UPDATES ON $3B SHIPPING HUB DEAL
Failed farm deals make COSCO wary
The Philippines is trying to seal a $3 billion deal with China’s largest shipping conglomerate, COSCO Group, to develop a logistics hub and other ventures, but will have to fend off rivals Thailand, Malaysia and Indonesia, said Francis Chua, special envoy for trade and investments.
He added that the Philippines needs to show it can deliver on its promises after nearly $5 billion worth of farm deals with China have so far failed to produce results.
China Ocean Shipping (Group) Co is interested in building a regional hub, a maritime school and an industrial zone and investing in mining in the Philippines.
COSCO Group, which earlier announced it was selling its dry-bulk shipping fleet for $4.6 billion to its China COSCO Holdings unit, is looking at several locations in Luzon, including two former US naval bases at Sangley Point and Subic.
If COSCO invested in Subic, north of Manila, it may strike a partnership with local port operator ICTSI, Chua said.
COSCO is also considering investing in Bataan or Batangas provinces, both facing the South China Sea, or in Baler, Quezon province, which faces the Pacific Ocean, he said.
COSCO was not immediately available for comment.
Chua said he would meet COSCO group President Wei Jiafu, a former ship captain, in Beijing this month to discuss possible investment, their second meeting in around three months.
"I want to hear from him what is the bottomline here. What would it take for him to say ‘yes’ immediately?," said Chua, a stockbroker and electronics manufacturer.
"I’ll ask him what are the lingering issues. Once he gives me his minimum requests, then I have to go back to the government ... that will be the clincher," he said.
COSCO is also in talks with other Asian countries about a regional hub as it seeks to expand to meet growing requirements from its Asian, US and European clients, said Chua, who became ambassador for Chinese trade in December.
His task was expanded in June to cover other countries.
After years as a regional laggard, the Philippines is revving up again due to strong consumer demand, a booming outsourcing sector and relative political calm.
The economy grew at 7.5 percent in the second quarter, its fastest annual pace in 20 years, but analysts have said the country needs to attract more foreign investment to keep the momentum going.
Net foreign direct investment reached $2.35 billion last year, less than 2 percent of GDP, as bureaucracy, corruption and creaking infrastructure put off investors.
In January, the Philippine government signed 18 farm deals with China and committed to find large parcels of land for Chinese firms to produce crops at lower cost for the Philippines and China.
The biggest of the 18 deals involved a planned $3.8 billion investment by the Fuhua Group in 1 million hectares of high-yielding corn, rice and sorghum.
But Chua said the government was finding it difficult to make available 1 million hectares for lease due to resistance from local farmers and the difficulty of finding large contiguous parcels of land in the archipelago.
"Frankly, it’s difficult to locate land here in our country." -Reuters
The Philippines is trying to seal a $3 billion deal with China’s largest shipping conglomerate, COSCO Group, to develop a logistics hub and other ventures, but will have to fend off rivals Thailand, Malaysia and Indonesia, said Francis Chua, special envoy for trade and investments.
He added that the Philippines needs to show it can deliver on its promises after nearly $5 billion worth of farm deals with China have so far failed to produce results.
China Ocean Shipping (Group) Co is interested in building a regional hub, a maritime school and an industrial zone and investing in mining in the Philippines.
COSCO Group, which earlier announced it was selling its dry-bulk shipping fleet for $4.6 billion to its China COSCO Holdings unit, is looking at several locations in Luzon, including two former US naval bases at Sangley Point and Subic.
If COSCO invested in Subic, north of Manila, it may strike a partnership with local port operator ICTSI, Chua said.
COSCO is also considering investing in Bataan or Batangas provinces, both facing the South China Sea, or in Baler, Quezon province, which faces the Pacific Ocean, he said.
COSCO was not immediately available for comment.
Chua said he would meet COSCO group President Wei Jiafu, a former ship captain, in Beijing this month to discuss possible investment, their second meeting in around three months.
"I want to hear from him what is the bottomline here. What would it take for him to say ‘yes’ immediately?," said Chua, a stockbroker and electronics manufacturer.
"I’ll ask him what are the lingering issues. Once he gives me his minimum requests, then I have to go back to the government ... that will be the clincher," he said.
COSCO is also in talks with other Asian countries about a regional hub as it seeks to expand to meet growing requirements from its Asian, US and European clients, said Chua, who became ambassador for Chinese trade in December.
His task was expanded in June to cover other countries.
After years as a regional laggard, the Philippines is revving up again due to strong consumer demand, a booming outsourcing sector and relative political calm.
The economy grew at 7.5 percent in the second quarter, its fastest annual pace in 20 years, but analysts have said the country needs to attract more foreign investment to keep the momentum going.
Net foreign direct investment reached $2.35 billion last year, less than 2 percent of GDP, as bureaucracy, corruption and creaking infrastructure put off investors.
In January, the Philippine government signed 18 farm deals with China and committed to find large parcels of land for Chinese firms to produce crops at lower cost for the Philippines and China.
The biggest of the 18 deals involved a planned $3.8 billion investment by the Fuhua Group in 1 million hectares of high-yielding corn, rice and sorghum.
But Chua said the government was finding it difficult to make available 1 million hectares for lease due to resistance from local farmers and the difficulty of finding large contiguous parcels of land in the archipelago.
"Frankly, it’s difficult to locate land here in our country." -Reuters
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