BUSINESS HEADLINES THIS PAST WEEK...

FOCUS OF APEC 2015: 'INCLUSIVE GROWTH' 

DEC 2 ---The Philippines has officially launched the preparations for the Asia-Pacific Economic Cooperation (APEC) 2015 summit as the host country, focusing on building economies that feature inclusive growth as the theme of the regional gathering. “Inclusive growth is where economic progress enables the betterment of our peoples; and where those empowered peoples can open the doors wider to even greater progress, spurring a virtuous cycle of empowerment and continuous development,” President Benigno S. Aquino 3rd said in his speech at the opening ceremony at the Green Sun Hotel in Makati City late Monday. The Philippines last hosted an APEC summit in 1996, more than two decades ago. In 2015, the Philippine government is set to hold a series of meetings in preparation for the conference and the APEC CEO summit set for November 15 to 17, 2015 in Manila. READ FULL REPORT...

ALSO: PH underspent anew in October — Treasury 

The government kept underspending in October, rendering the economic growth target for 2014 unrealistic. The Bureau of Treasury said Monday government expenditures in October reached P154.8 billion, or just 6 percent higher in the same month last year. State spending in the first 10 months of 2014 hit P1.6 trillion, up 6 percent on year, but way below the programmed level of P1.903 billion, Treasury data showed. The government has programmed P2.26 trillion in expenditures this year, which means it had to spend P1 trillion in November and December to meet the goal. The government registered just a budget deficit of P33.6 billion in the 10-month period, or 86 percent below the target of P244.302 billion for the period. Economists last week asked the government to pick up the pace of infrastructure spending, after the third-quarter economic growth decelerated to a two-year low of 5.3 percent on sluggish public expenditures.

ALSO: Prices of bangus, chicken and some vegetables up 

Prices of medium-sized bangus, chicken and some vegetables in Metro Manila markets went up on Tuesday from a week earlier, the Department of Agriculture announced on Tuesday. Bangus or milkfish is selling for P110 per kilogram, up P10. Cristina Morato, a housewife and mother of two kids, is not deterred by the price increase. "Bibili pa rin ako ng bangus kahit tumaas ang presyo, dahil kailangan ito ng katawan natin," she told GMA News Online. The price of fully-dressed chicken went up by P5 to 140. READ FULL REPORT...

ALSO: 'Cost of P62-B payout to Napocor workers to fall on consumers'

DEC 4 --Electricity consumers all over the country will ultimately shoulder some P62 billion in back wages and benefits to employees of the National Power Corporation (Napocor) who were found to have been illegally fired in 2003, officials told a Senate panel. At a hearing of the Senate energy committee on Thursday, officials from the Napocor and the Power Sector Assets and Liabilities Management Corp. (Psalm) warned of higher power costs should government be compelled to pay the amount. The Supreme Court (SC) recently put on hold its 2006 decision ordering Napocor and Psalm to give the back wages to some 9,000 employees. If the Court eventually upholds its decision, however, Psalm President Emmanuel Ledesma said government would have to pass on the amount to consumers. The cost of electricity may increase by 26 centavos per kilowatt-hour over a 10-year period, Ledesma said. READ FULL REPORT...

ALSO: DOF nixes PWD (Persons With Disability) VAT exemptions 

The Department of Finance (DOF) reiterated yesterday its opposition to a proposed measure that seeks to exempt persons with disabilities (PWDs) from paying value-added tax on certain goods and services, saying such a plan is susceptible to abuse and will result in P1.12 billion in foregone revenues for the government. The House of Representatives has approved on third and final reading House Bill 1039 which aims to give tax relief to members of society that are unemployed because of disabilities. PWDs currently account for 1.5 percent of the total population. The bill, which seeks to amend the Magna Carta for Persons with Disabilities, aims to exempt PWDs from VAT in addition to the discount they are already enjoying for medical, transportation and recreational services. READ FULL REPORT...

ALSO: Phl banking system one of Asean’s strongest – HSBC

The Hongkong and Shanghai Banking Corp. (HSBC) said the Philippine banking system remains one of the strongest in the 10-member Asean with credit growth seen strengthenings in the next few years. HSBC economist Frederic Neumann said Philippine banks possess excess liquidity with robust consumer demand growth while property prices continue to pick up steam. “The Philippines is in a bucket of its own,” Neumann said in a recent report. Liquid assets as a share of deposits have also increased, which implies that banks also have ample buffers – not to mention the robust external fundamentals on the sovereign side. READ FULL REPORT...

