Rebuilding for the Better Philippines updates
image source: politico.comMoody’s ups outlook for Philippines MOODY’S Analytics has raised its full-year economic growth forecast for the Philippines following a surprisingly strong second quarter, but warned that continued government underspending amid tightened monetary policy could slow expansion next year. “With the latest Q2 numbers, 2014 GDP growth [could hit] 6.2%. This sounds more realistic,” Moody’s Analytics senior economist Glenn Levine said in an e-mail yesterday, citing “exports [and] solid consumer demand” as drivers.
Second-quarter economic growth bested expectations after it expanded at a faster 6.4% from a downwardly revised 5.6% in the first three months of the year. The latest result, however, was still slower than the 7.9% notched in the April-June period a year ago.
For the first half, gross domestic product (GDP) growth averaged 6%, slower than the 7.2% notched in the same six months in 2013.
The government targets GDP to grow 6.5-7.5% this year.
Last March, Mr. Levine had said GDP expansion could slacken to 5.8% this year from the two consecutive years of stellar growth of 6.8% in 2012 and 7.2% in 2013, in line with a projected region-wide slowdown as downside risks within and outside Asia Pacific persist.
A Moody’s Analytics report released separately yesterday said economies in Southeast Asia “are expected to expand 4.3% in 2014, well below their recent trend rate just over 5%.”
Nonetheless, the Philippines was cited for being one of the two strongest performers in the region in the first half of 2014, the other one being Malaysia.
The report -- written by Moody’s Analytics economist Fred Gibson -- noted that the Philippines “has shrugged off” effects of typhoon Yolanda which devastated parts of central Philippines on Nov. 8-9, while saying that political uncertainty has weighed on Indonesia and Thailand.
Growth prospects for the region are nevertheless much brighter next year due to “firming global demand and stronger domestic spending.”
“Export earnings are projected to improve over the next 18 months in line with firming global demand,” the report read.
“The US economy is on a sustained upward trend and the Chinese economy is responding positively to the government’s stimulus.”
“The outlook is sanguine for companies involved in the production of smartphones and PCs (personal computers) as the global tech cycle continues to trend higher. Thailand, Malaysia and Singapore will benefit,” it added.
In the case of the Philippines, however, expansion of economic activity in the country could be imperiled by slow public and private spending, Mr. Levine said separately by phone yesterday.
“The fixed investment cycle is slowing quickly, both from the private sector and public sector. It’s fading quickly. The PPP (public-private partnership) pipeline has slowed,” Mr. Levine noted.
“That, coupled with slightly higher interest rates that run through investment channels, could ease GDP growth to 5.5% next year.”
Data released by the Bureau of the Treasury last Friday put the budget gap last month at just P1.8 billion -- down 97% from P53.2 billion a year ago -- as revenues grew 15% to P166.7 billion from P144.6 billion while expenditures fell 15% to P168.5 billion from P197.8 billion.
The government has set a P550.977-billion spending target for this quarter alone, of which P107.884 billion -- nearly a fifth -- is supposed to go to infrastructure needed to support accelerating economic activity.
July’s tally, in turn, nearly halved the budget gap to just P55.7 billion in the first seven months from P104.5 billion the past year, as revenues grew 12% to P1.101 trillion from P984.1 billion and expenses edged up just 6% to P1.156 trillion from P1.089 trillion.
Mr. Levine thus pressed the government to accelerate spending, particularly on ports, roads, airports, and utilities, “to get the push we need.”
Another analyst, however, expects other drivers of growth to provide stable support for now.
In a separate note yesterday, economist Jun Trinidad of the research arm of Citigroup Global Markets, Inc., said “hopefully, private sector activities will continue to offset weak fiscal contribution to growth as evidenced by the second-quarter GDP growth... despite real fiscal expenditures were down 2.2% year on year.”
“This highlights benefits of investment-driven growth over the past years that resulted in a more diversified GDP growth base -- from non-tech manufacturing to BPO (business process outsourcing) and transport services. Any sector bbenefitingfrom investment flows can provide the upside growth surprise aside from the OFW (overseas Filipino workers) remittance story.”
Mr. Trinidad added that initial state spending slowdown after the Supreme Court ruled as illegal in July “acts and practices” to implement the Disbursement Acceleration Program (DAP) -- which the administration had described as a stimulus measure -- should lift as soon as the dust settles on this controversy.
“Post-DAP brouhaha, legal clarity of what can and cannot be done within the budget system would no longer be a botteneck [sic],” Mr. Tridinad wrote, adding this would leave the usual weather and systemic constraints as the only real hurdles to growth.
“Other than inclement weather, fiscal challenge would be down to absorptive capacity constraints.” - Business World Online
Cebu Pacific - Asia's largest airlines - Photo: inquirer.net
MANILA, Philippines–Cebu Pacific Air, the country's biggest budget carrier, has bagged regulatory approval to fly to new international destinations, including New Zealand and Myanmar.
Cebu Pacific said it was granted seat entitlements to mount added flights to Singapore, Macau and, from Cebu to Hong Kong. The increase was approved in a Civil Aeronautics Board meeting, it said.
"For the new routes such as New Zealand and Myanmar, Cebu Pacific is in the process of reviewing network plans and our options in terms of operations. We will make announcements soon as ready," Alex Reyes, general manager for Cebu Pacific's long haul division, said in a text message.
Cebu Pacific was granted seven flights weekly from Manila to New Zealand and 1,260 entitlements from Manila to Singapore, allowing the airline to upgrade its current daily Airbus A320 service to an Airbus A330 service.
In the same meeting, CAB designated Cebu Pacific Air as an official Philippine carrier to New Zealand, Myanmar and Canada.
Cebu Pacific's opposition to extension of the codeshare agreement between Philippine Airlines (PAL) and Emirates on the Manila-Dubai route which is set to expire in October 2014 was also granted by the CAB.
"We commend the CAB air panel for [its] wisdom in rendering decisions that allow Philippine carriers to expand services in international routes. This ultimately benefits the travelling public," said Jorenz Tañada, Cebu Pacific Air vice president for corporate affairs.
Cebu Pacific Air is set to launch thrice weekly flights from Manila to Kuwait on Sept. 2, 2014, and four times weekly flights from Manila to Sydney on Sept. 9, 2014.
The carrier's 50-strong fleet comprises 10 Airbus A319, 28 Airbus A320, 4 Airbus A330 and eight ATR-72-500 aircraft. It claims to be one of the most modern aircraft fleets in the world.
