Hanjin raises Philippine investment to $1.68 bln

MANILA, (Reuters) - South Korea's Hanjin Heavy Industries will pour an additional $684 million into its shipbuilding yard in the Philippines, on top of the $1 billion it initially earmarked for investment, a government official said on Friday.

The entire investment, which would be completed by 2011, covers just two-thirds of a 400-hectare area leased to Hanjin in the Subic economic zone, northwest of Manila.

The company is working on details of a second phase of investment, Armand Arreza, administrator of the Subic Bay freeport zone, told Reuters.

No one from Hanjin was immediately available for comment.

By the end of this year, the Korean company would have invested $977 million to build part of the first phase of its shipyard. Another $501 million will be spent next year.

"The majority of it (investment) should be completed by 2008," Arreza said.

Hanjin is building two dry docks with four sets of 600-tonne "Goliath" type cranes, Arreza said.

Capacity constraints in Korea have forced Hanjin to look overseas for expansion. It started work in May 2006 on its Philippine facility, which has so far received orders for 28 container vessels, 3 bulk carriers and 2 oil tankers.

As of the end of 2006, the Hanjin group had racked up $1.7 billion worth of orders. In May, the group won shipbuilding orders worth a total of $2.2 billion from companies in Germany, France, Turkey and India.

The rise in Hanjin's ship orders were mainly driven by the growth in global trade, Arreza said.

He said Hanjin's annual exports from the Subic facility would reach at least $2.5 billion by 2016, equivalent to about 40 ships, from $521 million next year and $1.5 billion in 2009.

President Gloria Macapagal Arroyo said Hanjin's shipyard would transform Subic into one of the four largest shipbuilding centres globally.

The Korean firm's shipyard was the single largest direct foreign investment in the Philippines last year.