Home » Maritime, Ports/Terminals » Marina favors SBSR development over gov’t takeover of Hanjin

The Maritime Industry Authority (Marina) is recommending developing and upgrading the ship building and ship repair (SBSR) industry to enable local shipyards to expand its capacity to construct more ships and bigger vessels and contribute to making the Philippines a global maritime hub.

Marina pushed for this tack over the suggestion for government takeover of Hanjin Heavy Industries and Construction-Philippines, Inc. (HHIC-Phil), according to Marina Shipyard Regulation Service director Engr. Ramon Hernandez in a presentation to media on January 31.

Hernandez said that as a focal point of Marina’s 10-year Maritime Industry Development Plan (MIDP), the development and upgrade of local shipyards when realized will create opportunities for SBSR workers, like those displaced due to the HHIC-Phil problem.

Upgrade of local shipyards is under the program to develop the country as a global maritime hub, one of the eight priority programs of the MIDP, Marina’s decade-long roadmap to accelerating the achievement of a nationally integrated and globally competitive Philippine maritime industry.

Local shipyards, excluding foreign shipbuilding companies located in the Philippines, currently only have the capacity to construct 500 gross revenue tonnage (GRT). Once projects under the MIDP are implemented, Hernandez said the target is for local shipyards to be able to construct 2,000 GRT vessels. Other goals under MIDP include more investments for shipyard expansion and modernization, increased productivity of shipyards, and higher employment opportunities.

Hernandez said Marina presented its recommendation on January 29 in a roundtable discussion attended by representatives from concerned government agencies, banks and financial institutions, where views and options on addressing the pressing HHIC-Phil issue were raised.

Marina officer-in-charge administrator Narciso Vingson, Jr. opined that the government should first let the court and the banks solve the Hanjin issue before deciding to come in as a white knight. He noted as another option the suggestion to allow foreign investors to take over HHIC-Phil’s facilities.

The government’s current and immediate focus is to help the displaced workers of HHIC-Phil, Vingson noted. The Department of Labor and Employment in a separate statement said it will prioritize the reemployment of displaced HHIC-Phil workers in various construction firms.

A job caravan to be attended by 70 employers from different contractors involved in the government’s infrastructure program and companies within the Subic Bay Freeport Zone will also be held on February 9.

Meanwhile, Hernandez clarified that HHIC-Phil is not registered with Marina, which has no involvement with the shipyard as HHIC-Phil is a locator under the jurisdiction of SBMA. He noted that in 2007, Marina and SBMA signed an agreement for HHIC-Phil to register with SBMA in order to avail of incentives in the Freeport.

Hernandez said, however, that HHIC-Phil’s 300-hectare Subic facility may also be considered as a possible location for the country’s first eco-industrial maritime park, also another program under the MIDP.

Marina earlier said “the state-of-the-art facilities of HHIC-Phil may be considered as an option for the establishment of an eco-industrial maritime park for the clustering and consolidation of all maritime-related services, thereby accelerating the implementation of the program.”

HHIC-Phil has recently been placed under rehabilitation by the Regional Trial Court (RTC) of Olongapo City after the shipbuilder on January 8 petitioned for voluntary rehabilitation under Republic Act No. 10142, or An Act Providing for the Rehabilitation or Liquidation of Financially Distressed Enterprises and Individuals, citing financial obligations to Philippine and Korean lenders.

HHIC-Phil reportedly owes Philippine banks US$412 million in outstanding loans, on top of another $900 million in debt to lenders in South Korea.

Korean newspapers said South Korean-based Hanjin Heavy Industries and Construction Holdings Co., Ltd., (HHICH) and its affiliate HHIC-Phil have been suffering from a drop in new orders amid the protracted slump in the global shipbuilding sector.

HHICH has also been conducting massive restructuring efforts since 2016 by selling non-core assets.

HHIC-Phil was Subic Bay Freeport’s biggest locator, with a 300-hectare shipyard and an infusion of $2.3 billion in direct investment, and employing about 30,000 workers at the peak of its operations. Since 2008, the facility has built 123 vessels, contributing to the Philippines’ ranking as the fifth top shipbuilding country in the world, according to its website. – Roumina Pablo

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