Hanjin Philippines took tax perks for a shipyard model that left $1.3B in debt

Hanjin Heavy Industries and Construction Philippines built its Subic Bay shipyard with public concessions attached. It registered for tax perks under the Subic Bay Metropolitan Authority in 2006 and the Board of Investments in 2009. FIRB later said the company received a seven-year income tax holiday, a special 5% tax regime after that holiday expired, duty-free import privileges, and P5.17 billion in power subsidies from 2009 to 2018.

The bargain was supposed to create and maintain industrial scale. FIRB said HHIC-Phil failed to maintain an estimated 20,000 workers and did not proceed with a planned $2 billion Mindanao shipyard that was expected to create 30,000 jobs. The Subic yard was therefore not just a private capacity bet; it was a public-incentive bet on shipbuilding volume that had to keep arriving.

On 8 January 2019, the company announced bankruptcy and sought voluntary rehabilitation in Subic. PhilStar reported that it owed $412 million to Philippine banks and another $900 million to Korean banks. The affected local lenders included RCBC, Land Bank, Metrobank, BPI and BDO. A commentary in the same paper pointed to an unexpected glut in shipbuilding demand caused by continued uncertainty in world trade, plus heavy debt and revenues that had fallen behind.

The bill outlived the company. In 2022, FIRB said the failed shipyard had cost the government at least P370 million in 2015 income-tax-holiday revenue and P5.17 billion in power subsidies from 2009 to 2018. The former Hanjin yard was later taken over for redevelopment, but the incentive review board used the collapse as a warning that tax privileges need stricter performance checks before they are granted.