The Fiscal Incentives Review Board (FIRB) has approved the grant of tax incentives to the P17-billion US-funded Project AGILA, which seeks to redevelop and operate the Hanjin shipyard in the Subic Bay freeport zone.
In a statement, Tuesday, May 10, FIRB said the project was granted special corporate income tax (SCIT), value-added tax (VAT) exemption from importation, VAT zero-rating on local purchases, and duty exemption on importation.
Funded by US-based private equity firm Cerberus Capital Management, Project Agila boasts of a P17-billion investments. Subic Bay Metropolitan Authority (SBMA), operator of Subic Bay Freeport that hosts the sprawling Hanjin shipyard, endorsed the project to the FIRB for incentive purposes.
On Tuesday, May 10, Finance Secretary and FIRB Chairman Carlos Dominguez III expressed support for the approval of the tax perks for Project AGILA stressing the rehabilitation of the Hanjin shipyard presents economic potential, citing its strategic location near the West Philippine Sea (WPS).
“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 in a statement.
He added, “The resumption of operations in the shipyard will also prompt development and productivity in the area, which can attract more investment opportunities into the country.”
Furthermore, the project will cater to both the Philippine Navy (PN) and potential export locators.
It will be beneficial, specifically to the Navy, as it will involve the safety and efficiency of the Philippine government ships’ performance and, consequently, strengthen national security.
In April, US firm Cerberus Frontier has completed the acquisition of the former Hanjin shipyard at the Subic Bay Freeport in Zambales.
Dominguez said the acquisition has been beneficial to all stakeholders, including workers, Philippine military and creditors.
Dominguez cited that Cerberus has managed to retain and create more jobs in the area, further stimulated the Philippines’ robust growth, and served the requirements of both the military and the private sector.
With the conclusion of the agreement, Dominguez said the deal allows five of the Philippines’ largest banks to book a profit from their written-off loans with Hanjin Heavy Industries and Construction Philippines (HHICP).
It also allowed the Subic Bay Metropolitan Authority, where the shipyard is located, to get a better tenant in Cerberus, Dominguez said.
HHICP, the local unit of the South Korean shipbuilder, which operated the Philippines’ largest shipyard that employed as many as 30,000 at the height of its operations, but filed for bankruptcy protection in Jan. 2019 after failing to repay $1.3 billion loans in what is regarded as the country’s largest-ever corporate default.