NOY'S CORNER THIS PAST WEEK...
(MINI-READS followed by FULL REPORTS below)

MRT MESS: ABAYA CLEARED, VITANGCOL TO FACE RAPS


JULY 4 --Transportation Secretary Joseph Emilio Abaya
With the Metro Rail Transit 3 breaking down regularly due to various glitches, the Office of the Ombudsman ordered yesterday the indictment for graft of former MRT 3 general manager Al Vitangcol III and five incorporators of the company that won a multimillion-dollar contract to maintain the rail service.
Those who will face trial before the Sandiganbayan are Vitangcol’s uncle-in-law Arturo Soriano, currently the provincial accountant of Pangasinan; Wilson de Vera, who ran for mayor under the Liberal Party in Calasiao, also in Pangasinan; Marlo de la Cruz, reportedly an LP campaign supporter in Manaoag, Pangasinan; Manolo Maralit and Federico Remo. The five are incorporators of the Philippine Trans Rail Management and Services Corp. (PH Trams), which bagged the MRT 3 interim maintenance deal worth $1.15 million a month without public bidding on Oct. 20, 2012 when Vitangcol headed the agency. The contract was renewed three times until Sept. 4, 2013. Transportation Secretary Joseph Emilio Abaya, who signed the controversial maintenance contract, was cleared by the Office of the Ombudsman, which noted that he had not yet taken over the Department of Transportation and Communications (DOTC) when the contract was signed. It was not immediately clear why Abaya was cleared. He took over the DOTC, which has jurisdiction over the MRT, on Oct. 18, 2012, two days before the contract was awarded. READ MORE...

ALSO: Roxas mum on anomalous MRT contract; ‘It’s Ombudsman’s decision’


JULY 4 --Mar Roxas: "No comment, it"s the Ombudsman's decision. not mine"  ILIGAN CITY—”It’s the Ombudsman’s decision, not mine,” Interior Secretary Manuel “Mar” Roxas II said when asked to comment on critics implicating him in an allegedly anomalous Metro Rail Transit (MRT) maintenance contract. “No comment. They never said anything good about the  govt so that’s fine,” Roxas, in Filipino, told reporters after distributing 23 brand-new patrol jeeps to Lanao del Norte provincial police on Saturday. Militant group Bagong Alyansang Makabayan (Bayan) has questioned the Ombudsman’s resolution on the $11.5-million maintenance contract between the Department of Transportation and Communication (DOTC) and Philippine Trans Rail Management and Services Corp. (PH Trams). Without public bidding, PH Trams, a company of former MRT General Manager Al Vitangcol’s uncle-in-law, bagged the maintenance contract in October 2012. The contract was awarded to the company two days later. The Office of the Ombudsman dismissed the graft complaint against Transportation Secretary Joseph Emilio “Jun” Abaya after it found no probable cause against the acting Liberal Party president while Vitangcol and five incorporators of PH Trams were indicted for graft. READ MORE...

ALSO: Activists compare Aquino to MRT trains


JULY 5 ---President Aquino points to a Philippine STAR story on the problems of the MRT-3 during a meeting with the Cabinet yesterday. The President has expressed concern over the daily negative reports about the MRT-3. Looking on is Finance Secretary Cesar Purisima. PHILSTAR HEADLINE PHOTO OCTOBER 14, 2014
THE militant group Bagong Alyasang Makabayan likened the administration of President Benigno Aquino III to the Metro Railway Transit system which charges the people more for less and breaks down all the time. “The Aquino government is like the MRT,” said Bayan secretary general Renato Reyes Jr. “It promises to take you from point A to point B. It makes you wait and wait. It charges you more for less. It breaks down all the time and still expects you to be thankful that you arrived at your destination in one piece.” “In many aspects, it is a train wreck and an intolerable burden on the people.” Reyes added. Reyes noted that numerous train breakdowns happened almost every week since last year. The latest incidents took place Feb. 17, March 11, April 30, May 25 and just last month when hapless passengers were made to walk along Guadalupe Bridge to find some other transportation. Bayan is bracing for what they described as “a deluge of lies and empty rhetoric” when President Aquino deliver his sixth and final State of the Nation Address on July 27. Reyes said they will not be surprised if Aquino highlights Gross Domestic Product growth, the conditional cash transfer program and the prosecution of political foes as among the so-called achievements of the regime. READ MORE...

