Hanjin's new projects hikes investments | SubicNewsLink

07 June 2009

Hanjin's new projects hikes investments

An expansion project of Korean shipbuilder Hanjin Heavy Industries and Construction Corp. in this free port will raise the total investments committed by locators here to more than $6 billion this year.

Hanjin Heavy’s expansion will also reinforce the firm’s status as the single-biggest locator in the free port today.

Subic Bay Metropolitan Authority (SBMA) administrator and chief executive officer Armand Arreza said Hanjin Heavy’s new investment pledge of $86 million would raise the firm’s total investments in Subic to $2.54 billion.

The shipbuilder’s new investment is in the production of ship components in the free port.

Hanjin Heavy, which had so far built four container vessels here in the last two years, announced its new funding commitment during the recent visit of President Arroyo in Korea.

Hanjin officials said the new investments will be placed in two schedules: $29 million starting September this year, and $57 million next year.

Arreza said Hanjin Heavy’s $86-million project raises the total investments in Subic to $6.64 billion, topping the previous record of $5.78 billion in the first quarter of 2009.

“With just the first $29 million, our investment commitments will breach the $6-billion mark this year,” Arreza said.

“With the succeeding $57 million, we will be hitting close to the $7.5-billion enhanced target that we have set for 2010,” he added.

Hanjin Heavy’s new investments would also allow it to maintain its position as Subic’s top employer. Its officials announced that the new project would create some 4,000 new positions on top of the 16,000 jobs that now exist at the firm’s Redondo Peninsula shipyard.

Arreza cited Hanjin Heavy’s new project for its huge potentials in helping ease unemployment in Central Luzon and spur growth in terms of raw materials and other production inputs.

“Best of all, with ship components produced locally, we shall have the right to claim that ships produced by Hanjin in Subic are entirely Philippine-made,” Arreza added.

Despite what critics say as its poor safety record, with several fatal accidents occurring at its Subic facility in the past two years, Hanjin is credited for putting the Philippines on the world’s maritime map by producing the first Philippine-made container ships.

In the first quarter of this year, Hanjin set a new record with the twin-launch of its third and fourth container ships and became Subic’s biggest exporter for the first time after posting $179.36 million in freight-on-board value.

The shipbuilder initially committed $1 billion in investment when it located in Subic in 2006. It increased its exposure by $68 million a year later.

Hanjin Heavy’s current expansion is also expected to bolster the job-creation program in Subic, which now employs 85,000 workers.

Arreza said Subic’s employment “could easily jump to double the current figures once projects proposed by several Korean firms are realized in the next two years.”

These include a plan by M Castle Inc. to construct a $1-billion resort complex in a 615-hectare property. Around 7,000 direct and 16,000 indirect jobs are projected to materialize when construction starts, according to reports quoting M Castle chairman Sang Soo Shin.

“These [are] major employment boosters,” Arreza said. “Aside from the jobs that would be directly created by these projects, there will be thousands of employment opportunities to be generated downstream.”

Hanjin Heavy’s expansion and M Castle’s planned project will further boost Korean business exposure in Subic, which had grown to $2.85 billion since 2003, the highest value of foreign direct investment here.

According to SBMA figures, Korean firms put up 234 investment projects in the free port. Philippine firms come in second with $513.5 million in investment value. Filipinos remain first with 533 projects.

The third-biggest investors here are Taiwanese companies, with 41 projects worth $256.4 million. Indian firms are the fourth with three projects worth $101.1 million. (HENRY EMPEƑO, Business Mirror Online)

PHOTO: Workers at the Hanjin Heavy shipyard in the Subic Bay Free Port install components to a container vessel. Hanjin Heavy now plans to produce ship components in its facility here with an $86-million expansion project.