From: news@netnews.upenn.edu (USENET News System)
Newsgroups: soc.culture.filipino
Subject: Investment in Subic
Date: 8 Sep 92 15:58:03 GMT
Followup-To: soc.culture.filipino
Organization: University of Pennsylvania


	SUBIC BAY NAVAL BASE, Philippines (UPI) -- Plans to turn the Subic Bay
naval base into a free port when the U.S. Navy leaves could mean big
profits, but only for companies willing to blaze their own trail.
	Subic boasts a well-protected deep harbor and billions of dollars in
modern infrastructure, including a ship repair facility, port, air
station, housing and telecommunications.
	But investment guidelines are loose at best, competition is intense,
and the risks for the handful of companies that will eventually win
leases on the base are daunting.
	``It's just like trooping through virgin snow,'' a U.S. energy
industry executive who regularly visits the base said of trying to
invest at Subic. ``Now, a lot of people are going to be nervous doing
that, but it is the way we prefer it.''
	Former President Corazon Aquino announced hazy plans to turn the base
into a complex of industrial estates, duty-free zones and a major
maritime center in early January.
	Subic Bay -- repair and logistics center for the Japan-based 7th Fleet
-- was the largest U.S. military installation overseas. At its height,
some 8,000 U.S. military personnel and 4,000 to 5,000 dependents lived
there. In addition, the base had 12,000 to 14,000 full-time Filipino
base workers and about 22,000 part-time Filipino workers.
	Last September the Philippine Senate rejected a proposal for a new
10-year U.S. lease on the base. Aquino ordered the United States to
leave Subic Bay by Dec. 31 after talks aimed at a phased, three-year U.
S. pullout failed.
	But political infighting in the Philippine government over control of
the proposed free-trade area that would replace the base, along with a
close, seven-way presidential election that did not produce a clear
winner until June, put the brakes on the Subic Bay transition effort.
	Executives say the Subic Bay situation has begun to jell since
President Fidel Ramos took office June 30. But much work remains.
	The Subic Bay Metropolitan Authority, or SBMA, is in charge of the
transition. But it has yet to draw up even an application form for
investors.
	``There is no real package yet,'' said SBMA Director Rosalinda
Ligsay. ``Everything is in the preparatory stages.''
	Ligsay said the group was waiting for a World Bank team to complete a
comprehensive base development plan before setting up any solid
investment structure.
	A team of 32 World Bank officials and Philippine experts hopes to
complete the plan sometime in September. But several potential investors
say anyone who waits for it will be left in the cold.
	``To choose a lot at this point is a bit premature,'' said Carl
Goderez, a consultant hired by the World Bank to help plan the
transition. ``But by the first quarter of next year they should be in a
position to begin closing deals.''
	Executives say the only way to a secure a contract is to present a
proposal in a one-on-one meeting with Richard Gordon, the charismatic
mayor of the nearby base town of Olongapo and chairman of the SBMA.
	Gordon is the driving force behind the free port. He hopes to save
Olongapo -- a city of about 300,000 -- by keeping the Subic Bay base from
suffering the fate of what used to be the U.S. Clark Air Base.
	Clark Air Base, not far from Subic Bay, was heavily damaged last year
by the eruption of the Mount Pinatubo volcano. U.S. forces withdrew
because of the damage, and looters moved in and razed the base.
	Although the U.S. Navy is transferring much of Subic's valuable
infrastructure to other installations, the base will remain prime real-
estate.
	With a planned minor runway extension, its airport, Cubi Point, can
accommodate a fully loaded Boeing 747 jetliner.
	The Subic Bay base also has an extensive container port and a ship
repair facility that includes 27 berths and more than 50 buildings.
	There are dozens of modern office and residential buildings. A diesel
generator supplies up to 26.4 megawatts of power, insulating the base
from an electricity shortage suffered by the rest of the country.
	``To duplicate what you have here already would take years and
billions of dollars,'' Goderez said. ``With the existing infrastructure
... you can offer goods at prices that undercut your competitors.
	``Provided the government gives the legal framework and incentives,
you can compete with anyone in the world.''
	The contest for that opportunity is getting hotter by the day and
involves major companies from around the globe.
	Executives say a consortium of Taiwanese investors has expressed
strong interest in securing a management contract for the entire base.
	More than 10 companies are interested in leasing the ship repair
facility, including Singapore-based Keppel Corp., Kawasaki Heavy
Industries and the Russian government.
	The Perot Group, owned by Texas-based billionaire-politician Ross
Perot, is interested in both the airport and industrial estate.
	Taiwan-based Evergreen, the world's largest container shipping firm,
American President Lines, American Telephone and Telegraph, Canon,
Caltex, Royal Dutch-Shell and Coastal Petroleum are among dozens of
companies interested in parts of the base.
	``I'm beginning to run into my competitors in hotels,'' a Western
executive said in Manila recently. ``I just saw one tonight...and I know
damn well that he's not here on vacation.''
	But even the most optimistic investors acknowledge that Subic poses
big risks as well as opportunities.
	Some potential investors say they are concerned about Mount Pinatubo,
which destroyed 250 buildings on the Subic Bay base when it blew its top
last year.
	The peak, 35 miles north of Subic, has shown signs of gearing up for
another major eruption, although scientists say they doubt the volcano
would inflict as much damage as it did in June 1991.
	That blast killed more than 700 people, forced nearly a quarter of a
million more to flee, laid waste to farm land and cooled temperatures
worldwide.
	In addition to concerns about the volcano, investors are wary of
inadequate infrastructure outside the base; the narrow, worn-out road
that connects Subic to Manila; and the Philippines' image as a dangerous
country.
	Perhaps the most pervasive concern is that, despite all its
potential, the base will fail to take off as a free port.
	``What Subic really needs is for one company to go in and score a
lease,'' the energy industry executive said. ``Once that happens, I
think people are going to feel a lot more confident and you are going to
see a whole pile of contracts being signed.
	``Would I sign a deal tomorrow and be that first one? Hell, yes.
Which one of the contracts that I have in my briefcase would they sign?
''
Newsgroups: soc.culture.filipino