Between 2014 and 2021, Cebu Pacific will take delivery of 11 more brand-new Airbus A320, 30 Airbus A321neo, and 2 Airbus A330 aircraft, the statement showed.–Miguel R. Camus : Inquirer
Henry Sy Sr. MIKE AMOROSO - By Louis Bacani (philstar.com)
Forbes: Richest Pinoys got richerMANILA, Philippines - Forbes magazine released on Thursday its new list of 50 richest Filipinos, most of whom got richer this year.Based on the updated list, the combined wealth of the country's 50 richest is a whopping $74.2 billion or P3.2 trillion, up 12 percent from $65.8 billion in 2013.Shopping mall mogul Henry Sy topped the list for the seventh consecutive year with a net worth of $12.7 billion or P553.59 billion."[Sy] Retains top spot for seventh year in a row. Richer than ever, thanks to rising share price for his SM Prime Holdings, country's largest mall operator, and Banco de Oro," Forbes said.Forbes staff Abram Brown noted that four newcomers join the top 50: the Po family, Dean Lao, the Concepcions and P.J. Lhuillier."The only loser in the Top 10 was Lucio Tan (No. 2), whose fortune fell on worries about the cigarette market," Brown said.The list of the richest Filipinos and their estimated net worth:GMA Network executives Gilberto Duavit Jimenez Menardo and Felipe Gozon also saw their rankings fell while businessman Manuel Pangilinan and Lourdes Montinola dropped from the top 50.
1. Henry Sy; US$12.7 billion
2. Lucio Tan; $6.1 billion
3. Enrique Razon Jr.; $5.2 billion
4. Andrew Tan; $5.1 billion
5. John Gokongwei Jr.; $4.9 billion
6. David Consunji; $3.9 billion
7. George Ty; $3.7 billion
8. Aboitiz Family; $3.6 billion
9. Jaime Zobel de Ayala & family; $3.4 billion
10. Tony Tan Caktiong; $2 billion
11. Robert Coyiuto Jr., $1.8 billion
12. Lucio & Susan Co, $1.7 billion
13. Yap family, $1.475 billion
14. Manuel Villar, $1.460 billion
15. Inigo & Mercedes Zobel,$1.2 billion
16. Alfredo Yao, $1 billion
17. Andrew Gotianun $955 million
18. Vivian Que Azcona $935 million
19. Eduardo Cojuangco $870 million
20. Beatrice Campos $825 million
21. Po family $770 million
22. Oscar Lopez $700 million
23. Alfonso Yuchengco $685 million
24. Roberto Ongpin $680 million
25. Betty Ang $670 million
26. Dean Lao $625 million
27. Manuel Zamora $620 million
28. Carlos Chan $550 million
29. Jorge Araneta $510 million
30. Mariano Tan Jr. $445 million
31. Edgar Sia $390 million
32. Ramon Ang $380 million
33. Michael Romero $375 million
34. Concepcion Family $320 million
35. Philip Ang $315 million
36. Frederick Dy $310 million
37. Luis Virata $300 million
38. Alfredo Ramos $260 million
39. Wilfred Steven Uytengsu Jr. $255 million
40. Tomas Alcantara $250 million
41. Jose Antonio $240 million
42. Bienvenido Tantoco Sr. $235 million
43. Jacinto Ng $230 million
44. Gilberto Duavit $200 million
45. Menardo Jimenez $195 million
46. Eric Recto $190 million
47. Walter Brown $183 million
48. Felipe Gozon $182 million
49. P.J. Lhuillier $180 million
50. Juliette Romualdez $170 million- Philstar
Supreme Court and Sandiganbayan orders turnover of Marcos' looted $42 Million USD to Philippine Treasury
Court orders turnover of Marcos' USD42M loot to govt
MANILA - The Sandiganbayan has ordered the turnover to the government of 42 million US dollars in the so-called "Arelma" account of the late dictator Ferdinand Marcos.
The anti-graft court's Special Division issued a two-page writ of execution on the 18th of this month directing the transfer of the money from the Philippine National Bank to the Bureau of Treasury.
The funds represent Marcos assets, originally amounting to 2 million dollars deposited with Merrill Lynch Securities in New York in 1972 in the name of Arelma Foundation.
The order was based on a Supreme Court ruling dated March 12, 2014.
In the ruling, the High Court junked the motion for reconsideration filed by Imelda Marcos, on behalf of the late President, and affirmed its April 25, 2012 decision which held that "[a]ll assets, properties, and funds belonging to Arelma, S.A., with an estimated aggregate amount of $3,369,975 as of 1983, plus all interests and all other income accrued thereon" be forfeited in favor of government when these assets are transferred to the possession of the Republic of the Philippines.
The case stems from a petition for forfeiture filed by the Presidential Commission on Good Government (PCGG) with the Sandiganbayan on Dec. 17, 1991 involving $356 million ($658 million as of the April 2012 SC ruling), and two treasury notes worth $25 million and $5 million, allegedly illegally amassed by the Marcoses.
The PCGG petition also sought the forfeiture of the assets of alleged dummy corporations and entities established by the Marcoses, as well as real properties and personal properties obtained by the couple "manifestly out of proportion" to their lawful income.
Sandiganbayan - photo: philippinechronicle.com
Arelma, which maintained an account and portfolio in Merrill Lynch, New York, was described by the PCGG in the petition as among entities purportedly organized by the Marcoses for "hiding ill-gotten wealth."
The PCGG stressed that the Marcoses could not have afforded to acquire Arelma because their combined lawful income for the period 1966 to 1986, or in the two decades they were in power, was only P2,319,583 or $ 304,372, or only 9% of the entire Arelma fund of $3.4 million in 1983.
The PCGG obtained a favorable ruling from the Sandiganbayan on April 2, 2009; the anti-graft court declared all assets and properties of Arelma, S.A. forfeited in favor of the government.
The Marcoses filed an appeal with the SC to seek a reversal of the Sandiganbayan ruling.
In its 2012 decision, the high court stressed that "in determining whether the presumption of ill-gotten wealth should be applied, the relevant period is incumbency, or the period in which the public officer served in that position."
"The amount of the public officer's salary and lawful income is compared against any property or amount required for that same period," the high court said.
In its final ruling, the high court said the arguments the Marcoses raised in their MR were already passed upon in the 2012 decision.
Marcos incorporated Arelma, S.A. under Panamanian law in 1972, he was already President then; in 2000, the account had grown to $35 million. - ABS-CBN News
Cha-cha gets going
MANILA, Philippines - Floor debates over proposals to change economic provisions of the Constitution kicked off at the House of Representatives yesterday, with one of the proponents stressing that the effort is more about making future economic legislation responsive to Filipinos’ needs than giving foreigners the right to own land.
Davao City Rep. Mylene Garcia-Albano, who chairs the committee on constitutional amendment, made this clear in response to interpellation of Resolution of Both Houses No. 1 (RBH 1) by Akbayan party-list Rep. Walden Bello.
The plenary debates ended at past 7 p.m.
Albano said any proposed amendment to economic provisions of the Constitution would not be automatically written and adopted even if the resolution being discussed in the House is approved and ratified by the people.
Albano was the first to defend RBH 1 yesterday.
RBH 1, principally authored by Speaker Feliciano Belmonte Jr., seeks to include the phrase “unless otherwise provided by law” in some sections of Articles XII (national economy and patrimony), XIV (education, science and technology, arts, culture and sports) and XVI (general provisions).
This means the constitutional restrictions on foreign ownership will remain until Congress enacts specific laws to remove them.
In his interpellation, Bello pointed out that China, Indonesia and Vietnam have the same constitutional restrictions on foreign ownership of land but these did not hinder the massive flow of foreign investments to their economies.