ALSO: Abaya’s non-inclusion in MRT graft charges puzzles senators


JULY 5 ---ROXAS, ABAYA
Senators yesterday sought a concrete explanation from Ombudsman Conchita Carpio-Morales regarding the non-inclusion of Department of Transportation and Communications (DOTC) Secretary Joseph Emilio Abaya in the graft charges filed against Metro Rail Transport (MRT-3) officials connected to an alleged anomalous maintenance contract. Senator Grace Poe-Llamanzares, head of the Senate public sub-committee on transport, said she wants to go over the 39-page resolution released by the Ombudsman to find out details why Abaya was excluded from indictment and only former MRT-3 General Manager Al Vitangcol III and the five incorporators of Philippine Trans Rail Management and Services Corporation are now facing graft charges in connection to the purported irregular maintenance contract entered into by MRT-3 and PH Trams-CB&T. “I welcome this indictment by the Ombudsman against Mr. Al Vitangcol and his cohorts on behalf of the hundreds of thousands of our countrymen who suffer the indignity of riding the MRT everyday under such deplorable conditions brought about by their almost heinous criminal indiscretions,” Poe said in a statement. READ MORE...

ALSO: PH gov’t should modify handling of territorial dispute with China --Analyst


JULY 5 ---THE Philippines should modify the way it is handling its territorial dispute with China over the West Philippine Sea (South China Sea) while it still can by pursuing formal dialogue with the Chinese government, one of the country’s foremost foreign affairs and economic analyst said.
Prof. Richard Heydarian of the De La Salle University in Manila Political Science department issued the call even as the Philippine government prepares for the first hearing to be conducted by the Arbitral Tribunal in the Permanent Court of Arbitration on the case filed by Manila against Beijing’s claim over most of the disputed South China Sea. The Philippine government, the Department of Foreign Affairs (DFA) in particular, has repeatedly refused to enter into bilateral talks with China for fear that it may affect the arbitration case it filed. The Aquino administration, especially Foreign Affairs Secretary Albert Del Rosario, has “consistently suggested that diplomacy with China is practically fruitless.” “The default policy is to garner maximum international support and rely on an inherently uncertain legal maneuver against China,” Heydarian wrote in an article published by The Diplomat. However, he said, the Philippines can pick up a few tactical lessons from Vietnam and Japan both of whom have been locked in a similar territorial standoff with Beijing. “Both countries have been more proactive and creative in engaging China without compromising their territorial interests.” For Japan, noted Heydarian, a specialist in Asian geopolitics, it took a huge gamble when Japanese Prime Minister Shinzo Abe pursued a formal dialogue with Chinese President Xi Jinping on the sidelines of the Asia Pacific Economic Cooperation (APEC) in Beijing in 2014. READ MORE...

ALSO: Infra underspending to result in lower GDP, says Australia-New Zealand bank group


JULY 5 --Philstar.com/File photo
The Aquino administration’s underspending is seen to be a major threat to the country’s growth, the Australia and New Zealand Banking Group Ltd. said.
“Unless public spending fires up, risks to Philippine full-year economic growth outlook skew to sub six percent for the full-year 2015,” ANZ said. While still tagging the Philippines as the “strong man of Asia,” the ANZ expressed concern that GDP growth could weaken if public underspending especially in the infrastructure side would continue. “Philippines growth below six percent will be both an unusual and an unexpected event,” it said in a report. The government expects the local economy to grow by six to seven percent this year. ANZ said even if investors turn negative on growth in the short term, growth differentials would be minimal as foreign investors might return to the market as opportunities become enticing. But improvement or otherwise in the fiscal balance occurring as a result of fiscal underspending would be considerable, it added. With remittances providing a structural current account surplus, renewed public spending should serve to add to the resilience of the Philippines as the US Fed tightening cycle commences. Likewise, the upcoming presidential election could fire up public spending. But in the absence of this, a growth/ fiscal balance trade-off falls into place, ANZ said. “The strong man of Asia seemed a little bit unsteady on his feet over the first quarter of 2015,” ANZ said. READ MORE...

