Department of National Defense (DND) Secretary Delfin Lorenzana announced Wednesday, March 9, that there will be no impact on the country’s national security if the reported takeover of an abandoned shipyard in Subic Bay, Zambales by a United States private equity firm will push through.
“I don’t think there will be any implications on our national security,” Lorenzana told reporters.
The Defense Chief was reacting to Cerberus’ reported $300-million acquisition of an abandoned shipyard that was erstwhile ran by South Korean firm Hanjin Heavy Industries and Construction in Subic Bay. The deal will reportedly be finalized on April 15.
Rumors of the planned takeover of the Hanjin shipyard by Cerberus had been floated as early as 2020.
To recall, Hanjin had filed for bankruptcy in 2019 due to its USD 1.3 billion outstanding loans from Philippine banks and South Korean lenders.
The South Korean firm then asked for help from the Philippine government to seek for investors that will take over the operations of the shipyard.
“I don’t know the financial transactions regarding the Hanjin shipyard. It is the Department of Finance who is working on it in coordination with the creditor banks,” Lorenzana said.
But the Defense Chief added that he had recommended that the Philippine government takes over or buys the shipyard if there were no buyers “to save the shipyard from going into disrepair and generate jobs.”
The Philippine Navy (PN) had actually informed the government of its willingness to handle the operations of the Hanjin to protect national security although budget constraints had to be considered by the government.
In 2019, it was reported that there were eight foreign investors who expressed interest on the shipyard, including two Chinese firms. This raised fears that a Chinese takeover of the shipyard might complicate the territorial dispute between China and the Philippines in the West Philippine Sea.
Although Cerberus, an American firm, will now reportedly handle the shipyard’s operations, several stakeholders were floating the possibility that it is part of a plan of the United States Navy to re-establish its former base in Subic.
Subic Bay used to be an American naval facility until it was closed in 1992 when the Congress terminated the Military Bases Agreement by the Philippines and United States. The agreement allows US to lease certain Philippine military and naval bases.
In July 2020, then PN Flag Officer in Command, Vice Admiral Giovanni Carlo Bacordo had expressed concerns about rumors of US Navy’s plans to re-establish a naval base in Subic.
“Having US bases in the country will make Philippines as a legitimate target in the unlikely event of war. That is way beyond just having US Navy ships conducting repairs or other commercial activities in Subic,” Bacordo had said.
Further, President Duterte ha also revealed in the same year that he had received a report about the supposed plans of the US Navy to re-establish its former base in Subic.
“If you put bases here, you will double the spectacle of a most destructive thing just like Manila during the Second World War,” Duterte had said during the fifth State of the Nation Address (SONA).
The rumors eventually died down and remained unsubstantiated until the recent report of Cerberus’ takeover of the Subic shipyard brought them back.
But Lorenzana dismissed the rumors, saying that the PN will occupy and lease the northern portion of the shipyard to be the home port of its frigates and other big ships.
“It will be the same as when Hanjin was operating it – building commercial ships,” Lorenzana said.