“We have seen that in the most dynamic economies in Southeast Asia, constitutional ban on foreign ownership was not in fact a hindrance – it’s something that foreign investors have learned to live with,” Bello said.
Albano, however, pointed out that RBH 1 does not contemplate on directly writing amendments to the Constitution but only seeks to allow the country to adjust or adapt to future economic realities and contingencies.
She said the parliaments of China, Indonesia and Vietnam have passed numerous laws that tend to ease economic restrictions in their respective constitutions.
“That’s not the objective. We’re not saying we’re going to remove them (restrictions). We want to provide flexibility to our country on crafting economic policies to meet the exigencies that come our way,” Albano told Bello.
She said China has allowed long-term lease of up to 99 years for land, while Vietnam and Indonesia have also enacted laws that allow full repatriation of earnings of investors, among other legislation passed to attract investments.
Albano said land ownership is not the only concern addressed by RBH 1, but also other sectors and aspects of the economy.
She noted Congress recently ratified a bill allowing full foreign ownership of banks.
Leaders of the chamber said they would try to speed up passage of RBH 1 to protect it from possible attempts by some lawmakers to dilute it with proposals to amend the political provisions of the Constitution to allow President Aquino to seek another term.
A counterpart measure, authored by Sen. Ralph Recto, is pending in the Senate.
Belmonte earlier expressed confidence that there would not be much fuss over RBH 1 as it is aimed at attracting investments and boosting employment.
“This is just a simple change. The door (to investments) is still locked and we have to provide a legal key,” the Speaker said. “I suppose all the countries around us, in fact, have always been ahead in the area of foreign direct investments, so we really have to start thinking on what we should do.”
He said positive economic developments and high foreign investor confidence provide further justification for removing constitutional obstacles to investments. - philSTAR
Economy likely grew over 6% in Q2 – FMIC
MANILA, Philippines - The country’s economy is forecast to expand by over six percent in the second quarter of 2014, slower than the 7.5-percent growth in the same period last year, according to First Metro Investment Corp. (FMIC).
Government forecasts gross domestic product (GDP) to grow between 6.5 to 7.5 percent this year.
In the first quarter of the year, the economy managed to expand a lower-than-expected 5.7 percent, as Super Typhoon Yolanda contributed to the poor performance.
But FMIC president Roberto Juanchito T.Dispo said clearer signs of recovery in the second quarter could serve as a positive momentum.
“We are quite confident that the economy will accelerate back towards the seven-percent growth part in the second half of 2014,” Dispo said. FMIC is a member of the Metrobank Group and one of the country’s leading investment firms.
He added that gains in industrial output look solid moving towards positive territory, employment growth at the start of the second quarter, and an anticipated momentum gain for government spending in the second semester of the year would get the Philippine economy back on track.
The FMIC executive said inflation is likely to accelerate in the third quarter to 4.8 percent or 0.5 percentage point higher than in the first three months of the year, due to the delayed importation of rice and the adverse impact on other food prices of Manila’s truck ban.
“We expect government spending to revert back to a 12-percent growth pace starting third quarter, with infrastructure spending continuing to lead the way,” Dispo said.
Exports are likewise seen to strengthen in the second semester as the US economy show solid signs of recovery with the help of speedier job creation. “China should continue to post seven-percent growth better for the second half, both adding to the demand for our export products,” the FMIC chief added.
The Bangko Sentral ng Pilipinas (BSP) is expected to raise policy rate by another 25 basis points (bps) and the reserve requirements by another 100 bps towards the end of the year.
FMIC said that corporate bond issuance should pick up for the rest of the second semester of 2014 as the large issuers in the market have reached the single-borrower limits (SBLs).
Meanwhile, the FMIC report cautioned that the equity market will have to absorb BSP’s tightening measures.
“Valuations remain stretched and the sustainability of valuations hinges on earnings catching up, or the economy continuing to register strong growth,” Dispo said, adding that poor first semester GDP growth would force a downward bias in revised economic forecasting.
Nonetheless, the investment firm believes that in the present state of the equity market remains positive as it continues to challenge the 7,100-level.
“With these in mind, we believe selectivity is key to outperformance and rotation to value and low beta plays are preferred. We continue to like banks due to M&A themes, potential re-rating catalyst, and gaming stocks with properties located at Entertainment City in Manila,” it added. - philSTAR
Britain Said: Philippines could be "Asia's Next Superpower to Watch" in the next 20 years - unrivaled
NPPA/NPPA - MANILA, Philippines - Yahoo! interviews British Ambassador to the Philippines, Asif Ahmad, at the Yahoo! Philippines headquarters (Adrian Bautista/NPPA IMAGES)
PH is among Asia’s emerging powers, says British Ambassador
With its vast natural resources and an economic growth “that’s unrivaled by many across the region,” the Philippines is one of the emerging powers to watch, a diplomat has said.
“There’s no reason why over the next 20, 30 years, the Philippines will not fulfill the ambitions of what we believe the country has,” British Ambassador to the Philippines Asif Ahmad told Yahoo Philippines in a recent interview. Ahmad has been deployed to the country for over a year now.
Ahmad said that among the members of the Association of Southeast Asia Nations (ASEAN), he perceives the Philippines “as a leading member of it.”
“We have created our links, we invest more time in terms of visits and attention than other countries. It’s part of our narrative of emerging powers and we see the Philippines as one of them,” he added, noting that this is also why Great Britain takes pride as the single-largest investor in the Philippines from the European Union.
Even politics does not appear to be a threat. In fact, Ahmad believes discussions on political developments such the Priority Development Assistance Fund (PDAF) and the Disbursement Allocation Program (DAP) are good.
“In any democracy, we see lively politics as being healthy and issues are being discussed in the open. It would be worse if corruption in the country like the Philippines or elsewhere was kept quiet or if the media are frightened to mention it,” he added.
But while a bright future appears to be in store for the Philippines, Ahmad admits the Philippine government has so much work to do. And if the Philippines wants to get the global attention it deserves, it must improve its airport and transport system.
“I’m looking at tourism, [PH has] a huge opportunity, the finest natural assets in the region. The challenge now, of course, is to how to get to each and every destination. [There must be] airport investment, reliable transport from A to B, and that in turn, generate employment…that’s a great opportunity,” Ahmad said.
Ahmad says untapped opportunities for the Philippines also include rural development.
“If you have connections or infrastructure and transport systems, livelihoods will improve. People will be able to produce food not only for the Philippines but for export,” said Ahmad. - Yahoo News
PNoy open to charter change, lifting term limits
MANILA - President Benigno Aquino said on Wednesday he was considering constitutional changes including adjustment of term limits for officials that might allow him to serve a second six-year term.
The present constitution would limit Aquino, elected in 2010, to a single six-year term. The restriction was born of the country's experience of martial law under the late strongman Ferdinand Marcos, who ruled for more than two decades.
Aquino, speaking in an interview with a local television network, was asked whether charter changes would allow him to seek a second term in 2016.
"When I got into this, I remembered it is for one term of six years," he replied.
"Now after having said that, of course I have to listen to my bosses," he added, using his usual reference to the Filipino people. "But that doesn't mean...that I will automatically chase after another term, right?"
