Manila urged to take over Subic Bay shipyard

Among the foreign companies expressing interest in the sprawling shipyard on Subic Bay are two Chinese firms, one of which is state-owned, according to Philippine officials.
Among the foreign companies expressing interest in the sprawling shipyard on Subic Bay are two Chinese firms, one of which is state-owned, according to Philippine officials.PHOTO: EPA-EFE

Officials voice fears that Chinese takeover may project Beijing's power deeper into the region

MANILA • The Philippine government should take control of the country's largest shipyard, the Defence Secretary said, after officials raised concerns that Chinese companies seeking to take over it would act as agents of Beijing, projecting China's power deeper into the region.

Among the foreign companies expressing interest in the sprawling shipyard on Subic Bay are two Chinese firms, one of which is state-owned, according to Philippine officials.

They have voiced fears that a Chinese takeover of the yard would give a strategic foothold to China, which is expanding its economic and military presence in the region and has seized islands in the South China Sea that are claimed by the Philippines, among others.

Defence Secretary Delfin Lorenzana said he had raised the issue of the shipyard in a meeting on Wednesday with President Rodrigo Duterte, who has tried to improve relations with Beijing, worrying US policymakers who have long seen the Philippines as a strategic check on China.

Also in the meeting were Foreign Secretary Teodoro Locsin Jr and the country's economic managers.

"The Philippine navy suggested that, why not the Philippines take over, so that we'll have a naval base there?" he told foreign correspondents on Thursday, recounting his conversation with the President. "Then we'll have shipbuilding capabilities."

The government owns the site and leases it out, and the Defence Secretary said United States, Australian, Japanese and South Korean firms had also expressed interest.

 

But he said he agreed with a proposal by a Philippine senator that the country "should take it now wholly". Mr Duterte's position on the matter is not clear.

Subic Bay, about 80km northwest of Manila on the island of Luzon, was the site of a major US naval base during the Cold War, and it opens onto the South China Sea.

Officials have not identified the companies that have shown interest, but the shipyard is becoming available as concerns mount in many countries that Chinese companies, even ones that are not government-controlled, often engage in industrial espionage and act as tools of the Chinese government's influence and spying efforts.

Justice Antonio Carpio of the Philippine Supreme Court, an outspoken critic of Mr Duterte's China-friendly stance, is among the officials who have publicly warned against a Chinese presence in Subic Bay.

"Why would we allow the Chinese to get a foothold in Subic when they are trying to seize the West Philippine Sea just across?" he said. "It doesn't make sense."

A Philippine unit of Hanjin Heavy Industries and Construction Group, a South Korean company, took over the site in 2006 and built the shipyard, which grew to employ more than 20,000 people and has built large cargo ships.

But demand for new ships has slowed, thousands of workers have been laid off and the Philippine arm of Hanjin, after defaulting on some US$400 million (S$542.5 million) in loans, filed for bankruptcy this month.

In recent years, China has occupied and built military bases on formerly uninhabited islands and reefs in the South China Sea, far from the Chinese mainland and much closer to the Philippines, Vietnam, Indonesia, Malaysia and Brunei.

It also claims much of the sea, and its potentially lucrative oil and gas deposits, as its territorial waters.

Most of the world regards the sea international waters and an international tribunal made a sweeping ruling in 2016 against China's conduct in the region.

NYTIMES

A version of this article appeared in the print edition of The Straits Times on January 19, 2019, with the headline 'Manila urged to take over Subic Bay shipyard'. Print Edition | Subscribe