The good news and the bad news about Subic

When Commodore Feliciano G. Salonga took over the Chairmanship of the Subic Bay Metropolitan Authority (SBMA) last September 19, 2005, he examined the business ledger and was horrified.

He discovered that the SBMA had P 4.7 billion in unpaid or past-due receivables. On closer inspection, Chairman Salonga found that approximately half of that huge amount consisted of penalties and surcharges, meaning that the collection effort had been overlooked to the point that the penalties and surcharges had built up to the level of being almost of the same amount as the original debt. These receivables were inherited from the administrations of his two predecessors, the founding Chairman and CEO, now Senator Richard "Dick" Gordon, and in a lesser amount from former Chairman Felicito "Tong" Payumo.

The root cause of these unpaid debts and surcharges, obviously, was the result of sloppy work on the part of the lawyers who had drawn up contracts, plus, of course, the unusually laid-back fiscal housekeeping which had prevailed in the SBMA. Complicating matters, I might add, had been the fact that Gordon and Payumo, a former Bataan Congressman, had been feuding with each other for years. In fact, when former President Joseph Erap Estrada had appointed Payumo to take over, Gordon had refused to "surrender" the SBMA to Tong, harassing his newly-appointed administration for months until being literally forced to give in.

Even then, Dick controlled Olongapo City and had attempted to put up a barricade between the Freeport Zone and Olongapo itself. This "war" between Dick and Tong had done the Freeport Authority and its Industrial Zone no good. Oh well. Now that a more tactful Fil Salonga – who, by the way, aside from his own experience and hands-on management expertise is the father of "Miss Saigon" Lea Salonga – has taken over, I guess there will be more peace in the SBMA. Or perhaps, I’m just kidding myself.

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The truth is that the "bad news" is now balanced off by the good news. Under Salonga, the SBMA is on a roll on terms of investments already in place, i.e. more than $3.5 billion. In the pipeline are investments of $60 million from Taiwan, and, for starters, $312 million from the People’s Republic of China.

The present level of employment in the SBMA is close to 60,000, distributed among investors in tourism, maritime industries, manufacturing, and a slew of traders, transhippers and second-hand construction and agricultural equipment reconditioning. Interestingly enough, there are now 94 locators engaged in ICT and one in aviation in the Zone.

The dominant nationalities are still Filipinos, followed closely by the Taiwanese, the South Koreans and the Japanese (who are both growing in size and numbers quite rapidly) aside from Malaysians and Europeans. Commodore Salonga is quick to say that "we owe most of these investments to the efforts of my predecessors chiefly Senator Dick Gordon and former Chairman Payumo."

Fil Salonga’s stunning achievement, however, was to clinch a $1 billion investment from Hanjin Heavy Industries and Construction, Inc., of Korea. Last month, Hanjin, which is the Number Two in shipyards and heavy industries, after Hyundai Heavy Industries (which runs shipyards, manufactures the well-known cars and other vehicles bearing its brand, as well as agri-equipment) set up shop in the SBMA and was off and running, initially employing 1,000 Filipino engineers, workmen and contractors. The Hanjin plan envisions expanding its workforce to 10,000 in the first year and eventually 30,000 within ten years – a quantum boost in Subic employment.

Hanjin is already bringing in earthmovers and other heavy equipment to commence civil works and begin the manufacture of components for ships and steel fabrication. Since Hanjin also operates 140 ships worldwide, it is in the blueprint, in the long run, to dry-dock and possibly build ships in the SBMA port.

It was interesting how the deal was worked out. It turns out that Salonga, a graduate of the United States Merchant Marine Academy, at King’s Point, New York with a B.S. in Marine Engineering in 1953 had served in the U.S. Merchant Marine in the Korean theater of war in 1950 and 1951, specifically as a cadet engineer aboard the SS "Pioneer Mail," a 16,000 gross ton vessel. Although he had not claimed the distinction, the Koreans had regarded him as a war veteran who, just as our PEFTOK battalion combat teams had fought on the peninsula, had helped the South Koreans repel invasion from the north.