It was Aquino's first comment on reconsidering his stated position against amending the constitution passed during the term of his mother Corazon, who was closely associated with the re-establishment of a democratic order.
Any constitutional amendment would require a vote of three quarters in Congress and convocation of a constitutional convention. Aquino's allies currently dominate both houses of Congress.
Past presidents have considered charter amendments, but faced intense public criticism for attempting to extend their term of office. Aquino, who has put in place reforms in the fiscal sector that earned the country its first investment grade rating, is likely to face similar public reaction.
Some legislators, including the speaker of the lower chamber of Congress, have actively pushed for changes to the constitution, particularly to economic provisions that capped foreign investments into the country.
Recently, Interior Secretary Manuel "Mar" Roxas, a chief ally of Aquino and one of the leaders of the administration party, voiced his personal opinion Aquino should seek a second term.
Aquino also said charter changes would allow for a review of the courts' powers as a check on other branches of government.
Last month, the Supreme Court ruled that a government move to use budget savings for stimulus spending without congressional appropriation was unconstitutional, sparking debates on whether Aquino was indeed committed to his anti-corruption promises, since the money funded legislators pet projects. (Reporting by Rosemarie Francisco; editing by Ralph Boulton) - ABS-CBN . Reuters
DANCE PRIDE. A-Team performing their number at the World Hip Hop Dance Championship. Screengrab from YouTube
MANILA, Philippines – Filipino dancers proved their talent once again, when the A-Team, a group of 30 dancers, won the gold medal at the Mega Crew division of the 2014 World Hip Hop dance competition held at Las Vegas.
The competition which was held Sunday (Monday, August 11 in Manila) and was livestreamed at the SM Aura Samsung Hall.
According to the Hip Hop International’s Facebook page, the bronze went to Russia’s Flyographers Dance Team, while New Zealand’s ID CO won the silver medal.
Here is a video of the A-Team’s number from the YouTube account of the Hip Hop International
The A-Team is led by two coaches known in the Philippine hip hop community – Angelica and MJ Arda. The group has been joining competitions since 2011, winning 2nd place in Slimmers World Step-Up Philippines, 2nd Place, World Supremacy Battlegrounds 2012 Varsity Division in Sydney, Australia, and Champion at the World Supremacy Battlegrounds 2013 Varsity Division also in Australia in 2013 among others.
Aside from the A-Team, another Filipino dance group, The Romancon Dance Company from the De La Salle - College of Saint Benilde also participated in the Adult Division finals of the competition. The division was won by the group Brotherhood from Canada.
A Philippine helicopter prepares to take off during an exercise in June. The Philippines and China both claim territories in the South China Sea.China expands its reach in the West Philippine Sea (South China Sea). What's the end goal?
Beijing wants to assert its preeminence in Asia. But not so strongly as to push its neighbors into the arms of the United States.
BEIJING — It is typhoon season in the South China Sea. But more dangerous than the physical winds tearing down homes and trees is a brewing political storm that threatens the peace in one of the world’s most strategic flash points.
Over the past several months China has set itself on a collision course with its Southeast Asian neighbors, taking a series of forceful steps to assert territorial claims over potentially valuable rocks, reefs, and waters that other nations claim, too.
Some of them, such as Vietnam and the Philippines, are alarmed enough to have voiced their anger publicly. Others, such as Malaysia, Indonesia, and Brunei, have been more cautious.
Their collective disquiet has drawn in the United States. Senior US diplomats and defense officials have bluntly accused China of fomenting instability in the region and intimidating its neighbors.
China’s oft-repeated pledge of “peaceful development” and its offer of “amity, sincerity, mutual benefit, and inclusiveness” to Southeast Asia are looking threadbare. Adding to the uncertainty is the lack of clarity surroundingBeijing’s goals.
They may not be clear even to Beijing, where more dovish and more hawkish factions appear to be debating the wisdom of China’s recent moves. If Beijing’s abrasive attitude pushes its neighbors to seek help from Washington, some analysts here are warning, it will mean only trouble for China.
Instead of ending up as the naturally dominant power surrounded by economically dependent smaller neighbors, China would find itself strategically isolated in the region and facing off directly with the US.
“There are some inside the system who are wondering ... whether or not this is all going to backfire,” Christopher Johnson, a China analyst at the Center for Strategic and International Studies (CSIS) in Washington, told those at a recent conference on China’s intentions.
At the same time, he added, there is “a possibility that they [the Chinese government] are not scoring ‘own goals,’ that they know exactly what they are doing with this strategy because they think it will be effective” in intimidating China’s neighbors into submission to Beijing’s regional domination.
There is less ambiguity about what China has actually done in the South China Sea this year.
On Jan. 1, it imposed rules demanding that anyone fishing in waters it claims, which make up nearly 90 percent of the South China Sea, should get prior permission from the Chinese authorities.
In March a Chinese Coast Guard vessel prevented the Philippine Army from resupplying its soldiers based on a rusting ship grounded on the Second Thomas Reef in the Spratly Islands, which Beijing and Manila both claim.
Over the past few months, a Chinese dredging vessel has been creating an artificial island on the previously submerged Johnson South Reef, which the Philippines also claims. The company doing the work has published computer mock-up images of an airstrip it says is planned.
In May the state-owned China National Offshore Oil Corporation moved an oil drilling rig into disputed waters near the Paracel Islands, which Vietnam claims. A Chinese barge accompanying the rig rammed and sank a Vietnamese fishing boat during clashes.
All these moves appeared to violate an agreement that China signed with the Association of Southeast Asian Nations (ASEAN) 12 years ago in which both sides pledged to “exercise self-restraint in the conduct of activities that would complicate or escalate disputes and affect peace and stability.”
“China has been very opportunistic, pushing and pushing to see what they can get ... and taking as much as they can,” says David Arase, who teaches international politics at the Johns Hopkins University campus in Nanjing, China.
By taking small steps to avoid provoking Washington to act in support of its regional allies, China is trying to “dishearten” rival claimants and “resign them to the fact that they have to give up their rights,” Professor Arase says.
“They are continuing with their salami slicing, reef by reef, step by step,” said Tran Truong Thuy, an analyst at Vietnam’s Institute for East Sea Studies, at a recent CSIS conference. “In reality they want to change ... the South China Sea into a Chinese lake.”
Are China's claims legitimate?
China insists its actions are legitimate since, in an oft-repeated official phrase, Beijing enjoys “indisputable sovereignty” over all the islands in the South China Sea and “their adjacent waters” on historical grounds, no matter how far they are from the mainland or how close to other countries’ coastlines.
That is debatable, say international law experts. Chinese maps show what it calls a “nine-dashed line” around the edge of the South China Sea, shaped in the form of a lolling cow’s tongue, cutting through several neighboring countries’ 200-mile exclusive economic zones and their continental shelves. But Beijing has never clearly explained just what this line signifies.
“Even in China there are different ideas” on the subject, says Xue Li, head of the international strategy department at the China Academy of Social Sciences. Members of the military insist the line marks China’s national boundary; others suggest it encloses China’s historical waters; some scholars say it merely demarcates the land features over which China claims sovereignty.