ALSO MANILA TIMES OPINION: One big economic reason to have an Aquino-free nation 

DEC 4 --by RIGOBERTO D. TIGLAO: One of the biggest reasons why even an important sector of our business community can’t wait to have President Benigno S. Aquino 3rd step down, and for a totally new regime to take over, involves our territorial dispute with China in the West Philippine (South China) Sea. To bolster his regime, Aquino roused—quite successfully I would think—the Filipino nationalist sentiment by his belligerent rhetoric against China regarding our claims on the Spratly islands, as well as the Scarborough Shoal. By filing an arbitration case against China on the dispute in January last year, and pressuring Asean to take a stand against China over it, he has closed off any bilateral resolution to the dispute. In his second state of the nation address he boasted: “Now, our message to the world is clear: What is ours is ours; setting foot on Recto Bank is no different from setting foot on Recto Avenue.” Both the Americans and the Chinese must have shaken their heads in disbelief at such a stupid analogy made by our President. His reference to Recto Avenue may sound smart-alecky, but it was childish braggadocio, revealing his ignorance of our territorial dispute. READ FULL COLUMN...


READ FULL REPORTS HERE:

Focus of APEC 2015: ‘Inclusive growth’

MANILA, DECEMBER 8, 2014 (MANILA TIMES) by VOLTAIRE PALAÑA RERPOTER - The Philippines has officially launched the preparations for the Asia-Pacific Economic Cooperation (APEC) 2015 summit as the host country, focusing on building economies that feature inclusive growth as the theme of the regional gathering.

“Inclusive growth is where economic progress enables the betterment of our peoples; and where those empowered peoples can open the doors wider to even greater progress, spurring a virtuous cycle of empowerment and continuous development,” President Benigno S. Aquino 3rd said in his speech at the opening ceremony at the Green Sun Hotel in Makati City late Monday.

The Philippines last hosted an APEC summit in 1996, more than two decades ago. In 2015, the Philippine government is set to hold a series of meetings in preparation for the conference and the APEC CEO summit set for November 15 to 17, 2015 in Manila.

“This gathering’s significance is magnified when one considers that, in a world where many economies are reeling from uncertainty, Asia-Pacific economies have, for the large part, sustained a relatively good level of growth. In fact, Southeast Asia in particular has been identified as one of the world’s most promising regions,” Aquino said.

“It is for this reason that the Philippines has chosen to orient this year’s APEC toward making certain that this growth has tangible effects on the lives of all our peoples. This explains our theme: ‘Building inclusive economies, building a better world.’ I am confident that, with our country’s remarkable turnaround in recent years, our story and our experiences can certainly enrich the discussions on this topic,” he said.

The APEC aims to promote free trade and economic cooperation in the 21 member economies with coastlines along the Pacific Ocean region.

Besides Manila, Legazpi City, Clark-Pampanga, Bagac-Bataan, Boracay, Bacolod, Iloilio City, Tagaytay and Cebu will be hosting other ministerial meetings. The Philippine government’s strategy is spreading out as much opportunities for SMEs as possible.

The summit will seek to underscore the significance of the small and medium enterprises (SMEs) in the country’s economy, and their role and integration in global supply chains, Department of Trade and Industry (DTI) Secretary Gregory Domingo said.

The country’s micro, small and medium enterprises (MSMEs) account for 99 percent of local businesses, contributing 65 percent of the jobs generated by all types of business establishments.

Domingo pointed out that as the backbone of the country’s economy, MSMEs are developed by the government to help them become more competitive not just regionally but also globally.

“…We are really looking at cross-border supply chains. The 2013 UNCTAD World Investment Report estimates that 80 percent of Gross Global Exports are tied to global value chains,” Domingo said.

“To achieve inclusive growth, it is imperative that our SMEs must be competitive and be able to participate in global value chains. For Filipino SMEs to succeed internationally, they need access to open, transparent, and efficient markets. As incoming chair of APEC 2015, the Philippines will help ensure that all APEC member economies will support businesses in this way,” he said.

“We would encourage the other APEC economies to improve their institutional support system for SMEs. The Philippines will lead projects that will promote and harness synergistic linkages between SMEs and large firms, as well as to enable SMEs to benefit from the regional economic integration. Simply put, we will look at global trade through the prism of SMEs,” he added.

The 21 APEC economies comprise an estimated 44 percent of global trade and 53 percent of world GDP in purchasing power parity terms. With its rate of growth faster than the rest of the world, APEC is the most economically dynamic region in the world.

“We are making the same big push for SME trade facilitation to strengthen and attain an ASEAN Economic Community (AEC). We truly need to ensure that SMEs can participate in regional trade in an easy manner. We have to make sure that the rules are made simple for small companies so they can feel the effect or benefits of the free trade agreements,” Domingo said.

