Han­jin: Bal­anc­ing se­cu­rity, econ­omy

The Philippine Star - - OPINION - FED­ERICO D. PAS­CUAL Jr.

THE POS­SI­BLE takeover by Chi­nese in­vestors of the trou­bled Han­jin ship­build­ing/ship­yard fa­cil­ity in Su­bic Bay is fraught with se­cu­rity im­pli­ca­tions that the ad­min­is­tra­tion must weigh to­gether with po­lit­i­cal and eco­nomic con­sid­er­a­tions.

Some Chi­nese ship­build­ing firms, one of them state-owned, have shown in­ter­est in Han­jin Heavy In­dus­tries and Con­struc­tion Corp. now weighed down by un­paid debts re­ported at $412 mil­lion owed to five lo­cal banks, aside from $900 mil­lion due South Korean cred­i­tors.

Hav­ing filed for bank­ruptcy this month, Han­jin is ripe for pick­ing, es­pe­cially with the gov­ern­ment not want­ing to see a ma­jor for­eign in­vestor sink at great cost to the econ­omy and the coun­try’s pres­tige.

A state­ment from Su­bic Bay Met­ro­pol­i­tan Author­ity said Han­jin has in­vested $2.3 bil­lion in its fa­cil­ity. Since 2008, it has de­liv­ered 123 ves­sels to clients across the globe, putting the Philip­pines on the map as the world’s fourth largest ship­builder based on gross ton­nage.

But last month, Han­jin laid off over 7,000 of its 30,000 em­ploy­ees (to­tal at its peak). It plans to ter­mi­nate an­other 3,000 early this year, and keep just about 300 lo­cal work­ers and as few as seven Korean su­per­vi­sors un­til March for fa­cil­ity main­te­nance.

Many quar­ters have warned against rush­ing ap­proval of res­cue pro­pos­als, hop­ing Mala­cañang will draw a broad con­sen­sus to bal­ance na­tional se­cu­rity and eco­nomic con­sid­er­a­tions, par­tic­u­larly in light of the re­ported Chi­nese keen in­ter­est to take over.

Con­sid­er­ing China’s un­friendly acts of build­ing up and mil­i­ta­riz­ing fea­tures in Philip­pine mar­itime ar­eas and its lur­ing the ad­min­is­tra­tion into mas­sive bor­row­ing that ex­perts have warned could be debt traps, a red cau­tion­ary light has been flash­ing.

For­mer Navy chief Vice Admiral Alexan­der Pama (2011-2012), for one, warned Satur­day in a Face­book post: “This Han­jin ship­yard is­sue is not just about busi­ness, fi­nan­cial and other eco­nomic is­sues. This is a very sig­nif­i­cant na­tional se­cu­rity is­sue!”

Pama added: “Own­er­ship of Han­jin ship­yard in Su­bic Bay will give the own­ers un­lim­ited ac­cess to one of our most strate­gic ge­o­graphic naval and mar­itime as­sets. Al­though it is a com­mer­cial ship­yard, noth­ing can pre­vent the own­ers from mak­ing it into a de-facto naval base and a mar­itime fa­cil­ity for other se­cu­rity pur­poses.”

Then na­tional se­cu­rity ad­viser Roilo Golez, among oth­ers, also had warned about Bei­jing’s build­ing a strate­gic tri­an­gle that will in­clude Panatag (Scar­bor­ough) shoal close to Su­bic. He said: “If the Chi­nese can com­plete this tri­an­gle, they will have full con­trol of the South China Sea.”

The tri­an­gle, which he de­scribed as a game changer, starts with the Para­cel is­lands which China con­trols. The sec­ond point is the area of the Kag­itin­gan (Fiery Cross) reef, Zamora (Subi) reef and Pan­gani­ban (Mis­chief) reef), which are all within the Philip­pines’ EEZ.

