A peek into Duterte Cabinet dynamics

FROM land conversion to mining to wages, the sundry issues that President Rodrigo R. Duterte’s Cabinet men have debated have given a rare glimpse into divisions among top policy makers.

What would have been clear dissenting voice in Mr. Duterte’s team -- that of Vice-President Maria Leonor “Leni” G. Robredo -- has been muted with her breaking ranks on the eve of a Dec. 5 Cabinet meeting, but Mr. Duterte is still left with alter egos who see the world’s problems through a prism that -- as with Ms. Robredo -- may not mirror his.

And that’s not entirely bad, said Ma. Nieves R. Confesor, a labor chief of former president Fidel V. Ramos from 1992 to 1995.

“To have a very homogenous Cabinet would scare me. Why? Because you’re looking at just one angle,” Ms. Confesor, who was also chief peace negotiator under former president Gloria Macapagal-Arroyo -- now representative of Pampanga’s second legislative district, said in a Dec. 16 interview.

“The volatility of the world is not going to get less. So what you need are more eyes and a different thinking,” she added.

“That kind of a world will require a Cabinet that looks like what Duterte has now, together with Leni,... to handle the complexity. You need to keep also the dissenting voice all the time.”

With Mr. Duterte staffing top government posts with militants, socialists, an environment advocate, capitalists and economists, the question at the end of the day is whose voice prevails.

“One expresses his opinion and if the President agrees, then everybody toes the line,” Socioeconomic Planning Secretary Ernesto Pernia, who said he did not miss a single Cabinet meeting since Mr. Duterte assumed office on June 30, told BusinessWorld.

‘FROM LEFT TO CENTER’
Environment Secretary Regina Paz “Gina” L. Lopez -- whose crackdown on illegal miners was viewed by critics as hurting potential investments -- found herself again addressing media queries as to how she can have her boss’s ear when her latest target involves a presidential appointee, special envoy to the US Jose E. B. Antonio.

The staunch environment advocate last week stopped a housing project at the La Mesa Watershed by a subsidiary of listed property developer Century Properties Group, Inc., whose founder is Mr. Antonio.

“You know what my experience with the President is? It’s that he really has his interest for the common good... Number two, he really doesn’t like corruption,” Ms. Lopez told a media briefing on Dec. 15.

“So it’s in these two aspects that we... have a resonance.”

Before that, local media had reported she and Finance Secretary Carlos “Sonny” G. Dominguez III clashed over mining policy. Mr. Dominguez is a childhood friend of the President and the latter’s major campaign donor who, before assuming the cabinet post, resigned from the board of Alsons Consolidated Resources, Inc., an indirect shareholder in the Tampakan copper-gold mine project.

But the frictions have somewhat eased, Mr. Pernia said in a Dec. 15 interview at his office.

“Gina said she’s going to allow responsible mining, companies that follow the law meticulously,” recounts Mr. Pernia.

“In other words, Gina has somewhat moved from extreme left towards the center,” he said while asserting that Mr. Dominguez “has not been an advocate of mining.”

The environmental crackdown does not worry the chief economic manager either. “It’s not a terrible dampener to economic growth,” Mr. Pernia said.

‘NOT DO-OR-DIE ISSUES’
Ms. Lopez told BusinessWorld separately that she liked the fact that “Sonny wanted to sign the Paris agreement,” a United Nations-backed deal to limit greenhouse gas emissions; and that in reconciling differences, the President “is a unifying factor.”

BusinessWorld tried to get the side of Mr. Dominguez but he did not respond to calls and mobile phone messages.

The cabinet has 22 members. Nine of them -- including Ms. Lopez -- still await the nod of the Commission on Appointments.

While the voices were discordant, none was openly critical of Mr. Duterte’s anti-narcotics campaign and his decision to give the late strongman Ferdinand E. Marcos a hero’s burial.

“These issues that have come out are not do-or-die issues. There are bigger things,” Ms. Confesor said, noting how some cabinet members who were former political detainees chose not to quit.

“You really have to be good at conflict management because you need to ensure that the conflict -- and conflict is healthy -- does not become unhealthy.”

But nine Cabinet meetings (by Mr. Pernia’s reckoning) since Mr. Duterte took over have left observers scratching their heads: the President’s men have not agreed on anything much but the war on illegal drugs.

