THE travails of Hanjin Heavy Construction Inc.-Philippines (HHCI-Phil), which filed for corporate rehabilitation with an Olongapo court on January 8 to seek protection from creditors of some $400 million in loans, arose from a mix of external and local problems Sen. Richard J. Gordon said Thursday. To avert further disaster, the government must move quickly to contain the fallout on the economy and on labor, he added.
Gordon was the first chairman of the Subic Bay Metropolitan Authority (SBMA) that manages the free port where Hanjin is listed as the biggest investor and employer. The local operator of the shipyard—which until last year had turned over a state-of-the-art container ship to buyers and cited impressive orders from regional shipping lines—was likely the victim of the global malaise resulting from a mix of many problems, Gordon told the BusinessMirror in a phone interview on Thursday.
Gordon said the global shipping industry, for one, is in trouble from a confluence of factors such as the trade wars and geopolitical conflicts, and many of the big multinational companies that placed orders cannot pay the shipbuilders like Hanjin which were left holding the bag.
“The company will likely undergo receivership” so it can buy time to pay off its huge debts, but, Gordon added, “Hanjin’s case is a rude awakening to us,” because, he noted, it shows that even the most successful investors could fall by the wayside at some point. Hence, he stressed, the government “cannot take away incentives” so that investors can continue to grow and provide jobs for locals.
Gordon, however, hastened to clarify he did not mean that Hanjin was not given enough incentives, but merely wanted to point out that “even those given incentives could suffer troubles—what more if incentives are not given?”
HHCI-Phil’s income tax holiday had already run out, along with the estimated P4-billion energy subsidy it got from the government, which allowed it to operate the humongous shipyard—propelling the Philippines to the status of fourth-largest shipbuilder in the world—at concessional power rates.
Gordon expressed concern over the fate of thousands of workers as Hanjin slows operations, adding “let’s move quickly on creating opportunities” for business and for creating jobs, mindful of the factors that caused Hanjin to teeter on the brink.
The BusinessMirror earlier reported that HHCI-Philippines had laid off some 7,000 workers in December, and was planning to lay off 3,000 more early this year.
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