FORMER Philippine Navy chief Alexander Pama had warned: "let's be aware that this Hanjin shipyard issue is not just about business, financial and other economic issues. This is a very significant national security issue."
Subic Bay played a critical role as a supply and maintenance hub for the US military during the Vietnam War and Cold War. Today, geopolitical rivalry centers on the South China, with Beijing vying for territory and influence against other claimants such as Brunei, Malaysia, Vietnam and the Philippines.
HHIC-Phil was once one the country's largest employers, with 35,000 workers at its peak in 2016.
Its $2.3 billion investment is the largest in the Subic Bay Freeport Zone. The base was converted to an economic zone after US troops were told to leave the Philippines in 1992 amid an upswell of nationalist sentiment.
Subic Bay, a deep water harbor 50 miles northwest of Manila facing the South China Sea, was the service and logistic center for the US Seventh Fleet until November 1992.
Accordingly, this move will enable the AFP to quickly deploy its fighter planes and frigates to any contingency in the South China Sea in the face of China’s maritime expansion in these disputed waters.
Right of passage
Australian Ambassador to the Philippines Steven Robinson said Australia has a “principles-based position” on the disputed South China Sea and the West Philippine Sea, where China is flexing it muscle and pushing for control of one of the world’s most important sea trade routes.
“What we say is that all countries should subscribe to the rules and the norms and the laws that govern free passage through international waters,” he said adding Australia’s concern for any action taken by any country that seeks to inhibit that free passage and the freedom of navigation.
Austal already has major investments in its Australasia shipyards, including at Henderson, south of Perth, the Philippines and in Vietnam.
White knight
But Subic Bay Metropolitan Authority chairperson Wilma Eisma, the agency in charge of promoting investments at the Freeport Zone, wants the shipyard rescued as soon as possible, regardless of who plays the white knight.
Eisma touts Subic as an alternative destination for companies looking to escape the fallout from the US-China trade war.
Just last year, Hanjin delivered the huge container vessel Antoine de Saint Exupery for French shipper CMA CGM.
The ship was the first container vessel with a capacity of 20,600 twenty-foot equivalent units to be built in Subic, and one of the biggest ships ever built anywhere, according to reports.
In his fifth State of the Nation Address last week, President Duterte said he would not allow foreigners to build military bases in Subic as it could lead to a war and the “extinction of the Filipino race.”
The deal between Cerberus and Austal will not involve construction of American bases, although the Philippine Navy is expected to occupy a portion of the former Hanjin site. Cerberus reportedly wants to use the facility for ship repair.
In June 2021, the SBMA said the negotiations on the lease contract of Hanjin Shipyard with Cerberus may be concluded soon.
SBMA business and investment manager Karen Magno said in a webinar organized by the Semiconductor and Electronics Industry of the Philippines Inc. the agency was in talks with Cerberus Capital, and not Australian shipbuilder Austal, which also expressed interest in the shipyard.
Austal already has an extensive operation on the fringes of the South China Sea to include shipyards in Vietnam and at Cebu, the Philippines, and a service center in Singapore, where the littoral combat ship USS Gabrielle Giffords is deployed.