ALSO Editorial: IMF finds too much complexity, flexibility in Philippine budgeting


JULY 5 --The International Monetary Fund (IMF) has issued a report “Philippines: Fiscal Transparency Evaluation” which, while citing the government’s reform efforts, finds the Philippine budgeting system suffering from an unusually large amount of complexity and flexibility that “budget credibility is undermined.” 
Budget outturns differ noticeably from the budget law, the IMF report said. As a result, it pointed out, the annual budget law has become an imperfect indicator of the government’s priorities for resource allocation and service delivery. The IMF finding of complexity stems from the fact that there are so many special-purpose funds and automatic appropriations. Spending during a fiscal year may deviate significantly from the initial budget assumptions. Available appropriations continuously exceed the obligation program, as funds unused in the previous year are carried over to the next year. An “unprogrammed fund” is available to be released during the year. READ MORE...


READ FULL MEDIA REPORTS HERE:

MRT mess: Abaya cleared, Vitangcol to face raps

MANILA, JULY 6, 2015 (PHILSTAR) By Rhodina Villanueva (The Philippine Star) | Updated July 4, 2015 - 12:00am 1 53 googleplus3 0


Transportation Secretary Joseph Emilio Abaya

MANILA, Philippines - With the Metro Rail Transit 3 breaking down regularly due to various glitches, the Office of the Ombudsman ordered yesterday the indictment for graft of former MRT 3 general manager Al Vitangcol III and five incorporators of the company that won a multimillion-dollar contract to maintain the rail service.

Those who will face trial before the Sandiganbayan are Vitangcol’s uncle-in-law Arturo Soriano, currently the provincial accountant of Pangasinan; Wilson de Vera, who ran for mayor under the Liberal Party in Calasiao, also in Pangasinan; Marlo de la Cruz, reportedly an LP campaign supporter in Manaoag, Pangasinan; Manolo Maralit and Federico Remo.

The five are incorporators of the Philippine Trans Rail Management and Services Corp. (PH Trams), which bagged the MRT 3 interim maintenance deal worth $1.15 million a month without public bidding on Oct. 20, 2012 when Vitangcol headed the agency. The contract was renewed three times until Sept. 4, 2013.

Transportation Secretary Joseph Emilio Abaya, who signed the controversial maintenance contract, was cleared by the Office of the Ombudsman, which noted that he had not yet taken over the Department of Transportation and Communications (DOTC) when the contract was signed.

It was not immediately clear why Abaya was cleared. He took over the DOTC, which has jurisdiction over the MRT, on Oct. 18, 2012, two days before the contract was awarded.

READ MORE...

Also not clear was why the indictment was for graft instead of plunder, a non-bailable offense recommended for amounts involving P50 million or higher.

Abaya, acting president of the LP, earlier claimed he was not aware of irregularities in the contract, saying he merely relied on the recommendations of the MRT Bids and Awards Committee (BAC).

Ombudsman Conchita Morales found probable cause to indict the six men on charges of conspiring to award the irregular contract, in violation of the Anti-Graft and Corrupt Practices Act or Republic Act 3019 and the Government Procurement Reform Act or RA 9184.

The ombudsman’s resolution, released yesterday, stated that Vitangcol used his power and authority, as the MRT’s general manager, chief end-user, head of the negotiating team and BAC member all rolled into one, “to dictate the proponents invited for the preliminary negotiations” of the maintenance services, and “intentionally hid his (affinitive) relationship with Soriano, which would have automatically disqualified PH Trams.”

