The Fiscal Incentives Review Board chaired by Finance Secretary Carlos Dominguez III approved the grant of tax incentives to the P17-billion Project AGILA which involves the redevelopment and operations of the Hanjin shipyard in the Subic Bay Freeport Zone.
Dominguez said he supported the approval of the tax perks for Project AGILA as the rehabilitation of the Hanjin shipyard presents economic potential, given its strategic location near the West Philippine Sea.
The project, which was endorsed by the Subic Bay Metropolitan Authority, would be funded by the United States-based private equity firm Cerberus Capital Management.
Among the tax incentives given to the project are special corporate income tax, value-added tax exemption from importation, VAT zero-rating on local purchases and duty exemption on importation.
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 said.
“The resumption of operations in the shipyard will also prompt development and productivity in the area, which can attract more investment opportunities into the country,” he said.
It will cater to both the Philippine Navy and potential export locators.
The DOF said it would be specifically beneficial to the Navy, as it would involve the safety and efficiency of the Philippine government ships’ performance and, consequently, strengthen national security.
Dominguez earlier said the acquisition by US private equity firm Cerberus Frontier of the former Hanjin shipyard at the Subic Bay Freeport was a “win-win” especially for the Filipino people, as it would retain and create more jobs, further stimulate the Philippines’ robust growth and serve the requirements of both the military and the private sector.
He said with the conclusion of the agreement for the buyout of the shipbuilding facilities, the deal would allow five of the Philippines’ largest banks to book a profit from their written-off loans with Hanjin Heavy Industries and Construction Philippines, while the Subic Bay Freeport, where the shipyard is located, will get a better tenant in Cerberus.
The Philippine Navy will also get a naval base “with an ideal harbor for its rapidly expanding fleet facing the West Philippine Sea,” Dominguez said.
Many of the displaced workers in the former Hanjin shipyard will also be retained, while additional jobs averaging about 300 a year from locators and subcontractors will be created, catalyzing growth in Central Luzon and the rest of the country, Dominguez said.
The discussions on the acquisition of the former Hanjin shipyard by Cerberus Frontier began three years ago.