“Our initiatives for SME’s though don’t end outside of the negotiating table. You would notice that for the country’s year-round hosting of APEC 2015 meetings, there is a very deliberate effort from the government to bring the meetings to the regions.” he added.


FROM THE MANILA STANDARD

PH underspent anew in October — Treasury By Jennifer Ambanta | Dec. 01, 2014 at 11:40pm

The government kept underspending in October, rendering the economic growth target for 2014 unrealistic.

The Bureau of Treasury said Monday government expenditures in October reached P154.8 billion, or just 6 percent higher in the same month last year. State spending in the first 10 months of 2014 hit P1.6 trillion, up 6 percent on year, but way below the programmed level of P1.903 billion, Treasury data showed.

The government has programmed P2.26 trillion in expenditures this year, which means it had to spend P1 trillion in November and December to meet the goal.

The government registered just a budget deficit of P33.6 billion in the 10-month period, or 86 percent below the target of P244.302 billion for the period.

Economists last week asked the government to pick up the pace of infrastructure spending, after the third-quarter economic growth decelerated to a two-year low of 5.3 percent on sluggish public expenditures.

“The Philippines has plenty of demand and what it really needs is more investment to relieve supply-side constraints. Without this, it will be difficult for the economy to achieve escape velocity,” Hongkong and Shanghai Banking Corp. economist Trinh Nguyen said.

The third-quarter growth was the slowest since the fourth quarter of 2011, when the gross domestic product grew 3.7 percent. Growth slowed from 6.4 percent in the second quarter of 2014 and 7 percent in the third quarter of 2013.

The third-quarter figure brought the average growth in the first three quarters to 5.8 percent, below the target range of 6.5 percent to 7.5 percent for 2014. This also prompted economists to reduce their growth forecasts for the year.

Nguyen said while consumer spending was rising fast, public spending on key infrastructure needs was not growing fast enough. “In fact, in third quarter of 2014, government expenditure contracted [by 2.6 percent],” she said.

Finance Secretary Cesar Purisima last week cited the need to improve public spending. “Our 5.3-percent growth highlights some challenges which we have the ability to address. Government spending can improve, and we have ample fiscal space to increase investments in our infrastructure and our people, through education, health, and social services,” he said.

Revenues in October amounted to P152.3 billion, up 13 percent on year, bringing year-to-date collections to P1.6 trillion, 13 percent higher on year.

Collections of the Bureau of Internal Revenue rose 7 percent in October to P101.8 billion, bringing the total in the 10month period to P1.1 trillion, up 11 percent on year.

Collections of the Bureau of Customs, meanwhile, increased 23 percent in October to P34.2 billion. Customs collections in the 10-month period rose 19 percent to P299.9 billion on year.


FROM GMA NEWS NETWORK

Prices of bangus, chicken and some vegetables up By KATHRYN MAE P. TUBADEZA, GMA NewsDecember 2, 2014 7:16pm 1 8 0 9

Prices of medium-sized bangus, chicken and some vegetables in Metro Manila markets went up on Tuesday from a week earlier, the Department of Agriculture announced on Tuesday.

Bangus or milkfish is selling for P110 per kilogram, up P10.

Cristina Morato, a housewife and mother of two kids, is not deterred by the price increase.

"Bibili pa rin ako ng bangus kahit tumaas ang presyo, dahil kailangan ito ng katawan natin," she told GMA News Online.

The price of fully-dressed chicken went up by P5 to 140.

Prices of sitao and pechay native both rose by P10 to P50 per kilo and P40 per kilo, respectively.

On the other hand, prices of pork ham or kasim went down by P5 to P185.

In a separate interview, housewife Anastacia Britos said she prefers pork meat, especially when prices of the commodity go down. – VS, GMA News


FROM ABS-CBN

'Cost of P62-B payout to Napocor workers to fall on consumers' by Ryan Chua, ABS-CBN News Posted at 12/04/2014 1:35 PM | Updated as of 12/04/2014 10:37 PM

MANILA, Philippines - Electricity consumers all over the country will ultimately shoulder some P62 billion in back wages and benefits to employees of the National Power Corporation (Napocor) who were found to have been illegally fired in 2003, officials told a Senate panel.

At a hearing of the Senate energy committee on Thursday, officials from the Napocor and the Power Sector Assets and Liabilities Management Corp. (Psalm) warned of higher power costs should government be compelled to pay the amount.

