Duterte receptive to idea of nationalising Hanjin Subic

Duterte receptive to idea of nationalising Hanjin Subic

All options are being considered by the Philippine government as it scrambles to save its largest shipyard.

Hanjin Heavy Industries and Construction Philippines (HHIC-Phil) has sought court protection with loans owed in excess of $400m to five local banks, prompting fears of the worst loan breach in the nation’s history.

Government officials have already said that two Chinese entities – one of whom is believed to be Cosco Shipyard – have expressed an interest in taking over the troubled Korean yard and will visit the site in the coming weeks.

The giant 300 ha shipbuilding facility could also be nationalised.

President Rodrigo Duterte is “receptive” to a Philippine government takeover of the Subic Bay shipyard, defence secretary Delfin Lorenzana said today.

“While we sympathise with the financial woes of Hanjin, we are excited with this development because we see the possiblility of having our own shipbuilding capacity in the Philippines, especially large ships like what is being built by Hanjin shipyard in Subic,” Lorenzana told senators today.

“I said, why not we take over the Hanjin and give it to the (Philippine) Navy to manage? And so I brought this idea to the president last night. He’s very receptive to the idea,” he said.

Splash also understands that Japanese shipbuilders have been contacted by the authorities in Manila.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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2 Comments

  1. Avatar
    Andrew Craig-Bennett
    January 16, 2019 at 5:32 pm

    Wonderful news for shipowners!

    A large modern shipyard taken permanently out of production!

    The track record of nationalised businesses in the Philippines is long and simple – 100% failure, due to “local conditions”, i.e. politicians inserting placemen and taking rake offs.

    And of course, as neither Lorenzana nor Duterte understands, 80% of the value added comes into the yard as components sourced outside the Philippines. At the moment it’s a Korean supply chain; it could, with time and expert knowledge, become a Chinese, or a Japanese,supply chain, but no other nationality could set up such a complex sourcing operation.

    So that’s the end of one of the world’s biggest, best planned, best equipped and most productive yards, which in turn is wonderful news for shipowners.

    All shipowners should do their bit to encourage the Duterte Government in this magnificent folly!

    1. Avatar
      Andrew Craig-Bennett
      January 16, 2019 at 11:55 pm

      A Filipino friend with a long career in shipping points out that I haven’t thought that through properly.

      Five Filipino Banks, a class of business known to be both wily and risk averse, find themselves sitting on US$ 450M of Korean debt secured on a worthless asset.

      The sort of debt that Filipino Banks really do like is Filipino Government debt. A few careful and patriotic words in the ears of the Secretary for Defence and the President, a quick nationalisation, trumpeted in the patriotic media, and $450M of non-performing loans become sovereign debt.

      And an incoming foreign shipbuilder can do an A&P Appledore and take on, not an expensive shipyard but a far more remunerative management contract.

      What’s not to like?