Beyond Hanjin
The collapse of the local unit of heavyweight Korean shipbuilding company Hanjin Heavy Industries and Construction Corp. is sending tremors across not only the economy, but also the body politic. What has become the biggest corporate default in Philippine history puts at risk the jobs of some 30,000 Filipino workers and the stability of a number of Filipino banks with a combined loan exposure to Hanjin of $412 million, most of it reportedly lent without collateral. More ominously, the fate of Hanjin’s $1.6-billion shipyard in Subic Bay, Zambales, has become a matter of geostrategic importance: Two Chinese shipbuilders—including one of the biggest in mainland China—have made overtures through the Department of Trade and Industry to bail out the troubled shipbuilder and set up shop in Subic, but that move has generated warnings about the national security implications of giving the Chinese access to the prized port and waters of Subic, which opens up into the South China Sea (SCS) that Beijing is claiming nearly entirely for itself.
The banks’ exposure has been contained for now, it seems, with the announcement by Rizal Commercial Banking Corp., Land Bank of the Philippines, Metropolitan Bank and Trust Co., Bank of the Philippine Islands and Banco de Oro Universal Bank to move as one in dealing with Hanjin’s bankruptcy. Per the gentleman’s agreement among them, “no one will jump the gun,” in the words of a bank executive, to unilaterally seize Hanjin assets and potentially trigger a free-for-all that would adversely affect the rehabilitation plan for the beleaguered company, once one of the world’s top 10 shipbuilding entities.
What to do with its shipyard in Subic, the fourth largest in the world, is a trickier question, given the delicate geopolitical factors now at play. The very notion of Chinese companies acquiring a beachhead in the port—the strategic importance of which the Americans saw in projecting their power in the Pacific, hence the location of the US naval base there until 1991, America’s largest military installation overseas for decades—has triggered public anxiety, given China’s covetous actions in the region.
Alexander Pama, a former Philippine Navy chief, took to Facebook to remind the government and the public that “this Hanjin shipyard issue is not just about business, financial and other economic issues. This is a very significant national security issue.” Handing over ownership of the Hanjin shipyard to the Chinese, he warned, would “give the owners unlimited access to one of our most strategic geographic naval and maritime assets,” at a time when the Philippines is in a territorial tussle with Beijing over some parts of the SCS. Associate Justice Antonio Carpio also sees peril in the scenario. “I mean, why do we allow the Chinese to get a foot in Subic when they are trying to seize our West Philippine Sea just across? It doesn’t make sense,” he said.
To lawyer and writer Wilfredo Garrido, this is a matter of urgent patriotism. In a Facebook post, he has appealed to the five Filipino banks to reject any Chinese offer of bailout to help keep them away from Subic: “Oh, how glad would be the Chinese to place personnel and equipment within 200 km of Scarborough Shoal, thereby opening up the whole West Philippine Sea to Chinese encirclement. With hundreds of hectares within its control in Subic, who knows what other facilities they will install, apart from shipbuilding.”
Malacañang’s initial response to such fears was rote dismissal and disinterest—“puro tsismis” (all talk), huffed presidential spokesperson Salvador Panelo. But, according to Defense Secretary Delfin Lorenzana, President Duterte himself is “receptive” to an idea that may offer a solution to the problem: the takeover of the Hanjin port by the government itself and a private partner. The current Navy chief, Adm. Robert Empedrad, is said to have first broached the idea.
The move would allow the Philippine Navy and Coast Guard to build their own ships in the shipyard, said Lorenzana. It would also ensure that the critical port is effectively under Philippine control, the risks to national security in leasing it to a country (or its surrogate firms) with designs of its own in the region kept at bay. The idea is worth considering seriously, the chief question now being: Where is the Filipino white knight that can join hands with the government to save thousands of Filipino jobs and keep the Hanjin port in Philippine hands?
