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Duterte 'receptive' to gov’t takeover of Hanjin's Subic shipyard

MANILA, Philippines – President Rodrigo Duterte is “receptive” to a Philippine government takeover of the Subic shipyard of South Korean shipbuilder Hanjin Heavy Industries and Construction Philippines.

Defense Secretary Delfin Lorenzana said this during the Senate budget deliberations on Wednesday, January 16. The Senate constituted itself as a committee of the whole to discuss Hanjin and other defense issues with Lorenzana.

Hanjin earlier revealed that it had $1.3 billion outstanding loans – $400 million from Philippine banks. The firm, through a petition before the Regional Trial Court in Olongapo City, sought government help with its financial problem.

For the DND, Hanjin's financial woes presented a golden opportunity for the government.

“While we sympathize 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.

“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.

Lorenzana, however, shared that Finance Secretary Carlos Dominguez III, was "thinking of how the local banks can recoup their investment."

"But really this is very perfect for us. We are actually ordering ships from abroad. If we can take this over, we can make our ships here,” he added.

Government-private partnerships

Lorenzana initially proposed that the government be the “minority owner,” with a civilian firm holding majority stakes.

But Senate Majority Leader Juan Miguel Zubiri suggested the opposite: that the shipyard be managed by a private firm while the government serves as the majority owner.

"It's under your control. It’s a win-win solution,” he said.

Zubiri said this way, government funds allotted for acquiring new ships need not go to other countries where the Philippines usually sourced the vessels, as these ships would be built in the country.

Senator Panfilo Lacson, for his part, suggested that the Philippine government take over Hanjin first and then just “give [it] out to possible partners” from the private sector. Lacson cited Executive Order 423, signed by then president Gloria Arroyo, which sets out guidelines for government partnership with private entities.

“What if the government, we just take over Hanjin and we give out to possible partners, private entities? Kikita pa gobyerno (The government will earn). Is that a good idea? And let Philippine Navy partner with a private entity.... Is that a good idea? Take over first then look for possible partners, private entities?” Lacson said.

May extra income and (We'll have extra income and) continuous income and may facility pa ang Philippine Navy (the Philippine Navy will have a facility),” he said.

To which, Lorenzana replied: “Yes sir, I think that's a good idea. In fact the Navy has 20 ships to be built in the next 5 years.”

But what about the capability and readiness of the Philippine Navy, which would be at the center of all this?

“We cannot take over totally the entire Hanjin but a portion probably the Navy can take over,” Philippine Navy Vice Admiral Robert Empedrad said, agreeing with Lacson that the Navy could be the “part owner.” – Rappler.com

Camille Elemia

Camille Elemia is Rappler's lead reporter for media, disinformation, and democracy. She won an ILO award in 2017. She received the prestigious Fulbright-Hubert Humphrey fellowship in 2019, allowing her to further study media and politics in the US. Email camille.elemia@rappler.com

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