Second Symposium(Presentation of Subic Bay)

Presenter:Victor L.Mamon
Deputy Administrator for Port Operations,
Subic Bay Metropolitan Authority
the PHILIPPINES

SUBIC BAY PORT DEVELOPMENT

BACKGROUND
The Subic Bay Freeport Zone (SBFZ) is among the flfSt military facilities to be converted for commercial and civilian use. It came about when the Philippine Govemment rejected the extended stay of the US Armed Forces in both Subic Bay in Zambales and Clark Air Force Base in Pampanga in the Philippines after the disastrous explosion of Mt. Pinatubo in 1991. Subic Bay possesses such excellent infrastructure, availability of trained manpower and strategic location , hardly unmatched elsewhere in the Asian region for its rich potential.

A glaring peculiar attraction of the port is its immediate availability in addition to its attractive feature of having a natural deep and sheltered harbor without need of a breakwater to service vessels. Its basic infrastructure has been previously geared toward military use but can easily be adapted for civilian and commercial purposes.

Its development will enable the Philippines to become a major player in the fast growing international container market, while facilitating hinterland and local transshipments to promote local trade thuscontributing significantly to the country's overall economic growth.

The management of SBFZ is being undertaken by the Subic Bay Metropolitan Authority (SBMA). It was established as the operating arm of the Bases Conversion Development Authority (BCDA), a government creation tasked to oversee the proper disposition of military assets that can be converted for commercial use. SBMA is specifically authorized "to administer, operate, manage and develop the ship repair facility, container port, oil storage and refueling facility within Subic Bay" that were left behind by the departure ofthe US Navy.

The SBFZ is uniquely positioned for further development as a vital center for industry, commerce, tourism and investment. Creating and developing an efficient and thriving port will be a powerful tool to attract additional industrial ventures and investments, making the port as a key toward the economic vision for Subic Bay and vicinity in particular and ofthe country in general.

The successful development of SBFZ will be a necessary step in revitalizing the Region encompassing Subic, Bataan Peninsula, Zambales, Pampanga, the rest of Central and parts of Northern Luzon and even Manila and the also developing economic zone known as the CALABARZON to the south. Successfully turning this SBFZ vision into reality can provide a model for economic development that can create widespread employment opportunities for people of the Philippines. Exeess trained manpower, at the moment, have to seek opportunities for employment overseas just to ride the economic crisis that has hit the Asian Region lately.

As a first step in implementing the SBF vision, the Philippine government established Subic as the country's first duty- freeport zone. The Freeport status, similar to that of Hong Kong, provides an immediate advantage over other transportation and economic centers in the region. It will be a powerful incentive to draw businesses to establish themselves in the Philippines to enhance their own global competitive advantages.

The conversion of the former defense installation of the U.S. for eommercial and industrial usage is one such opportunity that offers real and exciting possibilities for the discerning investors. Plans are in place to attract tourism and financial activities, Iight to medium industries, as well as environmentally friendly high-technology industries.

The overall goal of the government is to make maximum use of the existing facilities at the Zone, to foster private sector participation and to quickly generate economic activity in the area. Foreign investments plays a major role in attaining this goa[ especially where the government wishes to generate an increase in its net foreign exchange and utilize its surplus labor.

The SBMA boasts of a natural and deep harbor with relatively little siltation and depths capable of serving the large cargo ships and existing port facilities suitable for commercial port operations for the Philippine market and transshipment for the Asia-Pacific region. The SBMA envisions the Zone to develop into the premiere location for port operation, including local and foreign transshipment.

The SBFZ is a self- sustaining, industrial, commercial, fmancial and investment center. In addition, it also qualifies as a tourism and recreation center. Businessmen could therefore look forward to a place of business as well as a place for rest and recreation close to nature. The development effort started in the area occupied by the former US Naval Base in Subic and radiates outward to the neighboring municipalities in Central Luzon.

The SBFZ compromises the former Subic US Naval Base, Olongapo City and the adjacent municipalities of Subic, Hermosa and Morong. Republic Act(RA)7227, otherwise known as the "Bases Conversion and Development Act of 1992, defined the powers and functions of the SBMA within the SBFZ. These powers and responsibilities include the leasing of public land for commercial and transportation- related endeavors and the establishment, maintenance and regulation of public utilities. A formal declaration by the President of the Republic of the Philippines established the base conversion as a key item in the national agenda. It provides that the SBMA shall encourage the participation of the private sector by privatizing the development and operation of the various facilities in the former U.S, Naval Base to implement the conversion program.

The Subic port development is one of the flagship projects of SBMA that is getting the priority concern of the National Goverument in promoting economic recovery and upliftment of the Central and Northern Luzon Region in the Philippines.

In 1998 the Japan Intemational Cooperation Agency (JICA) assisted SBMA in attaining this Port Development vision by commissioning a JICA Study Team that undertook a Feasibility Study leading to the Subic Bay Port Master Plan. The Study was completed in March 1999 and the Final Report was submitted last August 1999. It has already undergone evaluation and endorsement by the Department of Finance to the National Economic Development Authority (NEDA) for final evaluation and endorsement to the Office of the President as one of the priority projects to be recommended to the Japanese Govermnent under the Special Japanese Yen Loan Program.