The Supreme Court (SC) recently put on hold its 2006 decision ordering Napocor and Psalm to give the back wages to some 9,000 employees.

If the Court eventually upholds its decision, however, Psalm President Emmanuel Ledesma said government would have to pass on the amount to consumers.

The cost of electricity may increase by 26 centavos per kilowatt-hour over a 10-year period, Ledesma said.

“National po ang effect. Babayaran ‘yan sa electricity bill ng taumbayan (The effect will be national. The people will pay it through their electricity bill),” he said.

Ledesma earlier said that should Psalm be made to pay P62 billion to the retrenched employees, it would be unable to pay for its expenses, including fuel to run power plants.

Napocor’s president and chief executive officer Ma. Gladys Sta. Rita, meanwhile, said paying the amount would badly hit the company’s operations, as well as the electricity supply in many parts of Mindanao and island provinces that Napocor services: Batanes, Romblon, Siquijor, Catanduanes, Masbate, and Palawan.

Asked by the committee’s vice chairman Teofisto Guingona III what the ultimate effect of a P62-billion payout would be, Sta. Rita replied, “Magsasara po ang National Power Corporation (The National Power Corporation will close down).”

Senator Guingona stressed that the central government would not allow Napocor and Psalm to default on their obligation should the SC order them to pay the back wages.

“The national government will have to step in and will have to foot the bill for the expenses. The sad part is … Yung consumer, ang mamamayan ang magbabayad nito through an increase in their electricity bill (The sad part is consumers will pay for this through an increase in their electricity bill)," he said.

Should the national government decide to step in, Congress first has to authorize the release of the amount.

“It will increase our already high power cost, which makes the country less competitive in attracting manufacturing companies to relocate to the Philippines,” Finance Secretary Cesar Purisima said.

Power rates in the Philippines are already among the highest in Asia, he noted.

Officials also questioned the amount that the SC said was due the retrenched Napocor employees who belong to the NPC Drivers and Mechanics Association, especially since many of them already received separation packages of P1 million each and were even rehired.

Atty. Maximo Paulino Sison III, head executive assistant at the Office of the Solicitor-General (OSG), said the clerk of a regional trial court in Quezon City came up with the P62 billion figure even if the case did not undergo a trial.

The OSG has already made submissions to the SC challenging the 2006 decision.

The SC specified the amount in its 2006 ruling, which voided the resolution of the Napocor board terminating its employees as part of its restructuring under the Electric Power Industry Reform Act of 2001. The Court found the Napocor resolution null, and the dismissal of employees in 2003 illegal, because only representatives of agencies forming part of the board were present in the meeting where it was passed.

“How did we come to P62 billion when 1/3 were hired the day after and 2/3 were hired within a month? What back wages and benefits were lost within a period of one day and one month?” Budget Secretary Florencio Abad said, referring to the rehired Napocor employees.

“That’s a highly questionable sum," he added.

Senate energy committee chairman Sergio Osmeña III said the SC must take into account that many of the retrenched employees were rehired by Napocor.

Granting P62 billion in back wages would mean giving each of the employees P7.5 million in addition to the separation pay they have already received and the salaries they are getting as current workers, Osmeña pointed out.

“I think the Supreme Court will have to be made to realize the implications of their decision,” he said.


FROM PHILSTAR

DOF nixes PWD (Persons With Disability) VAT exemptions By Zinnia dela Peña (The Philippine Star) | Updated December 7, 2014 - 12:00am 0 0 googleplus0 0

MANILA, Philippines - The Department of Finance (DOF) reiterated yesterday its opposition to a proposed measure that seeks to exempt persons with disabilities (PWDs) from paying value-added tax on certain goods and services, saying such a plan is susceptible to abuse and will result in P1.12 billion in foregone revenues for the government.

The House of Representatives has approved on third and final reading House Bill 1039 which aims to give tax relief to members of society that are unemployed because of disabilities.

PWDs currently account for 1.5 percent of the total population.

The bill, which seeks to amend the Magna Carta for Persons with Disabilities, aims to exempt PWDs from VAT in addition to the discount they are already enjoying for medical, transportation and recreational services.

The proposed VAT exemption shall apply on their medical and dental services; purchase of medicines in all drugstores; public railways, skyways and bus fare; admission fees charged by theaters, cinema houses, concert halls, circuses, carnivals and other places of culture, leisure and amusement; and all services in hotels and similar lodging establishments, restaurants and recreation centers.

DOF Undersecretary Jeremias N. Paul Jr. said while the government remains committed to helping the PWD sector, it believes the measure is not the best way to serve PWDs.

