Tax Perks Granted to ₱17 Billion Rehab Project of Subic Shipyard

Tax-free perks have recently been approved by the Fiscal Incentives Review Board (FIRB) for the ₱17 billion Agila Project, which aims to rehabilitate the Hanjin shipyard in the Subic Bay Freeport Zone. According to the Department of Finance (DOF), the granting of fiscal incentives for the project was endorsed by the Subic Bay Metropolitan Authority (SMBA).

“The project was granted special corporate income tax, value-added tax (VAT) exemption from importation, VAT zero-rating on local purchases, and duty exemption on importation,” explained the DOF. Finance secretary and FIRB chair Carlos Dominguez furthered that “the rehabilitation of the Hanjin shipyard presents economic potential, given its strategic location near the West Philippine Sea.”

“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,” Dominguez added. The Hanjin shipyard previously employed 20,000 workers until its operations slowed down in 2019 due to its inability to repay $1.3 billion to various banks.

With the rehabilitation of the facility, more investment opportunities are expected to be generated. Moreover, the DOF elaborated that “the project will cater to both the Philippine Navy and potential export locators. 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.” A naval base will be established within the facility, based on the deal between the government and US-based private equity firm Cerberus Capital Management which is funding the project.

Most of the displaced workers — around 3,000 employees — from the former South Korean shipbuilder will also be retained “while additional jobs averaging about 300 per year from locators and subcontractors will be created, catalyzing growth in Central Luzon and the rest of the country,” Dominguez furthered. “With this development beneficial to all stakeholders, we look forward to a robust shipbuilding and ship-repair facility to serve not only our military and coast guard requirements but also the requirements of the private sector.”

Sources: Inquirer, ABS CBN