SUBIC BAY Freeport—Employees of the Subic Bay Metropolitan Authority (SBMA) can still vividly recall the day 19 years ago when Subic welcomed 18 heads of state and proved to the world that it can host a prestigious event such as the Asia-Pacific Economic Cooperation (Apec) summit meeting.
Part of the preparation for the event was the construction of 18 luxury villas for the visiting Apec leaders that included US President Bill Clinton, and the building of a summit hall overlooking Subic Bay. The villas had since been sold to private buyers, while the conference venue remained unused in what is now part of a residential enclave.
Still the memories linger. But more than the pomp and pageantry that attracted thousands of residents of Olongapo City, Zambales and Bataan to Subic for a welcome party that replicated the sights and sounds of a Filipino fiesta, there was a sense of purpose, of a community wanting to deliver, says Carlos Andres, SBMA media relations officer who served as event volunteer for Apec 1996.
“It felt like we were one, that everyone has some stake in that undertaking and that we wouldn’t want to fail,” Andres recalls. “That was definitely Subic’s biggest day—something that made us very, very proud.”
Andres remembers most of all the sight that made headlines everywhere, when the 18 world leaders lined up along the conference venue at Subic’s Crown Peak area—resplendent in their native Barong Tagalog, waving to photographers with the blue Subic Bay serving as background.
“It was a heady experience,” adds Jonas Reyes, also a volunteer SBMA worker in 1996.
Reyes recalls how then-SBMA Chairman Richard Gordon constantly prep up the volunteer workers, boosting their spirits after working day and night to prepare for the high-profile event. He also recalls the huge banner hung in front of the SBMA main office along Waterfront Drive that said, “It’s Our Time.”
“The banner was so huge that the world leaders meeting at Crown Peak across the bay could not miss it,” Reyes recalls. “And that basically summarized it all—Subic was telling everyone that it was its time, that it’s ready for the entire world.”
‘Coming-out party’
Subic’s hosting of Apec 1996 was the defining moment for the then-fledgling special economic zone. “That was when Subic realized its potential, that it can be a player in the world stage, and that it can rise from the ashes of the Pinatubo eruption and succeed as an economic enterprise,” recalls Amethya de la Llana, head of the SBMA Planning and Development Office.
De la Llana says that what Andres and Reyes refer to as Subic’s “coming-out party” had, in fact, set the direction that the SBMA, which manages the Subic Bay Freeport, would take in the years to come.
SBMA figures indicate that Apec has provided Subic with the much-needed exposure to multinational companies, as well as to local investors who would set up shop in the area because of its accessibility, strategic location, available facilities and excellent security—Subic’s plus factors that were amply highlighted during the Apec summit.
According to the SBMA, a number of global companies located in Subic after the 1996 Apec event. These include: Hitachi, a Japanese multinational conglomerate that is listed on the Tokyo Stock Exchange and is a constituent of the Nikkei 225 and Topix indices, ranking 38th in the 2012 Fortune Global 500 and 129th in the 2012 Forbes Global 2000; Nidec Corp., another Japanese firm, which is currently the world’s No.1 comprehensive motor manufacturer; and Sanyo Denki, a Japanese maker of industrial fans, which is an overseas manufacturing subsidiary of Sanyo Denki Co. Ltd. Of course, the Subic Bay Freeport is home to Hanjin, a South Korean conglomerate whose shipping company is Korea’s largest and one of the world’s top 10 container carriers, whose shipyard in Subic Bay Freeport features the world’s two largest dry docks.
The Subic Bay Freeport is also hosting Vale SA, a Brazilian multinational diversified metals and mining corporation and one of the largest logistics operators in Brazil, with a global presence in five continents. Vale, which is considered the leader in the production of iron ore and the largest producer of nickel, currently uses the Port of Subic as its Asian hub for its iron ore-transhipment operations.
Other Subic locators include Philip Morris, a global cigarette and tobacco company whose state-of-the-art tobacco-storage facility in Subic Bay Freeport is expected to become its largest warehouse in Southeast Asia; Lindberg, a Danish multinational firm that has revolutionized the eyewear business—from design, materials and manufacture to sales—using lightweight titanium; and Crestec Co., a multilingual document engineering global company with 11 branches in Japan and 19 branches in 11 countries around the world.
With the arrival of foreign investors, as well as Filipino companies that are mostly engaged in the tourism and services industries, Subic’s gross revenues exponentially soared after it hosted the Apec summit, dwarfing its performance in the first four years after the free port was converted into a special economic zone from a military base.
Thus, from a gross revenue of just P800 million in 1996, SBMA’s income rose to P1.18 billion in 1997; P1.56 billion in 2001; and P1.67 billion in 2009. From there, the SBMA chalked up P2.02 billion in 2013 and P2.44 billion in 2014.
Similarly, the Subic agency recorded growth in its Ebitda (earnings before interest, taxes, depreciation and amortization) from P361 million in 1996, to P589 million in 1997, P750 million in 1998 and P869 million in 2001. Although Subic’s Ebitda weakened from 2002 to just P240 million in 2007, it soon gained new ground, climbing to P920 million in 2013 and P1.39 billion in 2014.
Continuing momentum
From the substantial growth surge it experienced after the Apec hosting, Subic went on to capitalize on the momentum to attract more investments, employ more workers and generate more income. And because of its innate attractiveness as an investment site, the Subic Bay Freeport Zone as of 2014 had about 1,500 businesses, more than $9.1 billion in investments, and a total work force of 96,958.
SBMA Chairman Roberto Garcia, who is credited for SBMA’s outstanding fiscal performance in the past three years, said that the best is still to come for Subic, as it expects a cumulative investment of about $9.5 billion by year-end, as well as some 100,000 in total free port employees. At the moment, Garcia said the SBMA “is the largest and most progressive free port operator,” the others being the Philippine Economic Zone Authority (Peza), Clark Development Corp. (Cdc), Cagayan Economic Zone Authority (Ceza) and Authority of the Freeport Area of Bataan (Afab).
Garcia said that while the SBMA currently has total assets of P28.08 billion, Peza has only P5.97 billion and Cdc, P5.72 billion.
In terms of equity, the Sbma has P16.97 billion, Peza has P4.25 billion, and Cdc has P3.49 billion. In terms of revenues, SBMA has P2.95 billion; Peza, P7.97 billion; and Cdc, P1.3 billion.
In terms of net income, SBMA also leads with P1.11 billion over Peza’s P1.03 billion and Cdc P331.73 million.
Ceza and Afab both have considerably smaller totals for assets, equity, revenue and net income.
Contributions
As an income-generating entity, the SBMA is now contributing significantly to the national economy. Garcia said that as of 2014, the agency contributed P15.3 billion through its Customs collections; a total of P1.8 billion in internal-revenue collections; P298 million in shares remitted to the national government; P199 million in shares given to local government units; and P243 million in dividends.
The P17.84 billion it raised in 2014 was 38 percent higher than the P12.96 billion it remitted in 2013. Garcia said the SBMA expects to outdo its sterling performance in the last three years by undertaking strategic measures, such as: moving from overregulation to developmental mode; expanding the free port area to accommodate more investors; capitalizing on the Philippines’s economic boom via aggressive marketing of the free port; focusing on game-changing projects; and institutionalizing good-governance initiatives.
Subic has come a long way since its establishment in 1992, but that event in 1996 had set the tone for its undertakings and accomplishments.