South Korea's Hanjin to build Philippine shipyard
SEOUL, Feb 27 (Reuters) - South Korea's Hanjin Heavy Industries Co. said on Monday it would invest $720 million constructing a shipyard in the Philippines as it looks to escape domestic constraints on capacity. Like bigger rivals, Hanjin is trying to secure more expensive ship orders as vessel prices look set to weaken in coming quarters amid expectations global trading volumes will slow.
The Philippines is a familiar overseas market for the South Korean shipbuilder, which has been involved in building harbours, airports, highways and railways there in the past three decades.
"The new shipyard in the Philippines is based on our strategy to overcome growth limits because of the limited site in our local ship yard and increase competitiveness in new shipbuilding orders," the company said in a statement.
Hanjin said it had already won an order from French-based global container shipping company, CMA CGM, to build 4 container ships of 4,300 TEU (twenty foot equivalent units), worth a combined $250 million, for the new shipyard.
A Hanjin spokesman said by telephone CMA CGM had expressed its intention to help finance construction and to participate in other overseas projects. He did not elaborate. ADVERTISEMENT
Hanjin's domestic rivals, including the world's top shipbuilder Hyundai Heavy Industries Co. and number two player, Daewoo Shipbuilding and Marine Engineering , have been building overseas shipyards mainly in China and Vietnam.
The first overseas shipyard for Hanjin will be located in Subic Bay, two hours drive from the capital Manila and will cover about 700,000 pyong (2.3 million square metres).
Subic Bay was home to a U.S. navy base for half a century.
The shipyard will build LNG (liquefied natural gas) and VLCC (very large crude carrier) vessels as well as marine plant.
The investment would span about 10 years from March this year, the company said in a filing to the stock exchange, adding it aimed to make the first vessel delivery from the shipyard in June, 2008.
Hanjin would lease the shipyard site for 50 years which would be exempt from corporate taxes for eight years.
The company said recent political uncertainties in the Philippines were unlikely to affect the deal.
Philippines President Gloria Macapagal Arroyo, who survived an impeachment attempt last year over allegations of election cheating and corruption, invoked a state of emergency on Friday to confront what she said was a conspiracy by political enemies, communists and "military adventurists".
Hanjin shares rose 0.61 percent to close at 24,600 won, in line with the firmer broader market .
The Philippines is a familiar overseas market for the South Korean shipbuilder, which has been involved in building harbours, airports, highways and railways there in the past three decades.
"The new shipyard in the Philippines is based on our strategy to overcome growth limits because of the limited site in our local ship yard and increase competitiveness in new shipbuilding orders," the company said in a statement.
Hanjin said it had already won an order from French-based global container shipping company, CMA CGM, to build 4 container ships of 4,300 TEU (twenty foot equivalent units), worth a combined $250 million, for the new shipyard.
A Hanjin spokesman said by telephone CMA CGM had expressed its intention to help finance construction and to participate in other overseas projects. He did not elaborate. ADVERTISEMENT
Hanjin's domestic rivals, including the world's top shipbuilder Hyundai Heavy Industries Co. and number two player, Daewoo Shipbuilding and Marine Engineering , have been building overseas shipyards mainly in China and Vietnam.
The first overseas shipyard for Hanjin will be located in Subic Bay, two hours drive from the capital Manila and will cover about 700,000 pyong (2.3 million square metres).
Subic Bay was home to a U.S. navy base for half a century.
The shipyard will build LNG (liquefied natural gas) and VLCC (very large crude carrier) vessels as well as marine plant.
The investment would span about 10 years from March this year, the company said in a filing to the stock exchange, adding it aimed to make the first vessel delivery from the shipyard in June, 2008.
Hanjin would lease the shipyard site for 50 years which would be exempt from corporate taxes for eight years.
The company said recent political uncertainties in the Philippines were unlikely to affect the deal.
Philippines President Gloria Macapagal Arroyo, who survived an impeachment attempt last year over allegations of election cheating and corruption, invoked a state of emergency on Friday to confront what she said was a conspiracy by political enemies, communists and "military adventurists".
Hanjin shares rose 0.61 percent to close at 24,600 won, in line with the firmer broader market .
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