“The measure will expose government revenues to massive risks due to abuses and leakages. The long-standing international argument against VAT exemption is clear: proposals like this will result in tax administration problems and even compliance issues for the business sector,” Paul said.

“For the tax administrators, clarifying and ensuring only PWDs avail of the exemption, and not unscrupulous individuals seeking to abuse the system, will be highly difficult,” he said.

Paul said the proposal would also result in additional tax compliance burden for businesses as it would require separate accounting records for the purchases of goods and services by PWDs, in addition to that of senior citizens.

Instead, Paul said subsidies should be given through the expenditure approach as this is more transparent, efficient, and effective in empowering PWDs.

“We re-affirm our commitment to PWDs by advising against a VAT exemption measure that would be hard to implement and prone to abuse. We will work with Congress to pass sensible and balanced proposals that better serve PWD interests,” Paul said.

Paul said the government is working to further shore up revenues to increase funding for programs that will benefit PWDs.

“As the Philippines is the second least efficient in terms of VAT efficiency among the ASEAN 5, the country can ill afford to pass a VAT exemption measure that cannot be guaranteed to be availed solely by PWD citizens,” Paul said.

“The DOF firmly believes that fiscal responsibility goes hand in hand with social responsibility. As we work to maintain the firm fiscal footing we have worked so hard to achieve, we must also take care to serve interests of citizens in the PWD sector by providing them effective, efficient and transparent relief through targeted subsidies,” he also said.


FROM PHILSTAR

Phl banking system one of Asean’s strongest – HSBC  By Ted P. Torres (The Philippine Star) | Updated December 7, 2014 - 12:00am 0 0 googleplus0 0

MANILA, Philippines - The Hongkong and Shanghai Banking Corp. (HSBC) said the Philippine banking system remains one of the strongest in the 10-member Asean with credit growth seen strengthenings in the next few years.

HSBC economist Frederic Neumann said Philippine banks possess excess liquidity with robust consumer demand growth while property prices continue to pick up steam.

“The Philippines is in a bucket of its own,” Neumann said in a recent report.

Liquid assets as a share of deposits have also increased, which implies that banks also have ample buffers – not to mention the robust external fundamentals on the sovereign side.

The Bangko Sentral ng Pilipinas (BSP) is currently the only central bank in Asia expected to hike rates next year. It has also implemented some macro-prudential measures to prevent asset bubbles.

“We don’t really worry about bank-related liquidity in the Philippines as banks are in better shape from a loan-to-deposit ratio (LDR) perspective,” the HSBC economist said.

The country is also in the process of further opening up the financial sector to foreign banks.

Last month, the Philippine government passed a law allowing foreign banks to operate in the country and to acquire up to 100 percent of a local lender from the previous ownership ceiling of 60 percent.

This move is in line with increased services integration with Asean under the Asean Economic Community (AEC), which is expected to come into force in end-2015.

Neumann said the increased foreign financial presence is quite timely, and provides an additional conduit for Japanese bank lending to flow into the Philippines to increase liquidity.

The global financial institution pointed out that LDRs have increased sharply in recent years in most Asean markets, and that the high-level of liquidity are likewise becoming tighter.

“These raise two immediate challenges,” Neumann said.

It means that high credit growth could lead to slow overall demand, and that it could render local financial systems more vulnerable to volatility in global markets and a sudden rise in funding costs.

In most of the Asean, deposit growth has slowed down thus constraining loan growth.

A low LDR generally signifies that a bank has excess deposits to deploy, and because deposits are relatively cheap and stable funding source, loan growth is easier to sustain.

When LDRs rise above 100, a bank can turn to wholesale or interbank markets to top up its funds. But this is risky and drives up the cost of funding. As a result, bank lending slows or at least becomes more sensitive to potential shocks.

Thailand has the highest LDR in the Asean while Singapore has a robust wholesale market as well as deep non-bank corporate and interbank lending channels.


MANIA TIMES OPINION

One big economic reason to have an Aquino-free nation by RIGOBERTO D. TIGLAO
 December 4, 2014 10:10 pm


RIGOBERTO D. TIGLAO

One of the biggest reasons why even an important sector of our business community can’t wait to have President Benigno S. Aquino 3rd step down, and for a totally new regime to take over, involves our territorial dispute with China in the West Philippine (South China) Sea.

To bolster his regime, Aquino roused—quite successfully I would think—the Filipino nationalist sentiment by his belligerent rhetoric against China regarding our claims on the Spratly islands, as well as the Scarborough Shoal.

By filing an arbitration case against China on the dispute in January last year, and pressuring Asean to take a stand against China over it, he has closed off any bilateral resolution to the dispute.