The Philippines is challenging the legality of the “nine-dashed line” in a case it has brought before a tribunal of the United Nations Convention on the Law of the Sea. China has refused to participate in the case, and few foreign legal experts say Beijing could win it.
China might, however, try to defend the line anyway by altering facts on the ground. Nationalist sentiment is strong in China: President Xi Jinping has shown himself readier to take risks than his predecessor, and territorial assertion could prove an attractive way to illustrate the “national rejuvenation” he has promised as China takes its rightful place in the world.
Xi ‘does not want to look like a chicken’
“Domestic opinion is very important to Xi Jinping,” says Zhu Feng, the head of the recently created Collaborative Innovation Center for South China Sea Studies at Nanjing University, a think tank to coordinate South China Sea studies. “He does not want to look like a chicken.”
At the same time, suggests Mr. Johnson of CSIS, Mr. Xi may believe he can get away with current policy because “ultimately, ASEAN countries will stand aside because of their interest and dependence on China’s economic prospects.”
But the costs of appearing to neighbors like an arrogant bully are not negligible. The recent row with Vietnam over the oil rig “completely turned around relations with Vietnam,” says Carl Thayer, an expert on Southeast Asia at the University of New South Wales in Australia.
The Vietnamese prime minister threatened to follow the Philippines to an international court and “the idea of getting out of China’s orbit has gone viral in Vietnamese public opinion.”
China withdrew the rig a month ahead of schedule, perhaps to cool the crisis, but not before it had drawn heavy international criticism and further stoked regional fears.
A survey published in July by the Pew Research Center found that a majority of people in eight of 10 countries neighboring China are worried that the Asian giant’s territorial ambitions could lead to military conflict.
Chinese analysts insist that Beijing’s traditional aim of maintaining a peaceful international environment to favor its economic development has not changed fundamentally, nor has its declared policy of shelving territorial disputes and jointly developing energy and other resources.
The challenge, says Lou Chunhao, an analyst at the China Institutes of Contemporary International Relations, affiliated with China’s Ministry of State Security, is “how to achieve a balance ... between protecting Chinese rights and sovereignty in the South China Sea and maintaining a benign environment.”
China’s rivals see safety in numbers
China’s ASEAN rivals in territorial disputes are not reassured by Beijing’s insistence that they resolve their differences one-on-one; they see safety in numbers. Nor have any of them yet voiced any enthusiasm for Xi’s call for a new Chinacentric security system in the region to replace the US-dominated arrangements that have held for the past 70 years.
“In the final analysis, it is for the people of Asia to run the affairs of Asia, solve the problems of Asia, and uphold the security of Asia,” Xi told an international conference in Shanghai, China, last May.
China’s top long-term goals in the ocean it claims, says Rory Medcalf, head of the international security program at the Lowy Institute, a think tank in Sydney, Australia, is “to ensure that nothing happens in the South China Sea without Chinese blessing” and “maximum freedom of maneuver for its Navy ... to be the dominant military player in those waters.”
An increasingly vocal band of government policy advisers in Beijing are suggesting that those goals would be easier to achieve if China’s neighbors trusted it more; they are urging a reset in China’s neighborhood diplomacy.
“China’s Navy could already beat all the ASEAN navies. The question is whether it would be worth it,” Mr. Xue argues. “We would pick up a sesame seed and throw away a watermelon,” he says, referring to the manifold economic benefits that closer ties with Southeast Asia would bring.
“The South China Sea could be a real battlefield, and that would be very harmful to China’s future,” adds Professor Zhu. “We need to find a way to settle [the disputes] piece by piece.”
Given China’s geographic position and its economic and political strength, “it is quite normal that China should be the dominant power in the South China Sea,” Xue says. “And just because of that, maybe we need to make compromises with our neighbors.” - CS Monitor
Japan Gives Vessels to Vietnam to Boost Maritime Security; A threat to the Philippines for another Viet invasion to Spratly?
Japan's Foreign Minister Fumio Kishida attends a media briefing with his Vietnamese counterpart Pham Binh Minh after their meeting at the Government Guesthouse in Hanoi, August 1, 2014.- Reuters
Japan offers vessels to Vietnam to boost its sea strength
HANOI - Japan will give six navy boats to Vietnam to boost its patrols and surveillance in the South China Sea, Japan's foreign minister said on Friday, in the latest sign of a strengthening of alliances between states locked in maritime rows with China.
The used vessels, worth 500 million yen ($4.86 million), would be accompanied by training and equipment to help the coast guard and fisheries surveillance effort, Japanese Foreign Minister Fumio Kishida said after talks with Vietnamese counterpart Pham Binh Minh.
The deal represents a notable shift in the two countries' close diplomatic and investment ties towards defense, a move likely to irk an increasingly assertive China that is pressing hard on claims to nine-tenths of the potentially energy-rich sea, and worrying much of the region.
"International security is getting more complicated... prosperity only comes with stability in the South China Sea and the East China Sea," Kishada told a news conference in Hanoi.
"I hope this equipment will strengthen the ability of Vietnam's coastal enforcement authorities."
Vietnam enjoys tight business ties with Japan, its biggest investor, but relations with Hanoi's largest trade partner, China, are at their worst in three decades and analysts believe that has sharpened the debate within Vietnam's secretive Communist Party over long-term foreign policy strategy.
Beijing's May 2 deployment of a drilling rig in waters Vietnam claims as its exclusive economic zone lit the fuse on simmering anti-China sentiment in Vietnam, worsened by accusations that the southeast Asian country's fishing boats were deliberately rammed by Chinese vessels.
That led to rare protests, rioting and arson in Vietnam aimed at Chinese factories, although Taiwan facilities were worst hit.
The rig was moved out of contested waters on July 16, a month before schedule, but it remains unclear if the two countries struck a deal behind the scenes. China said the rig was shifted because its mission had been completed.
China is not showing any sign of easing off on its maritime push. It will hold live-fire drills for five days from Tuesday off its coast in the East China Sea opposite Japan and in the Gulf of Tonkin, which borders both China and Vietnam, according to the Ministry of National Defense.
The Japanese support for Vietnam will include radar equipment and the vessels are to be handed over by year end, according to a Japanese government source in Tokyo, who requested anonymity.
Japan's already fragile ties with China have soured over their competing claims to a string of uninhabited East China Sea islets that Beijing calls Diaoyu and Tokyo refers to as Senkaku.
China also has overlapping South China Sea claims with Taiwan, Malaysia, Brunei and the Philippines, to which Vietnam has recently cosied up, and says may follow in pursuing international legal action against China.
Soldiers from both countries drank beer and played soccer during a party on an island in the disputed Spratly archipelago in June, in what was widely seen as a provocative show of unity.
1975 Vietnam Invasion of Pugad Island of the Philippines with Prostitutes ( Southwest Cay invasion )
Southwest Cay, known as Pugad island in the Philippines, as (南子岛) Nanzi Dao in China and as Đảo Song Tử Tây in Vietnam, is an island in the Spratly group. It was occupied by Philippine forces up to 1975, when South Vietnam forces were able to invade the island.