BAC chairman Jose Perpetuo Lotilla had admitted before a congressional inquiry that PH Trams was incorporated only in August 2012, two months before the award of the maintenance contract, with a paid-up capital of only P625,000.

Lotilla also admitted that PH Trams, by itself, would not have qualified for the P517-million job, and it was CB&T that had the finances and technical capability.

There is no word on a separate investigation conducted by the Department of Justice on allegations made by former Czech Ambassador Josef Rychtar and private investors that a group linked to Vitangcol had tried to extort $30 million from Czech railway firm Inekon in exchange for a contract to supply MRT trains. DOJ officials said the report of the National Bureau of Investigation was forwarded to Malacañang last year.

Inekon was trying to negotiate a government-to-government deal for the supply contract. De la Cruz and De Vera were reportedly present during the alleged extortion attempt at the official residence of the Czech ambassador in Forbes Park, Makati in July 2012, when the DOTC was headed by Manuel Roxas II. Rychtar reportedly told the group that Czech firms are prohibited from engaging in bribery to win deals.

Vitangcol has denied the extortion attempt. Roxas had recruited Vitangcol, his former Senate aide, to the MRT. The mother of Vitangcol’s wife is the sister of Arturo Soriano.

False affidavit, no divestment The ombudsman’s resolution stated that PH Trams’ incorporators were liable for executing a false Affidavit of Disclosure dated Aug. 12, 2012, stating that none of the incorporators were related by affinity with any member of the procurement teams.

Soriano claimed that he divested his shares in PH Trams on Sept. 10, 2012, or a month before the deal was awarded. But ombudsman probers found that no waiver was recorded in the Securities and Exchange Commission. It was also contrary to Soriano’s Statement of Assets, Liabilities and Net Worth, in which he declared that he obtained an interest as a stockholder of PH Trams in November 2012.

In December 1997, the MRT Corp. (MRTC) and Japan’s Sumitomo Corp. signed a maintenance contract for the safe and proper operation of the MRT trains, including the provision of labor and supervision. The agreement expired on June 21, 2010 but was extended four times, up to October 2012.

Fifteen days prior to the expiration of the last extension, the BAC adopted a resolution to undertake the procurement of an interim maintenance provider for six months and negotiate its terms and conditions. The negotiating team recommended that the project be awarded to PH Trams-CB&T joint venture for $1.15 million a month. On Oct. 20, 2012, the project was awarded to PH Trams-CB&T.

Section 3(e) of RA No. 3019 prohibits public officials from causing any undue injury to any party, including the government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of official administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence.

Section 3(h) prohibits a public official from directly or indirectly having financial or pecuniary interest in any business, contract or transaction in connection with which he intervenes or takes part in his official capacity, or in which he is prohibited by the Constitution or by any law from having any interest.

Meanwhile, Section 65(c)(1) of RA 9184 punishes the act of “submitting eligibility requirements of whatever kind and nature that contain false information or falsified documents calculated to influence the outcome of the eligibility screening process or conceal such information in the eligibility requirements when the information will lead to a declaration of ineligibility from participating in public bidding.”

De Vera, who allegedly acted as a middleman for Vitangcol in the deal, said he was surprised by the ombudsman’s report and would consult his lawyers.

Vitangcol was not immediately available for comment yesterday. He was forced to resign after reports came out about his family links to Soriano.

STAR columnist Jarius Bondoc, in a series of articles in the newspaper, had exposed the alleged irregularities in the MRT deal, prompting a congressional investigation.

Abaya, citing Bondoc’s columns in The STAR, decided to replace Vitangcol after learning of the family ties. Abaya said members of the DOTC’s bidding committee told him that they were not informed of the family links.

Lotilla said he and other BAC members also learned of the relationship of Vitangcol with Soriano only from the newspapers.