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Salonga shares credit for any gains with his SBMA Administrator and Chief Executive Officer (CEO) Armand C. Arreza, a nominee of Dick Gordon. He points out that Arreza, a former volunteer and Finance Officer during the term of former Chairman Gordon, is a Wharton graduate whose expertise is being put to work in attracting more investment and locators, as well as in the difficult effort to mitigate the P4.7 billion receivables problem. Salonga and Arreza have a tough job in the latter, partly because some of the big debtors have skipped the country, while the others who are still around have hired super-smart lawyers to defend themselves in the collection cases the SBMA has filed in the courts.

"As you can imagine, knowing how the courts operate," Salonga grimaces, "the challenge is truly a formidable one. Just the same, taking all the problems into consideration, I still feel justifiably optimistic about the future of the SBMA." He underscores that, in spite of everything being thrown at her by oppositionists and critics, GMA has drawn up a number of initiatives which Salonga feels will provide substantial benefits for the national economy in general and for Central Luzon in particular.

One of these initiatives is the Subic-Clark Alliance Development Program, which includes Subic Seaport as a key element.

Among most important anticipated developments, he reports, is a large investment from mainland China in the form of a multi-million dollar glass factory. The agreement on this is currently in the process of being formalized by a team of negotiators now there, headed by Department of Trade and Industry Senior Undersecretary Tom Aquino, SBMA Administrator and CEO Arreza and SBMA’s Investment Manager Ronnie Yambao.

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Since he tends to be modest, not enough is known of Fil Salonga’s qualifications to bring the SBMA into the 21st century.

Not only did he receive the most coveted award from his alma mater, the U.S. Merchant Marine Academy Alumni Association’s "Outstanding Professional Achievement Award for the Year 1988," but Salonga was recently promoted to the rank of Commodore (equivalent to General in the Armed Forces) in the Philippine Coast Guard Auxiliary, 106th Squadron. He not only graduated from the prestigious Kings Point, the Merchant Marine equivalent of the U.S. Naval Academy at Annapolis, USA, (a Kings Point Scholastic Star Awardee from 1949 to 1953) but also graduated from the Armed Forces of the Philippines Intelligence Specialist School in 1954.

He also graduated from the U.S. Navy Mine Sweeping Course in 1956.

Salonga also took his Master’s in Business Administration (1959-1960) in the University of the Philippines, Diliman, Quezon City and holds a U.S. Coast Guard License (1953) as 3rd Assistant Engineer (Unlimited Horse Power). He was Vice-Chairman of the Bataan Shipyard and Engineering Company, Inc. and President and General Manager of the Philippine Shipyard & Engineering Corp. (PHILSECO), a ship repair company in Subic, Zambales, from 1987 to 1994, and finally Executive Chairman of the Sabah Shipyard Philippines, Inc. from 1994 to 1999.

Kings Point where he was trained is regarded in America as the Fourth Arm of the U.S. National defense establishment, after the Army, Navy, and Air Force. Founded in 1938, it graduated approximately 8,000 officers during World War II, and a third of them were commissioned for active wartime duty in the U.S. Navy, quite a number of them dying in battle.

The cadets at the Merchant Marine Academy have basically much the same curriculum as that of the U.S. Naval Academy at Annapolis including Physics, History and Languages, courses in English composition and literature, physical training and ship’s medicine, as well as navigation, meteorology, engineering and naval science.

According to The Real Book About Our Armed Forces by Clayton and K.S. Knight, "Kings Point graduates are familiar with Navy practices and are capable of working closely with the Navy if hostilities call them to active wartime duty." The major aim of their training, however, concerns the shipping industry and graduates are prepared to handle ocean liners and cargo ships.

In sum, Commodore Salonga is well qualified to steer the SBMA into a prosperous future. But in the choppy political waters, he’ll need all the support from his Commander-In-Chief, La Presidenta.