Southwest Cay is in the northern edge of the Spratly group. It is within North Danger Reef which also contains the Philippine-occupied Northeast Cay (Parola Island), Vietnamese-occupied South Reef and unoccupied North Reef. Southwest Cay and Northeast Cay are just 1.75 miles (2.82 km) away from each other. Each island can actually see the other within their respective horizons.
The invasion took place when all the Philippine soldiers guarding the island of Pugad left to attend to the birthday party of their commanding officer who is based on nearby Parola Island. The storm that day is also believed to have persuaded all the soldiers to regroup temporarily on Parola island. A report also came out saying that South Vietnamese officials managed to send Vietnamese prostitutes to the birthday party to lure the Filipino soldiers guarding Pugad Island. It was said to be a "present" to the Philippine commander for his birthday and as a move of South Vietnamese forces to befriend all Filipino soldiers guarding the Spratlys. Philippine soldiers did not expect that South Vietnam would resort to foul play since both Philippines and South Vietnam, together with the United States, were allies in the Vietnam War. This tactic is believed to be the reason why South Vietnamese forces knew that the Filipino soldiers left the island, an action that is usually kept confidential.
After the party and after the weather cleared out, the returning soldiers were surprised that there was a company of South Vietnamese soldiers on the island. The South Vietnamese flag replaced the Philippine flag flying in the pole created by Philippine soldiers themselves. The soldiers returned to Parola immediately for fear that Parola would be the next target. After higher-ups of the Philippines were informed about the situation, they instructed the troops based in Parola and Pagasa to stay on red alert status. The following morning, the only thing the Filipino soldiers could do in Parola was to "curse" while South Vietnamese sang their national anthem. Under the Government of former president Ferdinand Marcos - Malacañang officials, who did not want to compromise the alliance while the Vietnam War was still being fought, decided to remain silent.
A few months later, the recently formed unified Vietnam (after North Vietnam successfully invaded South Vietnam) decided to remove all remaining South Vietnamese troops in the Spratlys and establish military control among the features. It was reported that dozens of South Vietnamese soldiers in Pugad Island swam all the way to Parola just to avoid being captured by North Vietnamese forces. It was then when Malacañang officials, headed by President Ferdinand Marcos, discussed how the Philippines could reclaim the island. It had been apparent that most of the officials (who treat the communists as a threat to the Philippine national security) want to attack Pugad to reclaim it. However, after an intelligence report came stating that the unified Vietnam had already built a huge concrete garrison within a few weeks, the officials dropped the plan and tried to resolve the issue diplomatically. However, this approach eventually died along the process making Pugad a Vietnamese-occupied island up to this day. This incident was confirmed in interviews with soldiers involved in an episode of the defunct Magandang Gabi Bayan (Eng.: Good Evening Nation) (MGB) of ABS-CBN. - Reuters, ABS-CBN, GMA
Proposed LRT-MRT intersection Stations - DOTC
LRTA awards LRT1 Extension project to MPIC-Ayala tandem
MANILA, Philippines - The board of the Light Rail Transit Authority (LRTA) has approved the recommendation to award the ₱65-Billion ($1.5 Billion USD) LRT1 Cavite Extension project to the tandem of infrastructure giant Metro Pacific Investments Corp. (MPIC) and conglomerate Ayala Corp.
Hernando Cabrera, LRTA spokesperson, said the board has approved the awarding of the public private partnership (PPP) project to the Light Rail Manila Consortium based on the recommendation made by the Department of Transportation and Communications (DOTC) Special Bids and Awards Committee (SBAC) last Monday.
“The LRTA board approved the award as recommended by the SBAC,” Cabrera said.
The LRTA board is composed of eight ex-officio cabinet members, chaired by Transportation Secretary Joseph Emilio Abaya, with the heads of the Department of Public Works and Highways (DPWH), Department of Budget and Management (DBM), Department of Finance (DOF), National Economic and Development Authority (NEDA), Metropolitan Manila Development Authority (MMDA), Land Transportation Franchising and Regulatory Board (LTFRB), LRTA administrator, and a representative from the private sector.
The LRTA board was supposed to meet in the second week of July but was moved to July 16 due to the lack of quorum. However, the July 16 meeting was called off due to Typhoon Glenda.
The meeting finally pushed through last Wednesday but the awarding of the project was not discussed due to numerous items in the agenda prompting the LRTA board to meet again yesterday morning where the award of the project to the Light Rail Manila Consortium was finally approved.
Cabrera said the LRTA board authorized the DOTC chief to sign and issue the Notice of Award and Concession Agreement for the project.
“Secretary Abaya was authorized to sign and issue the Notice of Award and the Concession Agreement,” Cabrera said.
DOTC spokesman Michael Arthur Sagcal said in a text message that the agency would wait for the LRTA Board Resolution approving the award of the PPP project to the Light Rail Manila Consortium.
“We will await the LRTA Board Resolution approving the BAC’s recommendation to award the project. Once the resolution is received, Secretary Abaya may then issue the Notice of Award to the Light Rail Manila Consortium,” Sagcal said.
MPIC Light Rail Corp. leads the group with 55 percent followed Ayala’s AC Infrastructure Holdings Corp. with 35 percent and Macquaire Infrastructure Holdings (Philippines) Pte Ltd. with 10 percent.
MPIC president Jose Maria K. Lim said the group has one year from the issuance of the Notice of Award to take over the facilities of LRT1.
“We have one year to take over and then we have five years to deliver the extension,” Lim told reporters
The group would have 20 days from the Notice of Award to make the 20 percent down payment while the remaining 80 percent would be paid during the 32-year concession period.
Ayala Corp. managing director John Eric Francia said the consortium is looking forward to the customary closing of the transaction.
“There is much work to do to enhance the system and customer experience, and we look forward to get going soon,” Francia said in a text message.- philSTAR By Lawrence Agcaoili
MANILA, Philippines - There are over a thousand vacancies at Bureau of Customs (BOC) offices nationwide that need to be filled.
Customs Commissioner John Sevilla said they need 1,056 personnel – accountants, administrative officers, lawyers, special police, special agents, intelligence agents, statisticians and Customs operations officers.
“By filling these vacancies, we will be able to provide a faster and better standard of service for importers, exporters and the public dealing with Customs,” he said. “On the average, we have over 3,000 entries and over 6,000 individual items being imported every day.”
Sevilla said around 4,000 containers arriving everyday need to be inspected.
“In order to facilitate these transactions we need additional manpower,” he said.
“Right now, there are only 3,600 employees in BOC.”
1,056 job vacancies at Customs
The lack of manpower was partly due to retirement, resignation and death, as well as dropping from the rolls and dismissal from service, Sevilla said.
To screen applicants, the BOC has released new guidelines under Customs Memorandum Order 15-2014 to simplify the hiring and selection process.
Interested applicants could visit the BOC website www.customs.gov.ph to download the details and documents required for their applications, including an updated personal data sheet; certificate of eligibility issued by the Civil Service Commission, Professional Regulation Commission or Supreme Court; transcript of records and diploma; certificates of training and seminars attended, if any; and performance appraisal report for the last two rating periods for those already working in government offices.
Deadline for the submission of application is on Aug. 6.