The DOTC, meanwhile, yesterday welcomed the ombudsman’s decision.

Michael Sagcal, DOTC spokesman, said in a text message the agency would continue to cooperate with authorities on any investigation pertaining to transport projects.

“The DOTC respects the rule of law, and has fully cooperated with the processes of the ombudsman throughout the investigation. We will continue to be transparent and help shed light on the truth, as we also pursue the rehabilitation and improvement projects for the good of MRT-3 passengers,” he added. – With Lawrence Agcaoili, Eva Visperas


INQUIRER

Roxas mum on anomalous MRT contract; ‘It’s Ombudsman’s decision’ SHARES: 57 VIEW COMMENTS By: Julliane Love De Jesus @JLDejesusINQ INQUIRER.net 07:31 PM July 4th, 2015


Mar Roxas: "No comment, it"s the Ombudsman's decision. not mine"

ILIGAN CITY—”It’s the Ombudsman’s decision, not mine,” Interior Secretary Manuel “Mar” Roxas II said when asked to comment on critics implicating him in an allegedly anomalous Metro Rail Transit (MRT) maintenance contract.

“No comment. They never said anything good about the government so that’s fine,” Roxas, in Filipino, told reporters after distributing 23 brand-new patrol jeeps to Lanao del Norte provincial police on Saturday.

Militant group Bagong Alyansang Makabayan (Bayan) has questioned the Ombudsman’s resolution on the $11.5-million maintenance contract between the Department of Transportation and Communication (DOTC) and Philippine Trans Rail Management and Services Corp. (PH Trams).

Without public bidding, PH Trams, a company of former MRT General Manager Al Vitangcol’s uncle-in-law, bagged the maintenance contract in October 2012. The contract was awarded to the company two days later.

The Office of the Ombudsman dismissed the graft complaint against Transportation Secretary Joseph Emilio “Jun” Abaya after it found no probable cause against the acting Liberal Party president while Vitangcol and five incorporators of PH Trams were indicted for graft.

READ MORE...

“If the Ombudsman is saying that Abaya was new to the DOTC and therefore did not know that the contract was anomalous, why not investigate Mar Roxas who was DOTC secretary when the contract was negotiated? Is it only mere coincidence that several of Vitangcol’s coaccused have links to the Liberal Party headed by Roxas and Abaya?” Bayan said.

Before he was appointed head of the Department of Interior and Local Government, Roxas was the DOTC secretary in 2011.

“I’m not exactly clear of what happened after I had left but ang masasabi ko, it was Sumitomo who was the service provider. Iyon ang nadatnan ko at patuloy na kino-continue lang ‘yon noong nandoon ako,” Roxas said. Sumitomo Corp. was the Japanese firm that used to provide maintenance to MRT coaches.

Apart from Bayan, Vice President Jejomar Binay’s camp said the “(downhill) slide” of the MRT 3 started during Roxas’ tenure as transportation secretary.

Lawyer Rico Quicho, Binay’s spokesperson for political affairs, said it was because of Roxas’ “inefficiency and corruption” that commuters riding the MRT 3 were suffering.


MANILA STANDARD

Activists compare Aquino to MRT trains By Joel E. Zurbano | Jul. 05, 2015 at 12:01am


President Aquino points to a Philippine STAR story on the problems of the MRT-3 during a meeting with the Cabinet yesterday. The President has expressed concern over the daily negative reports about the MRT-3. Looking on is Finance Secretary Cesar Purisima. PHILSTAR HEADLINE PHOTO OCTOBER 14, 2014

THE militant group Bagong Alyasang Makabayan likened the administration of President Benigno Aquino III to the Metro Railway Transit system which charges the people more for less and breaks down all the time.

“The Aquino government is like the MRT,” said Bayan secretary general Renato Reyes Jr. “It promises to take you from point A to point B. It makes you wait and wait. It charges you more for less. It breaks down all the time and still expects you to be thankful that you arrived at your destination in one piece.”

