Robust shipbuilding industry key to making PH a maritime power

THE PHILIPPINES should build a self-reliant coastal defense system and support local shipmakers if it wants to become a maritime hub, experts and a local shipbuilder said. 

“Maritime security is a necessary condition for developing the Philippines as a maritime hub,” said George N. Manzano, a trade expert from the University of Asia and the Pacific.

“If there are dangers from piracy and armed threats, there will be commercial risks in investing in maritime transactions, making the Philippines less attractive,” he said in an e-mail.

During the campaign, then-presidential candidate Ferdinand R. Marcos, Jr. had promised to develop the maritime sector and make the Philippines a “logistics hub.”

In 2021, there were 118 registered shipyards in the Philippines scattered across the country, 17 of which belong to the medium-large scale category, according to the Maritime Page website.

One of them is Propmech Corp., a company that has built over a thousand vessels for the Philippines’ defense forces with the help of its 900 employees in different sites across the country.

Glenn Tong, director at Propmech, said the government should prioritize local shipbuilders over foreign companies in securing maritime assets for the defense sector if it wants to make the Philippines a “great shipbuilding” and maritime hub.

“After all, how are we going to develop if our own government does not support [us]?” he told BusinessWorld on the sidelines of a media tour of its shipyard in Subic Bay Freeport last week.

“The government plays a big role in this. Hopefully, it will give more opportunities to local companies or some preference to keep local companies’ services for the long term,” Mr. Tong said. “The ability locally is not able to grow unless you maintain a force here who can do the work effectively.”

Mr. Tong cited the lack of local materials used for building ships as one of the main challenges facing the local shipbuilding industry.

“A lot of raw materials required to build vessels such as steel, resins, among others, still need to be brought in,” he said.

Another challenge is ensuring there are skilled and capable workers available for the industry, he said.

Mr. Tong said it’s also “costly” to maintain operations locally, citing the high electricity rates.

“The Philippines is uniquely suited to be a maritime nation. But of course, there are some challenges,” he said.

Mr. Manzano said having a local shipbuilding industry can help enhance the maritime security on the supply side by providing assets such as sea craft and surveillance systems, among others, to law enforcement agencies.

“However, this is not a sufficient condition because the assets can be procured from foreign suppliers. It really depends on the prices, which are a reflection of the competitiveness of the shipbuilding sector,” he said.

Lack of funds has prevented the Philippine defense establishment — one of the weakest in the world — from achieving its goal of becoming self-reliant in terms of assets.

One of the “signature” products of Propmech is the Philippine Navy’s first-ever missile-capable boats.

With speeds of up to 83.3 kilometers (km) per hour and an operational range of 650 km on a full tank, the 17-meter multipurpose attack craft (MPAC) is widely used for patrols, logistical purposes, and search and rescue operations. 

Propmech has improved each MPAC model based on recommendations from the Philippine Navy.

“As a maritime nation with high stakes in the maritime industry (since the Philippines is a big player in maritime human resource), it is important that commercial maritime vessels understand maritime security,” Chester B. Cabalza, a security expert, said in a Facebook Messenger chat.

Maritime security “should be imbedded” in their operational manuals “since there are transnational maritime issues that could paralyze the industry.”

During the media tour, Propmech showed its ongoing work on a batch of watercraft for the Philippine Marines — a total of 16 vessels with a contract price of PHP 338 million.

“Part of the rationale of elevating our shipbuilding industry is to boost our national defense,” Michael Henry Ll. Yusingco, a policy analyst who has closely observed geopolitical issues confronting the Philippines, said via Messenger chat.

“Building ships for our Navy and Coast Guard will compel us to develop our own cohort of experts and technicians,” he added. “Ultimately, it will wean us away from relying too much on our foreign allies for our defense.”

Mr. Yusingco said the local shipbuilding industry has made some progress but there is still much potential.

Last month, the largest aluminum ferry built in a Philippine shipyard was delivered to Molslinjen, Denmark’s largest passenger ferry company. The shipyard is owned by Australian shipbuilder Austal Limited.

“If indeed this government is serious in elevating our shipbuilding industry, then they have to bring together the key stakeholders,” Mr. Yusingco said. “The education sector must be on board to provide a steady source of human resources with the needed skills and aptitudes in shipbuilding.” 

Coastal areas must also be involved in any plans to develop the shipbuilding sector, he added.

Strong ecosystem
Propmech, which has vowed to help the Philippines become the “maritime capital” of the world, hopes the government will help develop a robust “ecosystem” for local shipbuilders. 

“A lot of subservices for shipbuilding are not yet available here, which is one reason why we have to do everything. We have to do the engine installation; we have to do everything — unlike in other countries where there are specific support groups that can do some needed operations.” 

Mr. Tong hopes that the Philippine government’s push for economic liberalization will not disadvantage local shipbuilders but will give them opportunities to partner with foreign entities.

“What we’re hoping is that in the long term, we can create a strong shipbuilding ecosystem in the Philippines, which will allow yards to do certain things while getting expertise from other partners.”

Propmech, a family business that has over 70 years of experience, began its operations as a distributor of marine engines in 1991 before expanding its services to vessel refurbishing, boat building and maintenance more than ten years later.

It has since entered into contracts worth about PHP 20 billion with government agencies including the Navy, Philippine Coast Guard, Philippine police, and the Bureau of Fisheries and Aquatic Resources.

“The Philippines is not lacking in talents and expertise on shipbuilding in the global maritime industry since the Philippines is an archipelagic and a maritime nation,” Mr. Cabalza said.

“If we don’t see ourselves as a maritime nation like our forebears did, then we may not accept the sacrifices that must be made to become a shipbuilding superpower,” Mr. Yusingco said. “We may not be willing to do the hard work. This challenge even weighs heavier on our political leaders because they are the beneficiaries of the untenable status quo.” — By Kyle Aristophere T. Atienza, Reporter