PORT DEVELOPMENT PROGRAM

A. Phased Construction Plan

The Short Term Plan which will be covered under the Japanese Special Yen Loan Package consist oftwo phases:

Phase I- Reclamation in the Cubi Pt. area near the Subic Bay International Airport (SBIA) of around 14 hectares of container backup area and the construction of a 280 meter berth with two 40-ton capacity gantry cranes.

Phase II- Continuing reclamation of another 14 hectare container backup area and construction of 280 meter berth with additional two gantry cranes.
In addition to the above reclamation , berth constructions and gantry crane installations, construction of access roads to link the Modern Container Terminal with the main road leading to and from Subic, rehabilitation of existing wharves to service conventional and break bulk cargoes and installation of new navigational aids will also be simultaneously undertaken.

It should be noted that the Subic Bay Modem Container Terminal will be complemented by the presence ofthe Subic- Clark Toll Road which will link Subic to the fonner US Airforce Base in Clark Field, Pampanga, a distance of around 45 kilometers. It is up for construction by late 2000 and due for completion in 2004. This road link opens up the Subic-Clark corridor to economic expansion that could avail of the Subic Port and the Clark Airport to sea and air traffic respectively.

The third phase of another 14 hectare backup area, 280 meter berth and additional two gantry cranes is covered in the Long Term Plan . It is not included in the Loan Package being applied for with the Japanese Government. Its start and implementation will depend on the outcome and progress of the first two phases. It can be accelerated if the market potential favors its early implementation.

B. Capacities (Cumulative)

Phase I　(280 m. berth, 2 Gantry Cranes)--300,000 TEUs

Phase II (280 m. berth, 2 Gantry Cranes)--600,000 TEUs

Phase III(280 m, berth, 2 Gantry Cranes)--900,000 TEUs
C. Costs

Total ProJect Cost----------- 215M dollars 

SBMA Component----------------185M dollars 

Prrvate Operator Component----30M*dollars
(*Note: The port facility will have the basic infrastructure of container backup area , berths and gantry cranes. Port operations will be opened for bidding to the private sector that will provide the other equipment in doing cargo handling and other tenninal operations.)
D. Timetable

Phase I---------- 2005

Phase II----------2007

Phase III---------2015
Reclamation is expected to start by late 2002 for berth construction and gantry crane installation and to be completed by year 2005. Reclamation will continue up to completion of Phase II but can be extended to Phase III as the situation warrants.

E. Operational Features

Port operations will be privatized. It will be opened up for public bidding to get the best tenns for the government. SBMA will function as the regulator of the port but will leave cargo handling and other terminal functions to the private sector to undertake. The concept of a Port Authority encompassing activities ofthe Seaport, Airport and Land is being looked into as a possible model of this private-government sector interface in Subic. In addition, separate operators for the different container berths will be heavily favored to spur competition among the operators to encourage port efficiencies that could be advantageous to port users.

F. Interim

While the reclamation and construction of the Modern Container Terminal is going on, container operations will continue at the current container terminal at the former US Naval Supply Depot (NSD). A 2nd. Hand gantry crane will be procured by an SBMA Interim Joint Venture Partner to replace an APL-SEALAND Hitachi Gantry Crane that was removed and transferred to GUAM when the US Navy returned Subic Bay to the Philippine Authorities in 1992.

Conventional and break bulk operations will also continue to be done at NSD and other wharves at Subic

The Interim Joint Venture (JV) will continue container operations at NSD until the completion of the Modern Container Terminal at Cubi Pt., after which it will be migrated to the latter leaving NSD purely for conventional and break bulk operations.

The Interim JV will, at least, ensure the continuity and improvement of container operations while the new container terminal is still under construction. The absence ofthe Gantry Crane at the Naval Supply Depot has limited the capacity of Subic Bay to accommodate non-self sustaining vessels from being h~ndled. As such, some locators and port users still have to use the Port of Manila to handle their containerized cargoes due to the scarcity of containerized vessels using the Port of Subic. The increased container traffic can also help assure enough container traffic to feed the new container terminal when it starts operations.

SIGNIFICANCE/CONCLUSION

The Subic Port primarily benefits enterprises within the Freeport Zone due to its location. However, it's designed not only to enhance the growih and development of areas within but also areas adj acent to Subic and of Central and Northern Luzon as well. This is due to the presence of the Clark and Luisita Industrial Complexes that will conveniently be accessed by the Subic- Clark- Luisita Toll Road within the near future.

The synergy between Clark and Subic is highlighted by the presence of an International Airport in Clark which is being earmarked to take the slack from the rapidly growing air traffic at the Ninoy Aquino International Airport(NAIA) in Metrc Manila. Subic Bay can provide the sea access while Clark the air access. Subic's airport, while of international standard, can not anymore be extended due to the high cost ofreclamation and the presence of mountain ranges in the vicinity. It will be allowed to peak in its utilization, thus air cargo beyond its capacity will be pushed to Clark. In effect, the Subic Bay Freeport will concentrate more on port development to spur economic development in Central and Northern Luzon.

The growth and development of the Subic port stems from the growing traffic problem in Metro Manila plus its configuration as a natural deep water port whose potentials have been widely acknowledged but has not yet been fully tapped, Economic developments in an area can best be served by access to all modes of transport. Subic has most of these and Clark Airport nearby provides the other synergy.

These features of Subic in relation to the overall strategy of the government to spur development as a means to economic recovery and growih in the incoming millenium make it among the prime target for government support and endorsement.