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Subic Bay Thrives in Post-US Era

Asia Enterprise

By Claire WallersteinSpecial to The Christian Science Monitor / November 10, 1997



SUBIC BAY, PHILIPPINES

Five years after the eviction of American troops from their largest base in Asia, Subic Bay is dramatically transformed and ambitiously planning to reinvent itself as the region's next Hong Kong.

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The bustling site, now sprouting new industrial developments, is almost unrecognizable as the base through which 4.1 million servicemen passed at the height of the Vietnam War.

At the time of the base closing in 1991, most predicted the area would fall into disuse. Instead, thanks to the vision and charisma of one Filipino, Richard Gordon, the grandson of an American sailor, Subic has risen from the ashes to become a thriving international free port.

Through sheer conviction, Mr. Gordon mobilized 8,000 local people left jobless by the American troop withdrawal to work without pay - some of them for up to two years - to maintain and protect the base while he lured in foreign investors.

Within five years, the Subic Bay Metropolitan Authority (SBMA), benefiting from political stability and economic growth created by the administration of President Fidel Ramos, has attracted hundreds of foreign companies. These include the Asian headquarters of Federal Express and Acer computers of Taiwan. So far, total exports for 1997 have reached almost $3 billion.

Subic was also the venue for the 1996 APEC summit attended by President Clinton, and has been visited and praised by international figures from Margaret Thatcher to Iran's former President Hashemi Rafsanjani.

Encouraged by such success, Gordon has now produced a "Hong Kong Strategy," aiming to cash in on the handover to China of the former British colony. He hopes to entice at least 50 of Hong Kong's 400 banks to Subic and develop it as an offshore financial center.

"Subic has an ideal central location in Asia in a stable and English-speaking country, and has tremendous space advantages over Hong Kong," Gordon says, "We also have a dedicated local work force of people who have shown they are prepared to work, unpaid, to secure their future."

The 45,000-acre site also benefits from abandoned US Navy infrastructure worth $8 billion, including docks, an airport, warehouses, and a state-of-the-art generator to protect businesses from the perennial power cuts that continue to plague the Philippines. There is even a 30,000-acre virgin rain forest, one of the largest in the country, which was protected from illegal loggers by the US military presence and is now being touted along with Subic's beaches as a tourist attraction.

On paper, Subic's rags-to-riches story is undoubtedly inspiring. But many feel the SBMA chairman's continued expansion plans are unrealistic.

"If Richard Gordon thinks he can make this place another Hong Kong, he's making a huge mistake." says Brian Johnson, the managing director of an Australian wet suit manufacturer, Subic Surf Corporation. "My three years here have been terrible, and I'm hoping to get out as soon as I can."

Officials cause gridlock

Among an array of problems facing investors, Mr. Johnson blames bureaucracy, high rents that offset the benefits of tax incentives, and constant battles with corrupt customs officials. Denied traditional hefty bribes, Johnson says, these officials cause continual gridlock by deliberately delaying the clearance of imported raw materials.