After 30 Years, Subic Bay Is Once Again Relevant as a Crucial Site for the U.S. Navy
There is a lot of military history surrounding Subic Bay in the Philippines. The Subic Naval Base was once touted as the largest U.S. overseas base in the world atw 678 square kilometers—about the same size as Singapore—before the Philippines kicked out the Americans in 1992. For nearly a decade, strategic relations between the two countries remained perfunctory.
That’s not the case today.
The Philippines and the U.S. are experiencing a strategic rapprochement amid rising tensions in the West Philippine Sea and China’s rise as a superpower that wants to challenge the status quo.
On February 2, 2023, the Philippines granted the U.S. expanded access to its military bases, with four additional sites that would host American troops and hardware. The U.S. has allocated over $82 million toward infrastructure investments at the existing five sites under the EDCA, but neither country disclosed which sites these are.
"We feel that it will help in making sure that there is safe passage in the South China Sea," Marcos said told Nikkei Asia on February 12, speaking of granting expanded access to the Americans.
But an obvious area of interest is Subic Bay.
Back in March 2022, U.S. private equity firm Cerberus moved to acquire the debt-laden Hanjin Subic Shipyard, whose parent company is South Korea’s Hanjin Heavy Industries and Construction. According to Reuters, Hanjin Subic Shipyard owes at least five Philippine lenders $412 million. In 2019, it defaulted on loans worth $1.3 billion.
Hanjin Subic Shipyard and the Grande and Chiquita Islands
Observers are calling Cerberus’s $300-million acquisition of Hanjin Subic Shipyard a “strategic purchase.”
“The U.S. equity firm’s $300-million purchase of strategic shipyard could herald a restored U.S. naval presence in its ex-colony,” wrote Gabriel Honrada for Asia Times.
According to Nikkei Asia, the Subic Bay Metropolitan Authority confirmed there were plans to resume shipbuilding and ship repair operations at the former U.S. naval base, which could cater to U.S. Navy ships. Nikkei Asia writes:
The full details of Cerberus' plans have not been made public. But the idea is to sublease the property to other companies, Magno said. U.S. real estate consultant CBRE is among the companies working on the project.
Gregory Poling, director of the Asia Maritime Transparency Initiative at the Center for Strategic and International Studies in Washington, tells Nikkei Asia:
"The Philippine and U.S. navies ... could contract the commercial operators for supply, sustainment and repair services, This could, in theory, lead to Subic again becoming a major link in the U.S. Navy's logistics chain in the region, though that will happen through the contracting of local civilian companies much as now occurs in Singapore.”
Subic Bay is such a crucial strategic location not only for the U.S., but also for China.
Ever since the Spanish occupation of the Philippines, Subic Bay was considered highly strategic, owing to its deep harbor and its access to the South China Sea. Like Manila Bay, its entrance is protected: Grande Island is to Subic Bay what Corregidor is to Manila Bay—an unsinkable fort.
According to Reuters, at least eight foreign companies expressed interest in acquiring the Subic shipyard in 2019. These included two unnamed Chinese companies and Australia’s Austal. A deal is set to be finalized on April 15, 2022.
In August 2019, China’s Sanya CEDF Sino-Philippine Investment Corp. proposed to develop Grande Island and Chiquita Island, which are located at the mouth of Subic Bay and has a distance of three kilometers from the Hanjin Shipyard. At the time, the proposal was rejected by the Subic Bay Metropolitan Authority or SBMA because it allegedly violates the Philippine Constitution.