“In many aspects, it is a train wreck and an intolerable burden on the people.” Reyes added.

Reyes noted that numerous train breakdowns happened almost every week since last year. The latest incidents took place Feb. 17, March 11, April 30, May 25 and just last month when hapless passengers were made to walk along Guadalupe Bridge to find some other transportation.

Bayan is bracing for what they described as “a deluge of lies and empty rhetoric” when President Aquino deliver his sixth and final State of the Nation Address on July 27.

Reyes said they will not be surprised if Aquino highlights Gross Domestic Product growth, the conditional cash transfer program and the prosecution of political foes as among the so-called achievements of the regime.

READ MORE...

“What will obviously be missing in the SONA are the facts showing record unemployment amid the reported economic growth, rising prices and the privatization of utilities and services, depressed wages, the proliferation of contractual labor, migration and the lack of genuine land reform and national industrialization,” said Reyes.

“Aquino will try hard to proclaim to the world that his Daang Matuwid has resulted into economic growth. He will try to convince the people that his pledge of good governance is real, despite the selective prosecution of political foes and the persistence of barkadahan governance as demonstrated by the Mamasapano incident,” he added.

Bayan and its member organizations nationwide will deliver their own “People’s SONA” which they expect to be a summing-up of the more than five years of the Aquino regime. The SONA protests will tackle issues related to the economy, governance, foreign policy, and human rights.

The group does not see anything new or unexpected in Aquino’s final SONA .

“More than five years into his term, expect Aquino to again draw comparisons between his regime and the previous Arroyo government, if only to cover up his own blunders and failures,” Reyes said.

“Aquino’s legacy will inevitably include the illegal Disbursement Acceleration Program, the Mamasapano crisis, the selective prosecution in the pork barrel scandal, the illegal Enhanced Defense Cooperation Agreement (EDCA), and the dismal preparedness and response to typhoon Yolanda,” he added.

The group said the issues that have also defined the Aquino administration include unemployment, questionable public-private partnership deals and the continuing human rights violations.


MANILA BULLETIN

Abaya’s non-inclusion in MRT graft charges puzzles senators by Hannah Torregoza July 5, 2015 Share0 Tweet0 Share0 Email0 Share0


ROXAS, ABAYA

Senators yesterday sought a concrete explanation from Ombudsman Conchita Carpio-Morales regarding the non-inclusion of Department of Transportation and Communications (DOTC) Secretary Joseph Emilio Abaya in the graft charges filed against Metro Rail Transport (MRT-3) officials connected to an alleged anomalous maintenance contract.

Senator Grace Poe-Llamanzares, head of the Senate public sub-committee on transport, said she wants to go over the 39-page resolution released by the Ombudsman to find out details why Abaya was excluded from indictment and only former MRT-3 General Manager Al Vitangcol III and the five incorporators of Philippine Trans Rail Management and Services Corporation are now facing graft charges in connection to the purported irregular maintenance contract entered into by MRT-3 and PH Trams-CB&T.

“I welcome this indictment by the Ombudsman against Mr. Al Vitangcol and his cohorts on behalf of the hundreds of thousands of our countrymen who suffer the indignity of riding the MRT everyday under such deplorable conditions brought about by their almost heinous criminal indiscretions,” Poe said in a statement.

READ MORE...

But while she respects the findings of the Ombudsman, Poe said she is keen on unearthing why Abaya was excluded when he was also signatory to the contract.

“While we respect the findings and recommendations of the Ombudsman in the indictment of Mr. Vitangcol and his cohorts, I would like to read the text of the resolution in full to find out the reasons why DOTC Sec. Joseph Emilio Abaya was not included despite having allegedly signed the contract presumably with full knowledge of the facts and the applicable law surrounding such anomalous procurement of services,” she said.

In its resolution, the Ombudsman found that Vitangcol used his power and authority as general manager and chief end-user, head of the negotiating team, member of the Bids and Awards Committee (BAC), “to dictate the proponents invited for the preliminary negotiations” of the maintenance services.