Provincial applicants may also send their applications via courier.
Applicants with relatives in the BOC up to the fourth degree of consanguinity are barred from applying for any position, as the Administrative Code prohibits nepotism.
All applicants will be screened by the newly formed BOC Personnel Selection Boards.
Applicants who pass the initial screening will undergo special aptitude and psychometric tests conducted by the Civil Service Commission.
After passing, they will take competency-based tests given by requesting groups or offices consisting of a written test, interview and a physical exam for applicants for the Intelligence and Enforcement groups.
The BOC has streamlined the process of promotion for employees with first and second level positions.
An employee may be promoted to a position which is more than three salary grades higher than the employee’s present position in meritorious cases. – With Zinnia dela Peña at philSTAR
U.S. Airmen with the 36th Contingency Response Group board a C-130 Hercules aircraft at Andersen Air Force Base, Guam, before departing for a mission in support of Operation Damayan in Tacloban, Philippines, Nov. 14, 2013. U.S. military forces were deployed to the Philippines to support humanitarian efforts in response to Typhoon Haiyan. U.S. Air Force/Senior Airman Marianique Santos
US to give C-130 planes to Philippines
MANILA, Philippines — The United States will give two Lockheed C-130 "Hercules" planes to the Philippines, newly appointed Armed Forces of the Philippines (AFP) chief-of-staff Lt. Gen. Gregorio Pio Catapang revealed.
In a state report, Catapang disclosed the impending donation in a visit to the 1st Air Division headquarters in Clark Field, Pampanga, citing American military officials.
"I just talked to our US counterparts [and] they told us they are making available another two C-130s to address our humanitarian assistance disaster relief concerns," Catapang said.
The United States military has deployed a humanitarian mission to the Visayas after the onslaught of deadly typhoon Yolanda, which took thousands of lives and destroyed countless homes.
vCatapang said that the Americans extended the offer after learning of President Aquino's plans to acquire new cargo aircrafts for the military.
The existing C-130 planes of the Air Force figured heavily in the transport of relief goods for victims of typhoon Yolanda and equipment needed by government troops involved in the efforts last year.
In November last year, former AFP chief Gen. Emmanuel Bautista announced that the country seeks to procure two more C-130 planes to improve disaster relief operations.
"We are in the process of acquiring two more C-130s. As you very well know, we only have three C-130s. In terms of strategic lift, C-130s are very important," Bautista said.
Vice President Jejomar Binay, his mayor-son Erwin Jejomar Binay Jr., and 21 other former and incumbent elected officials of Makati City are facing ₱1.5-billion plunder and graft charges before the Office of the Ombudsman (OMB).
The nine-page complaint was filed by the Save Makati Movement (SMM), headed by Renato Bondal and Ching Enciso.
The group accused the Binays and others of constructing an “incredibly overpriced” parking building in the heart of the country’s financial and business capital.
Among those charged were former and incumbent councilors Ferdinand Eusebio; Arnold Magpantay; Romeo Medina; Tosca Puno Ramos; Maria Alethea Casal-Uy; Ma. Concepcion Yabut;
Virgilio Hilario; Monsour del Rosario; Vince Sese; Nelson Pasia; Salvador Pangilinan; Elias Tolentino; Ruth Tolentino; Henry Jacome; Leo Magpantay; Nemesio “King” Yabut; Armand Padilla; Israel Cruzado; Ma. Theresa De Lara; Angelito Gatchalian and Ernesto Aspillaga.
Also slapped with plunder was Cecille Cag-anan of the Commission on Audit (COA) for her alleged failure to safeguard public funds allowing, the other accused to commit alleged criminal acts.
SMM said the city government spent ₱1.5 billion for the construction of the New Makati City Parking Building along F. Zobel Street in Barangay Poblacion from 2007 to 2013.
It said the first appropriation ordinance was for ₱P400 million which was approved by the Vice President when he was mayor six years ago.
When the younger Binay took over in 2010, he and city councilors allegedly continued to approve six more appropriation ordinances for the continued construction of the building with additional appropriation of ₱1.1 billion.
The complaint added that based on the data of the National Statistics Office (NSO), the average cost of construction for commercial and institutional buildings was only about ₱7,691 per square meter in 2007.
It claimed that erecting the structure at that time would only cost about ₱245 million.
The complaint stated that an enormous overprice of more than ₱1.3 billion was made considering how much was actually spent until the 11-story building with floor area of 31,928 square meters.
“The respondents, particularly the Vice President Jejomar Binay and the incumbent Mayor Erwin Binay violated every rule in construction manuals and government procedures in pushing for a project that was grossly overpriced and funded irregularly through supplemental budgets for five years,” the SMM said.
It alleged that even the initial appropriation of ₱400 million “is clearly already overpriced by more than P154 million and should merit Vice President Binay being haled to court for plunder.”
Bondal and Enciso noted that in the fourth quarter of 2012, the average construction cost of a commercial building in the locality was ₱9,527 per square meter which means that at such price, the construction of the parking structure should cost only about ₱304 million.
“The total amount appropriated by respondents to cover the cost of construction as of 2012 was however ₱1.5 billion or an overprice of more than ₱1.2 billion,” they said.
The complainants stressed that even if the present construction standards for high-end commercial buildings will be used, the current acceptable construction cost is only ₱25,000 per square meter.
“Thus, with the actual floor area being 31,928 square meters, then the reasonable cost of the building computed at current prices is only ₱798.2 million. By this very simple computation, the Makati City Parking Building has been grossly overpriced by no less than ₱761.8 million and no amount of cost overruns could be invoked for this despicable mismanagement and gross abuse of public funds,” they said.
“The overpricing of the building project could not have been committed without a deliberate, systematic and unconscionable raid of public funds designed by the Binays and the other respondents to defraud the people of Makati and gain personal profit in the process,” Bondal and Enciso said. - Manila Bulletin
COMFORTER IN CHIEF World Bank president Jim Yong Kim fields questions from the media during the Daylight Dialogue in the Palace while the embattled President listens during the “The Good Governance Challenge” session. Kim says the Philippines “is a global model in fighting corruption,” according to Agence France-Presse. GRIG MONTEGRANDE
World Bank hails PH as next Asian miracle
MANILA, Philippines–President Aquino on Tuesday received profuse praise from visiting World Bank president Jim Yong Kim, who declared that the Philippines would be the next Asian “miracle.”
Kim, who was in Manila for a two-day visit, also announced that the World Bank was providing $119 million for the construction of new roads, bridges and irrigation systems in Muslim Mindanao in support of efforts to promote peace and economic development in the region.
During the open forum at the Daylight Dialogue in Malacañang, Kim recalled that the World Bank had downgraded its “overall global [economic] growth forecast from 3.2 percent to 2.8 percent.”
But the World Bank did not do so for the Philippine economy, where the forecast remained “around 6.4 percent with a lot of upside going into the future.
“So I will just say again maintain these reforms, continue on the path that you’re on, and I think the future is very bright for the Philippines,” Kim said.
Foundation for future
Kim later offered a toast during a luncheon in the Palace, saying to President Aquino that “each of those things you’re doing are not only the right thing to do but they’re laying the foundations for your economic growth in the future.”