In his second state of the nation address he boasted: “Now, our message to the world is clear: What is ours is ours; setting foot on Recto Bank is no different from setting foot on Recto Avenue.”

Both the Americans and the Chinese must have shaken their heads in disbelief at such a stupid analogy made by our President. His reference to Recto Avenue may sound smart-alecky, but it was childish braggadocio, revealing his ignorance of our territorial dispute.

Recto Avenue is a main thoroughfare in metropolitan Manila on our biggest island of Luzon. On the other hand, there is hardly any dry land to step on at Recto Bank, internationally called Reed Bank. It is the 8,866 square kilometers of waters 9 to 45 meters in depth, atop a geological formation called a Guyot (after Swiss-American geologist Arnold Henry Guyot) consisting of submerged volcanic mountains and coral reefs.

The Mutual Defense Treaty of 1951 – a very brief pact of just 625 words, or less than half this column’s length – requires the US to come to our rescue if there is an “armed attack” against the Philippines.


What’s the story? Reed (Recto) Bank in disputed waters, potentially a huge oil and gas find. Inset: Right top executive Manuel Pangilinan with his former close associate now Foreign Affairs secretary Alberto del Rosario. One irks the Chinese, the other woos them.

However, Article V defines what an “armed attack” is, which is one “on the metropolitan territory of either of the Parties, or on the island territories under its jurisdiction in the Pacific Ocean, its armed forces, public vessels or aircraft in the Pacific.”

Reed or Recto Bank isn’t a metropolitan territory or an island territory. We have claimed the area as part of our 200-mile exclusive economic zone, as defined by the United Nations Convention of the Law of the Sea (UNCLOS) of 1982. The 1951 Mutual Defense Treaty hasn’t been revised to include a new definition of our territory under UNCLOS. Worse, the US hasn’t ratified UNCLOS; therefore, how could it invoke what for it is a non-existent treaty?

Based on the treaty’s Article V, the only way for us to draw in the Americans to defend us in Reed Bank is to provoke the Chinese to attack our “public vessels.” Probably that was the real motive of our puny Coast Guard boats confronting Chinese ships a few months ago.

Aquino, however, may have unwittingly highlighted a key element in the dispute that could have tremendous impact on our economy: the Reed Bank. It is believed, but not by everybody, to have huge oil and gas deposits with the most optimistic claim that its gas deposits could be five times bigger than the nearby Malampaya gas field, which has been supplying Luzon 40 percent of its energy requirements.

Not academic

These are not just academic estimates. Philex Petroleum – which is ultimately controlled by the Indonesian conglomerate, the Salim group, and headed by well-known top executive Manuel V. Pangilinan – has teamed up, through its UK subsidiary Forum Energy with billionaires Enrique Razon and Roberto Ongpin to bet that its Service Contract No. 72 in the Reed Bank contains world-class commercial oil and gas reserves.

The firm’s plans to send drilling ships had been stymied when our territorial dispute with China flared up in Scarborough Shoal off Zambales island further north, and after Aquino, as well as his foreign secretary Alberto del Rosario, made belligerent statements against China, calling it a bully in the region. The Chinese harassed a ship commissioned by Forum Energy to survey the Reed Bank area in March 2011, although our armed forces claimed they sent vessels to escort the ship to complete its work.

China has rejected offers by Philex Petroleum for a “Framework Agreement” with China National Offshore Oil Corporation, to which it had given exploration rights in Reed Bank, that would allow both firms to explore the area to determine if there are really commercial gas and oil deposits there.

This is where things get murky, but interesting. Senator Antonio Trillanes 3rd is convinced that del Rosario has deliberately been raising tensions with China (see my column “Trillanes: DFA chief deliberately worsened PH row with China,” Nov. 30). Del Rosario’s motive, he says, becomes obvious if one remembers that the foreign secretary had been a close friend and associate of Pangilinan, having been on the boards not only of Salim’s firms here in Manila but of the holding company First Pacific Co. in Hong Kong itself. (Not only that, from the start of his activities in the country in the 1980s, it was del Rosario who introduced him to Manila’s business world.)

Trillanes claims that Pangilinan has realized that there are no viable commercial oil and gas deposits in Reed Bank, pointing to an internet report of the US Energy Information Administration.

Trillanes claims that because of del Rosario’s moves and statements that raised tensions with China, that superpower will be blocking any further exploration at Reed Bank by Philex Petroleum. “Once drilling starts, the true (noncommercial) value of the reserves in SC72 would be known and MVP’s (as Pangilinan is often referred to) partners/stockholders at Forum Energy would start bailing out,” according to an aide memoire written by Trillanes.

