Philippines authorities should take over a major shipyard that sits on the site of a former U.S. navy base, or risk letting it fall into the hands of the Chinese who could use it as a regional foothold amid contentious South China Sea claims, Filipino officials said Thursday.

Defense Secretary Delfin Lorenzana said he had met with President Rodrigo Duterte and other officials on Wednesday, including Foreign Secretary Teodoro Locsin, to discuss ways for the Philippines to take over the facility in Subic Bay from its failing South Korean operator and keep it in local hands.

A state-run company is among two Chinese firms that have expressed interest in taking over the shipyard after South Korea’s Hanjin Heavy Industries and Construction filed for bankruptcy last week, according to local media reports.

Manila was also studying the prospect of offering the shipyard operations to players from the United States, Australia, South Korea and Japan – countries that are all considered as allies by the Philippines, the defense chief said.

“The Philippine Navy suggested that ‘why not the Philippines take over so that we’ll have a naval base there? Then we’ll have ship-building capabilities,’” Lorenzana said during an annual event in Manila of the Foreign Correspondents’ Association of the Philippines.

He said Manila was looking to purchase more ships in the next decade, and it would be advantageous for it to have the shipyard under its control.

“The most critical external security challenge for the Philippines is the territorial and maritime claims in the South China Sea,” Lorenzana said. “Compounding the issue is the backdrop of a rapidly evolving regional environment, where the United States-China geopolitical rivalry is deepening and a potential Taiwan Strait conflict is brewing.”

He noted that Washington remained the Philippines’ “only treaty ally” despite Duterte’s military pivot to China since he became president in mid-2016.

“China, our big, next door neighbor, has occupied and militarized some features closer to our shores,” the defense secretary said. “We have not, and we will not, surrender any part of our territory.”

However, a “constructive approach” was needed to engage China in the future, he said.

“The goal is to pursue functional cooperation with China and with other claimant countries,” Lorenzana said, adding that a 2016 international arbitration tribunal ruling in favor of Manila was “valid and legitimate.”

U.S. officials were not immediately available to comment on the news around Subic Bay.

https://www.rfa.org/english/news/china/philippines-subic-01172019143650.html