The Philippine shipbuilding industry has a gigantic potential for growth and is regarded as the sunrise industry that can boost the country's exports and economic growth. According to Invest Philippines, the country's industry is now poised to take on the traditional shipbuilding nations and become one of the world's largest shipbuilding nations in the in the next five to ten years. Shipbuilding is one of the government's preferred industries identified under the Investment Priorities Plan (IPP) entitling projects to income tax holidays and duty-free importation of capital equipment.
Shipbuilding activities include the construction and repair of ships and ship-breaking. The government aims to promote investments in the shipbuilding industry by focusing on markets such as Korea and Japan. It expects investments in the industry to grow to P93 billion by 2014. Philippines is currently ranked as the 4th top shipbuilding nation in the world following South Korea, China and Japan with 120 pending orders and a total size of 3.1 million Compensated Gross Tons.
With foreign investor's access to 100% ownership of companies on shipbuilding/repair, there has been an influx of shipbuilders in the country. Hanjin Heavy Industries & Construction (HHIC)-Phil, the local unit of the Korean shipbuilding giant, has won an order to build 10 mid-size container ships worth $450 million at its Subic shipyard. HHIC-Phil's Subic Shipyard has signed a contract with European shipowners to build the ships, which will be capable of carrying 5,000 twenty-foot equivalent units (TEU) of container.Further, Austal Ltd has also started its first shipbuilding operation in Cebu Industrial Park for 7 million Australian dollars ($7.2 million). The company has further invested A$5 million to upgrade the facility.
According to the International Finance Corporation: "Philippines has macroeconomic and maritime advantages for shipbuilding that include a better logistics performance, maritime training and seafaring". Due to high expectations of an economic recovery and excessive bidding for very large container ships,Philippine shipyards are now building more ships for export and a majority of these ships are of large tonnage capacities like bulk carriers, container ships and big passenger ferries. The Philippines is optimistic on the shipbuilding industry's bright prospects seeing it as a sector that will considerably contribute to economic progress and development, given enough government interventions and private sector support.
(Source: Insight Alpha)