“MVP stands to lose billions, ” it said.

“This explains the antagonistic stance of Sec. del Rosario toward China,” the document concluded. “He just needs a continuing pretext to delay the drilling until MVP finds an unwitting buyer of their stake and leave their other partners/stockholders holding the empty bag, “ according to Trillanes’ paper.

“Total Fiction”

“An old story, and a total fiction,” Pangilinan replied to my query on the matter. “Not true at all. We have long been wanting to drill, but geopolitics got in the way. The latest iteration is for us to do a seismic survey next year to establish the baseline ecology of SC 72, and determine the stability of the seabed where we might eventually drill.”

Pangilinan explained: “This will be followed by drilling of two appraisal wells in 2016. That’s the latest work program we’ve submitted to the Department of Energy.”

He pointed out: “Now as to whether we can execute or not this program is another matter, as it will be determined largely by geopolitics, over which we have little influence or control. For the record, Sec. Albert del Rosario does not get involved at all with the business of SC72. We make sure there’s a Chinese wall between business and government on commercial matters, despite what some may allege to the contrary.

And with respect to our work program on the concession, we report to our regulator, the Department of Energy, not DFA.”

Pangilinan may be right, but what’s indisputable at the moment is that China has given up on Aquino, and has adopted a hard stance against us on the territorial issue as long he is in power.

A win-win solution his predecessors had adopted was to put the sovereignty issue in the background, and for both countries to explore joint undertakings in the disputed area. The most important of such projects, as Pangilinan himself had offered his Chinese counterparts, would be, first, joint exploration, and if that works out, then joint exploitation with an equitable sharing of profits.

“The harsh reality,” an expert on the dispute said, “is obviously that we’ll lose humiliatingly if we fought a shooting war to claim our territories on the Spratly islands.”

“But with a sober leadership, there could have been a possibility for even a 50-50 sharing of the gas and oil found at Reed Bank or elsewhere, which for our country, dependent on imported oil, would have been a boon,” he said.

ADDENDUM TO THE ABOVE OPINION

Trillanes: DFA chief deliberately worsened PH row with China by RIGOBERTO D. TIGLAO November 30, 2014 10:36 pm


RIGOBERTO D. TIGLAO


If our relations with China are at their lowest ever, and if Filipinos are livid at the superpower for its purported bullying, our top diplomat, Foreign Affairs Secretary Albert del Rosario, should to a great extent be blamed.

That’s the only conclusion one would get from the report of Senator Antonio Trillanes 3rd as President Benigno S. Aquino’s “backchannel” envoy to China from May to August 2012.

Trillanes said that he had 14 back-channel meetings, seven of which were in China and seven in Manila.

The senator’s account, and his allegations against del Rosario are contained in his undated four-page aide memoire entitled “Summary of Backchannel Talks,” which had been made available to me.

Trillanes, in his paper, pointed out he had succeeded in his talks with Chinese officials, so that they ordered on June 10, 2012 the withdrawal from the disputed Scarborough Shoal (Bajo de Masinloc in our maps) of their Coastal Marine Surveillance (CMS) ships and 14 fishing boats.

A crisis had broken out on the shoal after a May 30 confrontation between Chinese fishermen and Philippine Coast Guard personnel. Our two Bureau of Fishing and Aquatic Resources vessels carrying the PCG personnel, as part of the agreement, also left the area.

On June 19 that year, though, Aquino called Trillanes to say that they were “betrayed by China.” Aquino referred him to the Philippine Daily Inquirer’s huge banner-photo which showed Chinese uniformed personnel holding a Chinese flag on the shoal, with the headline in huge fonts screaming: “China ships stay on shoal.”


Trillanes claims del Rosario fed the newspaper this report and photo which were false, the latter being a 1980 file photo.


Trillanes in his report wrote that his Beijing negotiators denied the news story, and pointed out that the photo was an old one from the 1980s.

The senator himself had suspected so as the photo had clear blue skies and calm waters as background, when in fact a typhoon was passing through the area at the time the photo was published. Trillanes claimed that his contacts in the newspaper told him that the false news story and photo came from del Rosario.

According to subsequent reports, the Chinese ships, both their CMS vessels and the fishing boats, indeed, had left the shoal, although as Trillanes said in his report, the Chinese would not announce that this was due to negotiations with the Philippine government. The official explanation of the foreign ministry was that the ships escorted the fishing boats to the Chinese mainland to escape an impending typhoon that would pass the shoal.

