SUBIC BAY FREEPORT — The Subic Bay Metropolitan Authority (SBMA) has already placed on hold a proposal by 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 strategic islands in the country, including Grande and Chiquita Islands on Subic Bay, SBMA Chairman and Administrator Wilma T. Eisma said on Monday that 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,” Eisma said.
She said that 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 ultra-high end housing units perched on water 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,” Eisma 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,” she added.
Eisma also said that there had been previous changes in the corporate control or ownership of the GFTG Property Holdings Corp., which holds the current lease over Grande and Chiquita, which were made without the consent of the SBMA.
“These violated the Lease and Development Agreements that GFTG had signed with SBMA,” she said. Eisma said that because of these issues, the SBMA Board had passed a resolution on May 19, 2019 that withdrew consent to the change in control and ownership of GFTG.
The 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.”
“The net effect is that the company’s proposal for Grande and Chiquita did not progress, and the project is currently non-operational,” Eisma said.
Information from the SBMA Business and Investment Group indicated that 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 3-storey five-star hotel, build a marina parking area, and upgrade recreational facilities on Grande.
In April this year, GFTG brought in Sanya after supposedly signing a deal for partnership at 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% of the shares. Hua Huang Yang, a Chinese investor who joined GFTG as partner in 2012, retained 20% from his previous share of 30%.
The thrust of the new majority shareholders “apparently changed the complexity of the Grande development project,” Eisma noted. As of now, the SBMA is looking for some suitable company that could take over the development of the two islands to help bolster Subic’s tourism program, Eisma added.