Sen. Ma. Lourdes “Nancy” Binay said she wonders whether Abaya’s exemption from the graft charges may be due to his affiliation with the ruling Liberal Party of President Aquino.

“Of course, we’re no longer surprised because there is indeed selective justice in this current administration. It’s surprising to know Secretary Abaya is not included in the case when in fact he was one of those who signed this contract. It’s evidence that there is really selective justice in this administration,” Binay said in an interview over Radio DZBB.

Abaya is currently acting president of the LP, while President Aquino is the chair and Senate President Franklin Drilon is the vice chair.


MANILA BULLETIN

PH gov’t should modify handling of territorial dispute with China by Roy Mabasa July 5, 2015 (updated) Share2 Tweet4 Share0 Email0 Share49

THE Philippines should modify the way it is handling its territorial dispute with China over the West Philippine Sea (South China Sea) while it still can by pursuing formal dialogue with the Chinese government, one of the country’s foremost foreign affairs and economic analyst said.

Prof. Richard Heydarian of the De La Salle University in Manila Political Science department issued the call even as the Philippine government prepares for the first hearing to be conducted by the Arbitral Tribunal in the Permanent Court of Arbitration on the case filed by Manila against Beijing’s claim over most of the disputed South China Sea.

The Philippine government, the Department of Foreign Affairs (DFA) in particular, has repeatedly refused to enter into bilateral talks with China for fear that it may affect the arbitration case it filed.

The Aquino administration, especially Foreign Affairs Secretary Albert Del Rosario, has “consistently suggested that diplomacy with China is practically fruitless.”

“The default policy is to garner maximum international support and rely on an inherently uncertain legal maneuver against China,” Heydarian wrote in an article published by The Diplomat.

However, he said, the Philippines can pick up a few tactical lessons from Vietnam and Japan both of whom have been locked in a similar territorial standoff with Beijing.

“Both countries have been more proactive and creative in engaging China without compromising their territorial interests.”

For Japan, noted Heydarian, a specialist in Asian geopolitics, it took a huge gamble when Japanese Prime Minister Shinzo Abe pursued a formal dialogue with Chinese President Xi Jinping on the sidelines of the Asia Pacific Economic Cooperation (APEC) in Beijing in 2014.

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“Soon after their awkward handshake, Japan and China resumed high-level talks among their defense and foreign ministries, paving the way for various confidence-building measures to manage their territorial disputes and avoid accidental clashes in contested areas,” he pointed out.

As for Vietnam, Heydarian said it dispatched top officials to China to deescalate tensions, set up of hotlines between the Hanoi and Beijing, and explore additional mechanisms to prevent another crisis and maintain robust economic ties.

“For both Hanoi and Tokyo, it was important to make sure their territorial standoff with China did not lead to conflict and undermine critical economic linkages with Beijing,” he said. “At the same time, this has not prevented them from fortifying their position on the ground, ramping up their presence close to disputed waters, and enhancing their defensive capabilities.”

In contrast, said Heydarian, President Benigno Aquino III and his Chinese counterpart are yet to “hold a single formal summit; the two countries are yet to sign a single hotline; and Chinese investments in the Philippines have been effectively frozen.”

As a result, growing territorial tensions in the South China Sea are taking a toll on the sizeable Filipino-Chinese community in the Philippines.

“Slowly, it is becoming clear that the Philippines’ territorial standoff with China not only carries the risk of possible conflict in disputed waters and a precipitous decline in Chinese investments,” said Heydarian, a regular resource speaker on Asian affairs in local and international conferences.

He said the “saber-rattling” between the Philippines and China in the South China Sea “has rendered long-dormant inter-ethnic tensions more visible in the public discourse.”


