By Chino S. Leyco
The Department of Finance (DOF) is not inclined to pull the trigger on acquiring the collapsed shipbuilder Hanjin Heavy Industries and Construction Philippines as early as now.
Finance Secretary Carlos G. Dominguez III said late Monday that it is not yet time for a government takeover of Hanjin while the negotiation between the parent Korean company and five local creditors including a state-owned bank is in early stages.
Dominguez also said that the proposal for the government to acquire the $1.2 billion shipbuilding facility in Subic Bay would require “a thorough study.”
“They are right now negotiating with the mother company,” Dominguez said in an interview, referring to Rizal Commercial Banking Corp., Land Bank of the Philippines, BDO Unibank, Inc., Metropolitan Bank and Trust Co., and Bank of the Philippine Islands.
“I don’t know where they are, [but] we have a representative there. There is early stages of negotiation on how to settle this issue. I’m not worried,” he added.
Last week, Defense Secretary Delfin N. Lorenzana proposed that the government should takeover the northern shipbuilding facility and to turn it over to the Philippine Navy for management.
Dominguez did not oppose Lorenzana’s plan, but the finance chief wants a formal proposal regarding the possible government acquisition.
“He [Lorenzana] is going to make the proposal. I asked him when are we going to see the details?” Dominguez said. “It’s gonna take some time to come out with how to operate that [facility] and quite frankly, we’ll wait for them and see what they have to say.”
Aside from Lorenzana’s formal plan, Dominguez added that the DOF would also wait for the final outcome of the negotiation between the local banks and Hanjin headquarters.
“We have to wait how the banks will end up their negotiation. It’s still early days, [but] I think something good. In this negotiation, you can never tell because Hanjin is not based here, the owner is in Korea and I understand, even them are having problems of there own,” he explained.
Asked about the fiscal implications should the government takeover the facility, Dominguez said it will all depend on the shipping industry’s performance.
“We have to look at the entire industry first—how is it doing? Are there good prospects for very large ships right now? I understand that demand is soft because of the trade wars so, we’ll see.
But you know this is cyclical business, there are times when there’s a big demand for ships and sometimes there’s no demand,” Dominguez said.
Last January 8, Hanjin, the biggest foreign investor in the Subic Bay Freeport, declared bankruptcy.
The shipbuilding firm owes about $430 million to five of the country’s biggest banks.
The Bangko Sentral ng Pilipinas already downplayed any significant impact to the banking industry of the loan exposures of some banks to Hanjin, citing it was “very negligible.”