South Korean shipbuilder Hanjin Heavy Industries has threatened to walk away from a US$2 billion shipyard project in the Philippines.
'Hanjin Mindanao's team for the shipyard project on the Phividec Industrial Estate will withdraw, effective April 29, 2008,' Hanjin's managing director Myong Goo Kwon said in a letter to state- owned Phividec Industrial Administration.
Phividec officials have since confirmed that Hanjin's Korean staff have left the site and are in Manila.
The yard, being built on 442 hectares on the northern tip of the southern Philippine island of Mindanao, would be one of the world's three biggest. The target completion date is 2017.
Hanjin is upset over an order by the local town mayor halting construction work on the yard because the Korean shipbuilder allegedly failed to secure a local building permit and environmental compliance certificate.
Hanjin's threat to walk away has sent shockwaves all the way up to Philippine President Gloria Arroyo's office.
The Philippines, which has lost out to neighbouring countries in the race for foreign investment, can ill-afford to lose Hanjin - its biggest foreign investor in the past decade.
Withdrawal by Hanjin would have serious ramifications, a presidential insider said. 'It would shatter the Philippines' reputation as an investment haven and it would take years for the country to recover from such a fiasco.'
Following reports of the withdrawal threat, President Arroyo flew to Mindanao last Wednesday to sort out the mess created by local officials.
Reports suggest she has persuaded local officials to grant the necessary permits so Hanjin can continue construction work.
But it is not clear whether this will be enough to convince the Koreans to return to Mindanao.
'Hanjin Mindanao's team for the shipyard project on the Phividec Industrial Estate will withdraw, effective April 29, 2008,' Hanjin's managing director Myong Goo Kwon said in a letter to state- owned Phividec Industrial Administration.
Phividec officials have since confirmed that Hanjin's Korean staff have left the site and are in Manila.
The yard, being built on 442 hectares on the northern tip of the southern Philippine island of Mindanao, would be one of the world's three biggest. The target completion date is 2017.
Hanjin is upset over an order by the local town mayor halting construction work on the yard because the Korean shipbuilder allegedly failed to secure a local building permit and environmental compliance certificate.
Hanjin's threat to walk away has sent shockwaves all the way up to Philippine President Gloria Arroyo's office.
The Philippines, which has lost out to neighbouring countries in the race for foreign investment, can ill-afford to lose Hanjin - its biggest foreign investor in the past decade.
Withdrawal by Hanjin would have serious ramifications, a presidential insider said. 'It would shatter the Philippines' reputation as an investment haven and it would take years for the country to recover from such a fiasco.'
Following reports of the withdrawal threat, President Arroyo flew to Mindanao last Wednesday to sort out the mess created by local officials.
Reports suggest she has persuaded local officials to grant the necessary permits so Hanjin can continue construction work.
But it is not clear whether this will be enough to convince the Koreans to return to Mindanao.