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Philippines’ Subic Bay Takes Center Stage

With the fast approaching ASEAN launch, along with ongoing tensions in the South China Sea, a lot of attention is being placed on Subic Bay. This former site of a massive U.S. naval base is located northwest of Manila, an excellent jumping off point not only for business/commerce in Southeast Asia, but also in close proximity to the Spratly Islands group where China has been actively building artificial islands and military facilities.

For the past 23 years—since the Subic Bay naval base was turned back over to the Philippines—it has been developed into a special economic zone, making use of the space for everything from manufacturing to ship repair to luxury condo developments. There are operations run by companies from a variety of countries but Taiwan is especially active here of late, and more investment is being encouraged by Jeff Lin, president of the Subic Bay Development Management Center Inc.—a venture between the Philippines and United Development Corp (a Taiwan-based enterprise).

Naval base Subic Bay Philippines

Taipei Times reports, “In the Subic Bay Special Economic Zone, investors only pay a 5 percent tax on gross income, which can help save costs, Lin said. If 40 percent of the investors’ products are manufactured locally, the products are sold duty-free on the ASEAN market, he added.”

Dozens of companies have already been putting money into new projects here and as of now, Taiwan alone operates about 30% of the companies in the already crowded Subic Bay Gateway Park.

In addition to economic expansion in the area, the port is about to enter a renewed period of military use. There are talks of allowing the U.S. to make use of the base to station troops again, in addition to allowing the regular presence of ships and aircraft. This by no means would be a return to the level of activity in former days, but in theory would be of more limited capacity, as dictated by last year’s Enhanced Defense Cooperation Agreement.

Despite the signing of this agreement, there is still debate and strong resistance to this plan, especially when considering that the 1992 closure of Subic Bay signified the end of a roughly 400 year period of foreign military presence in a country that had seen almost no end to colonization. No small event for the Philippines.

Even with the economic success of the Subic Bay Special Economic Zone, much of the infrastructure that once supported the world’s largest naval base is still in need of overhauling, so with the intent to resurrect this area to the level of handling military operations, some real money is going to have to be poured into the project soon. The U.S. plays their part in this with annual military aid but the Philippines government is now asking for US$300 million, as pressure increases over China’s island building campaign and the Philippines Armed Forces are in no state to defend anything.