MANILA, Philippines – A labor group urged the government to rethink its strategy in attracting foreign direct investments after Subic-based shipbuilder Hanjin Heavy Industries and Construction Corporation filed for voluntary rehabilitation due to ballooning debt.

Bukluran ng Manggagawang Pilipino (BMP) said the company’s bankruptcy should serve “as an eye-opener” for policy makers. It also urged the government to scrap the policy of generously providing fiscal and non-fiscal incentives to multinational corporations.

“This is the end result of the prevailing national development strategy that abandons the industrialization of the local economy in favor of foreign investment. The heavily exploited workers are now displaced and the transfer of technology did not happen,” BMP chairman Leody de Guzman said.

The Korean shipbuilder filed for bankruptcy last week after it suffered liquidity problems to repay its debts of over $400 million to local banks and another $900 million to South Korean lenders.

BMP demanded that Hanjin prioritize workers’ compensation and separation pay before paying off creditors and investors.

Hanjin reportedly employed over 28,000 workers, but laid off 7,000 workers last December. More are expected to be let go by the company.

Systemic impact?

A report from the Philippine Daily Inquirer identified 5 banks, namely Land Bank of the Philippines, Rizal Commercial Banking Corporation (RCBC), Metrobank, Bank of the Philippine Islands (BPI), and BDO Unibank as the ones that have exposure to Hanjin.

The Bangko Sentral ng Pilipinas (BSP) downplayed fears that it would result in a systemic problem in the banking industry.

“Based on our initial assessment, some banks are exposed to Hanjin but relative to both total loans of the banking system and total FCDU (foreign currency deposit units) loans of the banking system, their exposure is very negligible,” BSP Deputy Governor Diwa Guinigundo said in a statement to reporters.

April Lee Tan, head of research of COL Financial, echoed Guinigundo’s assessment.

“Our initial take: Impact on BDO, BPI, and [Metrobank] only minimal in terms of profits and capital, but impact on [RCBC] more substantial given larger exposure and smaller size. We also don’t think it indicates the presence of a systemic risk,” Tan said in a Facebook post. – Rappler.com