approve reclamation projects now rests with the Office of the President and no longer with the NEDA.

The real reason behind the EO is not clear.

Officially, the Duterte administration said it would pave the way for a more streamlined process, while at the same time ensuring better scrutiny of the projects.

Whatever the reasons are, industry players welcome EO 74. They said this would speed up the process instead of going through the NEDA which takes so much time.

“It will also remove corruption at the local government level,” a chairman of a company involved in reclamation told The STAR in an interview last Feb. 18.

Dennis Uy’s reclamation project

Meanwhile, in a society that loves gossips, sources said EO 74 may have been issued to benefit the Duterte administration’s friends, including his long time pal from Davao, businessman Dennis Uy.

Some believe that Uy may be interested in doing other reclamation projects aside from the one he is already pursuing. An expedited process would thus benefit his group.

But Uy dismissed talks that he is interested in other projects. “No,” he told The STAR when asked to comment on the rumors.

“Udenna is not looking into, or considering any land reclamation project at this point other than what’s already publicly known,” Udenna head of investor relations Leo Venezuela said.

A ranking official from his group also said that Uy is simply doing business and is not afraid to looking into different opportunities in different sectors.

The official said it was unfair to question Uy’s actions just because he is from Davao.

Whatever the reasons are for changing the regulatory environment surrounding reclamation projects, industry players hope the new EO would, indeed finally, pave the way for the different developments to proceed.

Source: philstar.com

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Many have claimed to have the solution to Metro Manila’s traffic problem, but the daily snarl continues to plague the lives of everyone who lives in the city—buses still overload passengers, and there are constant kilometric lines at the train stations, thanks to either shortage or poor maintenance, or both. But there might be a bit of hope left for us: The construction of the Metro Manila Subway is set to begin tomorrow, February 27, and with a Filipino-Japanese consortium helming the project, we might just have a train system similar to that of Japan’s by 2025.

The first three stations to be built will be along Quirino Highway, Tandang Sora, and North Avenue. The first phase of the construction also includes tunnel structures, a depot in Valenzuela, and the building and facilities for the Philippine Railway Institute. Partial operations for the three stations are planned for 2022.

The Metro Manila Subway (MMS) is envisioned as the most expansive railway system in the Philippines, spanning 36 kilometers across 15 stations running from Quirino Highway to NAIA Terminal 3 in Pasay and FTI in Taguig, the Department of Transportation said in a statement. It will also have stations at the city’s business districts in Makati, Ortigas, and Bonifacio Global City.

Hailed as the first underground railway in the Philippines, the MMS is expected to serve up to 370,000 passengers per day, with a capacity of up to 1.5 million passengers per day once it starts its full operations. It is designed to run trains at the speed of 80 kilometers per hour.

Source: spot.ph

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Employees of the Subic Bay Metropolitan Authority (SBMA) as well business locators in the Subic Bay Freeport sent in more than P70,000 worth of donations to victims of the fire that razed more than 600 houses in Orion, Bataan late last month.

SBMA Public Relations Department manager Armie Llamas said the Subic agency mounted a donation drive for the fire victims and collected some 25 boxes of assorted supplies from various SBMA departments and companies operating in the Freeport.

Photo Credit: SBMA Public Relations Department head Armie Llamas (center) and PRD Community Relations Officer Malou Dungog lead the turnover of goods donated by SBMA employees and business locators in the Subic Bay Freeport for Orion fire victims.

The donations consisted of sleeping mats, water pails, plates and drinking cups, various toiletry items, blankets, pillows, canned goods, and used clothes. These were turned over last week to Orion, Bataan Mayor Antonio Raymundo, Jr.

In a separate project, the SBMA’s 89.5-FM Subic Bay Radio also collected a significant volume of donations as it asked listeners to contribute in the aftermath of the Orion fire.

Acting station manager Menandro Magcale said that good Samaritans from the Subic Bay Freeport and Olongapo City provided 5 cavans of rice, 6 boxes of canned goods, 4 boxes of noodles, 3 boxes of bread and biscuits, 2 boxes of assorted packed food, 3 boxes of hygiene products, assorted kitchen and houseware, and beddings and mattresses.

The station likewise collected some 100 pairs of shoes and slippers, as well as a dozen huge plastic bags of used clothes.

The radio station staff, along with volunteer students from Aura College in the Freeport, delivered the donations on Feb. 8 to social welfare workers at the main evacuation center in the Bataan School of Fisheries in Orion.

SBMA Chairman Wilma T. Eisma, meanwhile, lauded the SBMA employees, business locators and other stakeholders in the Subic community for showing concern for other people who are in need.

“Your gesture of love and kindness for others, especially our neighbors in Bataan, best exemplifies the culture of benevolence and malasakit that we are cultivating in this community,” Eisma added.

Reports said that more than 1 6,000 individuals fled to temporary evacuation centers after a fire broke out at Sitio Depensa in Barangay Capunitan, Orion on January 29.

Abetted by strong winds, the fire razed down more than 600 houses made of light materials that were home to mostly fishermen and informal settlers.

Source: subicnewslink.blogspot.com

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Photo Credit: Nikkei Asian

One of the world’s biggest suppliers of used heavy machinery has tied up with a Subic Freeport-based firm for a $15-million investment that would provide equipment for development projects in the countryside.

This is according to the Subic Bay Metropolitan Authority (SBMA), which identified the Japanese used machinery supplier as AA Japan and the local partner as Filanka Subic Corp.

Without explaining the nature of the arrangement, the SBMA said the partnership aimed to help address the country’s development requirements in the fields of infrastructure, agriculture and energy by providing heavy-duty trucks and machinery.

“We aim to boost our network here, which may, in turn, strengthen the industry in this part of the country, as well as provide livelihood opportunities to nearby communities,” AA Japan president and CEO Hameed Ramzan said.

With a $15-million investment, the partnership is gunning for expansion and provision of full service in the country, SBMA said, citing company officials.

SBMA said this would mean hiring 200 employees skilled in conversion, painting, engine maintenance and bodyworks, as well as leasing additional spaces for their stock and service yards.

“Every year, we deal with more than 10,000 customers throughout the world and our reputation of quality has never faltered. We strive, and we will always strive, to offer our customers quality vehicles at a low price, and to provide them with the best customer service,” Ramzan said.

Since 1996, AA Japan has provided vehicles, equipment and machinery to contractors and procurers worldwide and has developed a global network of branches and exclusive partners that allow car sales throughout the world.

Source: business.inquirer.net

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