The government is extending tax incentives to the redevelopment and operations of the Hanjin Shipyard at the Subic Bay Freeport zone to be undertaken by US-based private equity firm Cerberus Capital Management.
Cerberus is spending P17 billion via Project Agila as the shipyard presents economic potential, given its strategic location near the West Philippine Sea.
The Fiscal Incentives Review Board (FIRB), upon the endorsement of the Subic Bay Metropolitan Authority (SBMA), has approved the grant of tax incentives to the project.
Finance Secretary and FIRB Chairman Carlos Dominguez III supported the approval of the tax perks, including special corporate income tax (SCIT), value-added tax (VAT) exemption from importation, VAT zero-rating on local purchases, and duty exemption on importation.
“We expect the project to create jobs in the adjacent communities, increase economic activity as well as support the national government’s economic recovery efforts,” Dominguez said.
Dominguez pointed out that the resumption of operations in the shipyard would also prompt development and productivity in the area that could attract more investment opportunities into the country.
Furthermore, the project would cater to both the Philippine Navy and potential export locators.
It would be beneficial, specifically to the Navy, as it involves the safety and efficiency of the Philippine government ships’ performance and, consequently, strengthen national security.
The shipyard owned by bankrupt Hanjin Heavy Industries and Construction of South Korea was taken over by Cerberus after it reached an agreement with creditor banks.
Hanjin invested $2.3 billion in the Philippines in 2006 and employed more than 30,000 in one of the world’s largest shipbuilding facility.
During its corporate rehabilitation in 2019, Hanjin’s outstanding loans with BDO Unibank of bankero Nestor Tan, Metropolitan Bank & Trust Co. (Metrobank) led by banker Fabian Dee, state-run Land Bank of the Philippines headed by bankero Cecilia Borromeo, Bank of the Philippine Islands (BPI) of bankero TG Limcaoco, and Rizal Commercial Banking Corp. led by bankero Eugene Acevedo amounted to $412 million.