FIRB grants tax perks to Hanjin shipyard redevelopment —DOF

The Fiscal Incentives Review Board (FIRB) has approved the grant of tax incentives to the redevelopment and operations of the Hanjin shipyard in the Subic Bay Freeport Zone, the Department of Finance (DOF) said Tuesday.

In a statement, the DOF said the FIRB granted the tax perks to Project AGILA, upon the endorsement of the Subic Bay Metropolitan Authority (SBMA).

The said project is United States (US)-based private equity firm Cerberus Capital Management.

In March, Reuters reported that Cerberus will acquire for $300 million a Subic Bay shipyard, which was run by debt-riddled Hanjin Philippines before it defaulted on its loans.

The DOF said Finance Secretary and FIRB chairman Carlos Dominguez III supported the approval of the tax perks for Project AGILA with a total project cost of P17 billion “as the rehabilitation of the Hanjin shipyard presents economic potential, given its strategic location near the West Philippine Sea (WPS).”

?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, the Finance department said.

“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,” said Dominguez.

“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,” added the Finance chief.

Furthermore, the project will cater to both the Philippine Navy (PN) and potential export locators, according to the DOF.

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, it said.

In 2019, the Olongapo City Regional Trial Court Branch 72 has officially placed Hanjin under corporate rehabilitation as the Korean shipbuilder sought financial relief from its ballooning obligations to local and Korean lenders.

On January 8, Hanjin Philippines filed a petition before the Regional Trial Court in Olongapo City to initiate voluntary rehabilitation under Republic Act 10142 or “An Act Providing for the Rehabilitation or Liquidation of Financially Distressed Enterprises and Individuals.”

According to the SBMA, Hanjin Philippines officials had revealed that the company owes Philippine banks some $400 million on top of another $900 million owed to lenders in South Korea.

It was established in 2006 as a subsidiary of South Korea’s Hanjin Heavy Industries & Construction Co. Ltd. Parent Hanjin Heavy is a multi-national company that provides shipbuilding, construction, and plant services in South Korea and internationally.

In the course of its operations, the subsidiary became the biggest employer among all registered businesses in the Subic Bay Freeport Zone with some 30,000 employees at peak season, and was recognized by both the Philippine Exporter Foundation  and the Department of Trade and Industry as a top export performer.—AOL, GMA News