Second del Rosario story

There was a second instance in which del Rosario planted, Trillanes alleged, a false news story in the Philippine Daily Inquirer that roused Philippine ire against China:

“On 24 June, the Philippine Daily Inquirer published a story about a Chinese vessel ramming a Filipino fishing boat. Again, P-Noy called me and he was furious about this incident. I told him that I would ask Beijing about it.

When I confronted the negotiators, they told me that their ships are in place and that the incident happened in an area that was at least 150 nautical miles away.

“So I investigated further by sending somebody to talk to one of the survivors who was then confined in Ilocos Sur. The survivor said that they were already sinking while tied to a fish marker and that they were not rammed at all. I then asked around again in the Inquirer as to who fed the story. My sources then revealed that the story came from Sec. del Rosario. “ (Emphasis mine.)

According to Trillanes, he recommended in an executive Cabinet meeting on July 5 that Aquino adopt a bilateral approach to resolving the territorial dispute with China, especially that over Scarborough shoal.

He explained that his bilateral talks with Chinese representatives had resulted in the drastic reduction of Chinese vessels from almost a hundred to only three. Trillanes told Aquino that the Chinese committed to pull out the remaining three CMS vessels if the Philippines does not internationalize it by raising the issue at the Asean Regional Forum (AFRE), scheduled July 12. The Chinese, he said, also assured him that they would not put up any structure around the shoal.

Del Rosario, however, pushed for internationalizing the dispute. “I clearly remember USec. Henry Bensurto with a PowerPoint presentation telling everybody in the meeting that the annexation of Scarborough Shoal by China would be used as a springboard to claim Western Luzon. Sec. del Rosario proceeded to present that China had almost 100 vessels in and around the shoal; that they placed a rope at the entrance of the shoal and the Chinese were duplicitous.”

(“USec Henry Bensurto” is not an undersecretary but at the time of the meeting, an assistant secretary of the Department of Foreign Affairs heading its West Philippine Sea Center and the Secretary-General of the Commission on Maritime and Ocean Affairs Secretariat. He would be part of the Philippine team that filed the arbitration case against China on the West Philippine Sea dispute, which is now pending before an Arbitral Tribunal in the Hague. He was assigned June this year as the Consul General of San Francisco, U.S.A., a much sought-after post among Philippine diplomats. “The rope at the entrance of the shoal” del Rosario alleged is sheer nonsense, a source familiar with Scarborough shoal explained. The “rope” seen by Coast Guard personnel was a remnant of anchor ropes floating near the entrance of the shoal.)

Cut ties with China

Trillanes continued: “It was at this point that Sen. Juan Ponce Enrile… raised the ante and proposed on the table that we study the option of completely cutting ties with China. Sec. del Rosario and Sec. Almendras followed suit and the discussion went on with NEDA detailing how many percentage points would be shaved off the GDP; DTI, explaining that the electronics exports sectors would be gravely affected; and DOLE, saying how many OFWs would be repatriated, etc.”

“In the end, when the vote came in, it was lopsided in favor of Sec. del Rosario’s option…” (to internationalize it and bring it to the AFR.)

Del Rosario’s strategy failed, though – or maybe not. The AFR host, Cambodia refused to issue a communiqué for the assembly — the first time this had happened in such ASEAN meetings — which necessarily would have contained a reference to the Philippines’ dispute with China over the Scarborough Shoal. When del Rosario began to raise the sensitive issue of the South China Sea at the summit, his microphone went dead. A technical glitch, said the Cambodian hosts.

Right after his arrival in Manila, del Rosario called for a press conference in which he was furious at the Cambodians’ refusal to issue a communiqué, and at an unidentified state’s “increasing assertion” in disputed waters, even warning it was raising the risk of conflict. That certainly made many more Filipinos mad at China.

Trillanes concluded in his report that in August 2012 he “politely declined from continuing with (his) role as backchannel negotiator since P-Noy had already decided his policy action (of internationalizing the dispute.)”

During Trillanes’ stint as backchannel negotiator in 2012, there were persistent reports that del Rosario detested the senator’s role, and had even threatened to resign his post, as he wasn’t consulted on the matter.

I wonder, though: China is such a huge superpower in our hemisphere, and it would affect, whether we like it or not, our nation’s future, the welfare of a 100 million Filipinos. Shouldn’t exposing del Rosario’s complicity, as Trillanes alleges, in our worsening ties with China be of higher priority for the senator than persecuting Vice President Jejomar Binay?

Why would del Rosario, as Trillanes seems to allege, want our territorial tensions with China maintained at an intense level?  That on Wednesday.


Chief News Editor: Sol Jose Vanzi

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