SUBIC BAY FREEPORT, Philippines — The Subic Bay Metropolitan Authority (SBMA) has placed on hold the proposal of a Chinese-owned company to develop and operate two strategically located islands at the mouth of Subic Bay.
Reacting to reports that Chinese investors are targeting the strategic Grande and Chiquita Islands in Subic Bay, the SBMA said a project covering the islands had been on standstill since May due to unresolved issues.
“It’s true that a group of Chinese investors wanted to take effective control of the islands to further develop them as tourism destinations, but we saw some problems about the proposed activities,” SBMA said in a statement.
SBMA said Sanya CEDF Sino-Philippine Investment Corp., which recently gained majority shares in the company holding lease and development rights over the two islands, had proposed to put up 80 high end housing units along the coastline of Grande Island up to Chiquita Island.
“This cannot be allowed because the Constitution limits the use and enjoyment of archipelagic waters exclusively to Filipino citizens,” the SBMA pointed out.
“Moreover, Executive Order No. 65, or the 11th Regular Foreign Investment Negative List, prohibited the presence of any foreign equity in the utilization of marine resources in archipelagic waters,” it added.
SBMA also said there had been changes in the corporate control or ownership of the GFTG Property Holdings Corp., which holds the current lease for Grande and Chiquita, made without the consent of the SBMA.
“These violated the Lease and Development Agreements that GFTG had signed with the agency,” SBMA said.
Because of the issues, the SBMA Board passed a resolution on May 19, 2019 that withdrew consent to the change in control and ownership of GFTG.
The SBMA Board also noted the need for “further coordination between the SBMA and the Department of Finance with respect to this change in the control/ownership of GFTG, including the payment of appropriate taxes for the transfer of shares of GFTG.”
Information from the SBMA Business and Investment Group indicated the Grande and Chiquita islands had been leased to various investor groups since 2002.
The development plan for the islands included the establishment of hotel accommodations, restaurant, and recreational facilities, as well as the operation of boat service to and from Grande Island.
GFTG had initially committed an investment of P180 million to construct a three-storey five-star hotel and a marina parking area, as well as to upgrade recreational facilities on Grande.
In April this year, GFTG brought in Sanya after supposedly signing a deal for partnership on the sidelines of President Duterte’s visit to Beijing for the Belt and Road Initiative Forum.
However, the agreement gave effective control of the project to Sanya, which gained 80 percent of the shares.
Hua Huang Yang, a Chinese investor who joined GFTG as partner in 2012, retained 20 percent from his previous share of 30 percent.
SBMA is looking for some suitable company that could take over the development of the two islands.