PHILSTAR

Infra underspending to result in lower GDP By Ted P. Torres (The Philippine Star) | Updated July 5, 2015 - 12:00am 1 10 googleplus0 0


Philstar.com/File photo

MANILA, Philippines - The Aquino administration’s underspending is seen to be a major threat to the country’s growth, the Australia and New Zealand Banking Group Ltd. said.

“Unless public spending fires up, risks to Philippine full-year economic growth outlook skew to sub six percent for the full-year 2015,” ANZ said.

While still tagging the Philippines as the “strong man of Asia,” the ANZ expressed concern that GDP growth could weaken if public underspending especially in the infrastructure side would continue.

“Philippines growth below six percent will be both an unusual and an unexpected event,” it said in a report.

The government expects the local economy to grow by six to seven percent this year.

ANZ said even if investors turn negative on growth in the short term, growth differentials would be minimal as foreign investors might return to the market as opportunities become enticing.

But improvement or otherwise in the fiscal balance occurring as a result of fiscal underspending would be considerable, it added. With remittances providing a structural current account surplus, renewed public spending should serve to add to the resilience of the Philippines as the US Fed tightening cycle commences.

Likewise, the upcoming presidential election could fire up public spending. But in the absence of this, a growth/ fiscal balance trade-off falls into place, ANZ said.

“The strong man of Asia seemed a little bit unsteady on his feet over the first quarter of 2015,” ANZ said.

READ MORE...

The Philippine economy slowed to 5.2 percent in the first quarter mainly due to state underspending.

Economic growth made a considerable downside surprise in the first quarter on the back of weak net exports - which the bank views as being aligned to the soft US GDP profile over the same period – and ongoing weakness in government spending.

With inflation seen to ease in the coming months, ANZ expects the Bangko Sentral ng Pilipinas to maintain its key policy rates for the remainder of the year.

For 2016, the foreign bank is forecasting Philippine GDP to hit six to 6.1 percent.

“This easing of fiscal policy should see the Philippines as one of the first Asean central banks to follow the Fed higher,” ANZ said.


MANILA BULLETIN EDITORIAL

Editorial: IMF finds too much complexity, flexibility in Philippine budgeting July 5, 2015 Share0 Tweet1 Share0 Email1 Share2

The International Monetary Fund (IMF) has issued a report “Philippines: Fiscal Transparency Evaluation” which, while citing the government’s reform efforts, finds the Philippine budgeting system suffering from an unusually large amount of complexity and flexibility that “budget credibility is undermined.”

Budget outturns differ noticeably from the budget law, the IMF report said. As a result, it pointed out, the annual budget law has become an imperfect indicator of the government’s priorities for resource allocation and service delivery.

The IMF finding of complexity stems from the fact that there are so many special-purpose funds and automatic appropriations. Spending during a fiscal year may deviate significantly from the initial budget assumptions. Available appropriations continuously exceed the obligation program, as funds unused in the previous year are carried over to the next year. An “unprogrammed fund” is available to be released during the year.

READ MORE..

The IMF said there is so much flexibility in the budget, as the President can reallocate appropriations between agencies to a large extent. Agencies cannot initially access their programmed appropriations as the Department of Budget and Management (DBM) releases the funds depending on its assessment of whether the government can meet its fiscal deficit target. Many special-purpose funds and other appropriations are transferred to the main budget lines during the year.

The IMF assessment recalls the findings of the Supreme Court when it declared unconstitutional several aspects of Malacanang’s Disbursement Acceleration Program (DAP), notably the practice of halting Congress-approved projects in the middle of the year, then amassing the unused funds in the DAP for use in Malacañang-designated programs.

The IMF report indicates that the practice of carrying over funds from one year to the next continues. There are still many unprogrammed funds; in one that was recently exposed, appropriated funds for projects that were identified only by code numbers, that could later be anything the DBM decides.

This is the complexity and flexibility that the IMF said it found in the Philippine budgeting system, undermining its credibility. The government officials concerned should look into these IMF findings to support its reform efforts.


Chief News Editor: Sol Jose Vanzi

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