Olongapo SubicBay BatangGapo Newscenter

Tuesday, May 06, 2008

Hanjin staying in RP – Palace

Korean shipbuilding giant Hanjin has expressed its intention to continue investing in the Philippines despite a looming Senate investigation into allegations of bribery and extortion hounding its $2-billion shipyard project in Misamis Oriental, Malacañang said yesterday.

Press Secretary Ignacio Bunye and Deputy Presidential Spokesman Anthony Golez, in separate statements, also warned that a Senate inquiry at this time could force Hanjin Shipping and other foreign investors to leave the country.

Bunye said Trade Secretary Peter Favila told him yesterday that Hanjin officials informed him that they are “inclined to stay” in the country despite the controversy. He pointed out that Hanjin is part of the “billion-dollar club” of foreign investors and its impact on the economy is huge.

Deputy Presidential Spokeswoman Lorelei Fajardo, who is also presidential adviser for Central Luzon, said she spoke with Hanjin president Jeong Sup Shim last week and he expressed frustration over the bad publicity.

“At the same time he (Jeong) gave us their guarantee that they will continue doing business in the Philippines. We have their commitment. They cannot hide their frustration at the same time,” she said.

President Arroyo earlier ordered Interior Secretary Ronaldo Puno to investigate allegations from officials of Tagaloan and Villanueva towns in Misamis Oriental that officials of Hanjin Heavy Industries Inc. were trying to bribe them, but Hanjin officials said local executives were trying to extort money from them in exchange for the smooth construction of the shipyard.

“We expect a credible investigation and (Misamis Oriental) Gov. (Oscar) Moreno is helping in this and I believe the governor will get to the bottom of this,” Bunye said.

He said Moreno is a former lawmaker and investment banker so he is fully aware of the value of Hanjin’s investment, but at the same time he maintains a “balance” of the interests of various parties.

“Let’s remove politics from this (issue) and let them (authorities) do an impartial investigation. It’s moving,” Bunye said.

Golez said a Senate investigation would only reinforce “our people’s belief that some critics of this government are still hungry for public attention at the expense of our country’s reputation.”

He said such a move would show the country as one that “slaps investors after inviting them to invest billions of dollars.”

Meanwhile, the Subic Bay Metropolitan Authority (SBMA) yesterday denied accusations that it is giving special treatment to Hanjin Heavy Industries.

“Like all other locators in Subic, Hanjin gets no preferential treatment,” Ramon Agregado, SBMA senior deputy administrator for support services, told senators.

Sen. Loren Legarda has filed a resolution to inquire into Hanjin’s privileges in order to ensure that the preferred status of investors in economic zones is not abused.

The South Korean investor is operating a $1.7-billion shipyard at Subic’s Redondo Peninsula.

“Of course, we have to prioritize some of Hanjin’s extraordinary requirements because of its tight construction and delivery schedule, but there were no shortcuts nor special privileges given,” Agregado noted.

“And even if some of these gets prioritized, there have been no complaints from other business locators that Hanjin’s prioritization is to their prejudice,” he added.

Agregado stressed that the Freeport zone is providing equal treatment to all locators and investors and that the incentives given to locators are subject to rules and regulations.

The incentives include tax- and duty-free importation of raw materials, capital equipment and other items for consumption within the Freeport; exemption from local and national taxes; unrestricted entry of investments; no foreign exchange control, which allows full repatriation of profit; visas for foreign nationals; and regional enterprise incentives.

Agregado said the SBMA has exercised its regulatory power against Hanjin when it stopped some of its importation activities because of pending collectibles.

SBMA has even penalized the company for violating requirements on environmental clearance certificates and the use of non-accredited sub-contractor.

“We even denied Hanjin’s claim for exemption on wharfage fee, even when the company has built the wharf that it’s now using,” Agregado said.

He also said Hanjin has not been given special rates for the 350 hectares it is using for shipbuilding operations.

“They have offered $3.50 per square meter for the land lease, and I think that is just fair, considering the size of their investment, the volume of employment created, and the fact that there are no existing utilities in the area,” he said.

In addition to this, SBMA has required Hanjin to follow guidelines on wage-related issues, working conditions, shipyard operation which was coordinated with Maritime Industry Authority (MARINA), immigration policies, as well as fees and relocation of affected settlers.

Hanjin and its sub-contractors now employ close to 17,000 workers, and had built its own Skills Development Training Center, which is now the world’s largest training facility dedicated to shipbuilding workers, and provides technology transfer. – With Elisa Osorio by By Paolo Romero - PhilStar

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