“And we are absolutely certain that the impact of your administration will be felt far beyond the six years that you have as President,” Kim said.
He said President Aquino should take much of the credit for the Philippine turnaround.
“Can the Philippines be the next Asian miracle? [After] coming here, I think there is no question that is the case,” Kim said.
Kim heaped praise on Aquino’s antigraft campaign, which has seen the President’s predecessor and three sitting senators charged with corruption, as well as the impeachment of a Chief Justice.
“Among the most important things you can do is tackle corruption and . . . that is one of the things that the [Aquino] government is doing frankly better than any government in the world,” Kim said.
“Around the world, the spread of information technology is converging with grassroots movements for transparency, accountability and citizen empowerment,” he said.
Under Aquino’s leadership, he said, “the Philippines is absolutely at the forefront of this transformation.”
Kim said the Philippines, where one quarter of the roughly 100 million people live in deep poverty, had huge potential.
He cited the country’s strong macroeconomic fundamentals, prudent monetary policies and young workforce.
Kim’s strong endorsement was a timely boost for Aquino, with two polls released this week showing the President’s public support dropping to record lows amid deep controversy over an economic stimulus program.
The Supreme Court on July 1 ruled the Disbursement Acceleration Program (DAP) was unconstitutional, with 13 justices handing down a unanimous decision that Aquino should not have bypassed Congress in spending P167 billion.
Aquino on Monday said the government would appeal the Supreme Court ruling.
Aid for Mindanao
Kim announced fresh World Bank aid financing for Muslim Mindanao at a news conference at the World Bank office in Taguig City.
Muslim Mindanao remains one of the poorest regions in the Philippines, with development held back by four decades of conflict between separatist rebels and government forces.
“We’ll support the peace process in conflict-affected areas,” said Kim, who is here for a two-day visit.
Kim noted that the poverty rate in conflict-affected areas in Mindanao was at 50 percent, or more than twice the national average.
He said the $119 million in aid financing would be made available to the government to bankroll the construction of new farm-to-market roads, bridges, communal irrigation systems and potable water projects in the Autonomous Region in Muslim Mindanao (ARMM, which will be expanded under a peace agreement signed in March between the government and the Moro Islamic Liberation Front (MILF), the largest rebel group in the region.
The government and the MILF are seeking the enforcement of the agreement, which grants broad autonomy to the expanded Muslim region, by next January.
The fresh World Bank financing is part of the Philippine Rural Development Project (PRDP) that Kim himself announced this week during a visit to Leyte province.
Under the PRDP, the government would receive $508 million in concessional loans from the World Bank to raise rural incomes across the country.
The PRDP will be presented to the World Bank’s board of executive directors next month.
On top of the new aid, the International Finance Corp. (IFC), the World Bank’s private investment arm, is also working on projects that will generate 6,000 new jobs in Mindanao.
Kim said the bank remained confident of the Philippines’ prospects, citing robust investments by the Aquino administration in areas such as education and healthcare over the last four years.
“Spending on health and education has doubled. This is extremely important,” Kim said, noting that the full impact of the investments would continue to be felt for decades to come.–Inquirer With a report from AFP
MANILA, Philippines - The Philippines received another credit-rating upgrade, this time from Japan-based R&I, in recognition of the reforms put in place by the Aquino administration that had paved the way for the country’s economic boom.
R&I announced Wednesday it raised the Philippines’ long-term foreign currency issuer rating by a notch from the minimum investment grade of BBB- to BBB due to a consistent rise in per-capita income in the country following substantial investments in infrastructure.
The rating was assigned a “stable” outlook, which means it is unlikely to change within a year.
At the same time, R&I maintained the country’s short-term debt rating at a-2, which indicates high certainty that short-term financial obligations would be paid.
“The Philippines’ economy continues to show strong growth, thanks to brisk investment coupled with private consumption driven by remittances from overseas Filipinos. This should allow for relatively high growth and raise per-capita income levels steadily,” R & I said in a report, adding that this would allow for a relatively high growth and steady increase per capita income.
Per-capita income in the Philippines has been modest compared with those of more advanced neighbors, but the country is catching up in this area. From $3,684 in 2009, per capita income in the country (using current prices and purchasing power parity) increased to $4,649 last year.
R&I likewise cited the country’s healthy fiscal situation, which should result in increased public spending. “Savings in interest payments, thanks to fiscal consolidation, help the government to finance infrastructure projects. Budget execution is also expected to accelerate,” it said.
The Philippines has set a ₱404.3 billion budget for public infrastructure spending this year, 40 percent higher than the 2013 figure.
R&I also said the rollout of more projects under the Public-Private Partnership (PPP) program would help boost more job-generating investments and sustain the rise in incomes.
Earlier this year, the government awarded contracts for two PPP projects, namely the ₱P1.72-billion automated fare collection and single ticketing system for the MRT and the LRT, and the P17.5-billion Mactan Cebu International Airport expansion project. This brings to seven the total number, and to ₱62.6 billion the aggregate cost, of the PPP projects awarded so far.
Aside from this, R&I recognized the country’s sound macroeconomic fundamentals, including ample foreign-exchange reserves, improving manageability of government debt, improving tax collections and within-target inflation R&I, however, expressed concern over who will succeed President Aquino when he steps down from office in 2016.
“There is risk that the next government will not be as reform-minded as the Aquino administration. However, pressures from growing international relationships, such as the establishment of the ASEAN Economic Community in 2015, along with public expectation for sustained reform initiatives, should deter the post-Aquino government from going backwards,” R&I said.
Meanwhile, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. welcomed the upgrade, saying this validates soundness of existing policies.
“The latest development on the country’s credit standing is a recognition of a host of favorable macroeconomic indicators, particularly an inflation outlook that is conducive for business and the stability of the financial system amidst a difficult operating environment,” Tetangco said.
“The upgrade is an expression of confidence, in part, on the ability of the Monetary Authority to implement appropriate and timely measures that ward off threats to the economic stability we are enjoying. The BSP will continue to craft policies that will help maintain this stability,” he added.
Finance Secretary Cesar Purisima likewise affirmed the focus on sustainability of favorable trends for the economy.
“Reforms that this government has started to institutionalize help ensure that the positive momentum will not falter,” Purisima said.
“On the fiscal front, administrative and policy reforms implemented by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) will make it easier in the future to keep the growth trend in public revenues,” he said.
Budget Secretary Florencio Butch Abad said the latest credit upgrade only confirms that “the Philippines is poised to become one of Asia’s major commercial hubs. The country has never been more ready to expand its market to accommodate local and foreign investments.”
“When investors bring their business into the country because of our lower risk profile, we can look forward to implementing more public works and creating broader job opportunities for our growing workforce,” Abad said.
“A key component of achieving investment grade is ensuring the stability and the reach of our economic expansion. Crucial to our economic development, of course, is the facilitation of robust and efficient spending. While we are now addressing challenges in the public expenditure process, we have no doubt that government spending will continue to spur the country’s growth, especially as the budget provides greater support for the Administration’s socio-economic programs,” Abad said. – PhilSTAR With Kathleen Martin