Cit­ing sur­veil­lance data, Golez said Fiery Cross, Subi and Mis­chief ap­pear to al­ready have three-kilo­me­ter­long run­ways that can ac­com­mo­date all types of air­craft in the in­ven­tory of China’s air force.

The third point in the tri­an­gle is Panatag, off Zam­bales and close to Su­bic Bay, which al­though within the Philip­pine EEZ and a tra­di­tional fish­ing ground of Filipinos, is un­der ef­fec­tive Chi­nese con­trol.

Aside from the sites al­ready en­croached, China has es­tab­lished a friendly foothold in the Davao area, Duterte’s home base, and is re­port­edly eye­ing strate­gic points in Palawan near the Spratly is­lands where it has been up­grad­ing its mil­i­tary fa­cil­i­ties.

When the Amer­i­cans left Su­bic Bay af­ter the ex­pi­ra­tion in 1991 of the Phl-US mil­i­tary bases agree­ment, the base was trans­formed into an in­dus­trial hub un­der the lead­er­ship of for­mer Olon­gapo mayor (now sen­a­tor) Richard Gor­don who had ral­lied vol­un­teers.

The big­gest Philip­pine Navy ships take shel­ter at Su­bic. Ships of var­i­ous for­eign navies, in­clud­ing those of the ma­jor pow­ers, con­duct port calls there and take pro­vi­sions from time to time. Pama ex­pressed fears that if China gains con­trol of the ship­yard, this could change.

He said: “Baka pag nagpa-pa­trol ang Chi­nese Coast Guard sa Scar­bor­ough, dyan na sila nag­pa­pahinga, ma­gre-re­pair at mag re­pro­vi­sion. xxx Nag-aa­gawan tayo ng mga

lu­gar tapos ibibi­gay natin yung ship­yard sa Su­bic.” He ap­pealed: “Let us all be aware and wary of the se­ri­ous se­cu­rity and other strate­gic im­pli­ca­tions of this is­sue! I urge our pa­tri­otic busi­ness com­mu­nity and the gov­ern­ment not to al­low Han­jin Ship­yard to fall into the wrong hands.” • What it takes to rehab Han­jin

TRADE Sec­re­tary Ra­mon Lopez said the Depart­ment of Trade is link­ing pos­si­ble strate­gic in­vestors with Han­jin. “Our first ob­jec­tive is to re­place (Han­jin) with an­other ship­builder that will take over.”

The Bangko Sen­tral ng Pilip­inas said that the ex­posed banks – Rizal Com­mer­cial Bank­ing Corp., Land Bank of the Philip­pines, Met­ro­pol­i­tan Bank and Trust Co., Bank of the Philip­pine Is­lands, and Banco de Oro Uni­ver­sal Bank – are tak­ing “col­lec­tive” ac­tion to cover Han­jin’s de­fault. The lenders are also re­port­edly con­sid­er­ing talk­ing to strate­gic in­vestors.

Ce­ferino Rodolfo, man­ag­ing head of the Board of In­vest­ments, said Han­jin has asked the gov­ern­ment for help in search­ing for an in­vestor. He said two Chi­nese firms, one of them state-owned, were in­ter­ested.

He said of­fi­cials of one firm will come to Manila this month, while rep­re­sen­ta­tives of the other will take a look at the sit­u­a­tion in Fe­bru­ary.

To take over, he said a com­pany only has to pay off Han­jin’s lo­cal debts, adding that the com­pany needs to nor­mal­ize its cash flow to be able to han­dle its back­log of or­ders, in­clud­ing sev­eral big ships still to be made.

Who­ever takes over will prob­a­bly need $12 mil­lion in work­ing cap­i­tal a month, as­sum­ing the firm make six to eight ves­sels each year, he said. * * * AD­VI­SORY: All Postscripts can be ac­cessed at ma

nil­a­mail.com. Fol­low au­thor on Twit­ter as @FDPas­cual. Email feed­back to [email protected]­hoo.com H

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