They squabbled over converting agricultural lands into industrial parks, with the economic team shooting down militant group leader and now Agrarian Reform Secretary Rafael V. Mariano’s proposal to wait for another two years to do so.

“We wrote a dissenting paper. We drafted the paper signed by Dominguez, [Budget Secretary Benjamin E.] Diokno, [Trade Secretary Ramon] Mon [M.] Lopez and Vice-President Robredo. Five of us signed it,” Mr. Pernia said.

“It was listened to, because they had to revise the EO [executive order].”

Minimum wage is also a sticky issue that has pitted left-leaning cabinet men against the technocrats and bureaucrats among their peers -- a tug-of-war between those with a penchant for populist measures and those who worry about fiscal health.

In September, Labor Undersecretary Joel B. Maglunsod, a former Anakpawis Partylist representative, backed calls for a P125 across-the-board wage hike; while at the Dec. 5 Cabinet meeting, Social Welfare Secretary Judy M. Taguiwalo, an activist, pushed for higher Christmas cash gifts to casual employees. Both proposals were thumbed down.

“[Labor Secretary Silvestro H.] Bello agreed with us,” Mr. Pernia said, referring to the Cabinet discussion over the proposed P125 across-the-board pay increase that was to supplant region-specific daily minimum wage levels.

“We told him: This is bad, pare. This is going to set back our GDP growth rate, unemployment and poverty targets,” he added.

BMI Research, a unit of global ratings agency Fitch, had earlier this month flagged as a political risk the “wider discontent within Duterte’s Cabinet over his style of leadership” following the resignation of Ms. Robredo.

But that concern may be overblown, with the lack of other signs, so far, that Mr. Duterte’s team -- though asymmetrical -- is faltering.

“The three of us are solid: Dominguez, Diokno and myself,” said Mr. Pernia.

source:  Businessworld

SMC, MVP to invest P3 billion in Sulu–Piñol

San Miguel Corp.; PLDT Chairman, President and CEO Manuel V. Pangilinan; and other big firms have committed to invest P3 billion in Sulu to bring peace and socioeconomic development to the province.

The commitment of big firms were contained in the Save Sulu project, which was presented by the Departments of Agriculture (DA) and Trade and Industry and non-governmental organization Go Negosyo Group to President Duterte in Malacañang on December 19.

The initiatives under the Save Sulu project include livelihood programs, mentorships, establishment of infrastructure and other rural facilities.

“This is in response to the President’s directive last September to come up with a poverty-alleviation program for Mindanao, particularly for Sulu,” Agriculture Secretary Emmanuel F. Piñol said in a statement.

Piñol added that Philippine Airlines Chairman Lucio Tan, Bounty Fresh Group of Companies, W Group, Federation of Filipino-Chinese Chambers of Commerce and Industry (FFCCCI) and Gawad Kalinga also threw their support behind the project.

“Alongside the campaign against terrorism, we should also have soft hands to help people from Sulu,” he added.

Piñol said companies under Pangilinan have committed to rehabilitate and upgrade Smart Communication facilities in Sulu, establish a coconut oil mill, and provide medical equipment and trainings to the health workers in the four Sulu hospitals.

He said San Miguel is planning to build a 50-megawatt coal fire power plant and to rebuild the Hajibuto School of Arts and Trade.

As for Philippine Airlines, Piñol said Tan committed to introduce commercial flights going directly to Sulu.

“The FFCCCI pledged to provide 15 school buildings or around 30 classrooms in the Autonomous Region in Muslim Mindanao,” he added.

Piñol also said the DA will allot P50 million under the Special Area for Agricultural Development to be used for various rural development program and foster inclusive growth. The DA will also distribute five farm tractors in the province.

The DA chief said these initiatives are in support of the Duterte administration’s goal of reducing poverty incidence in the country by at least 25 percent in three years.

source:  Business Mirror

China offers fund for Duterte’s war on drugs

CHINA has offered to provide about P25 billion worth of soft loans and another P720 million in grant for guns and equipment in support of President Rodrigo R. Duterte’s controversial war against illegal drugs and to fight terrorism.

Secretary of National Defense Delfin N. Lorenzana told reporters yesterday that the President and Chinese Ambassador Cui Tiankai met on Monday night to talk about what else China can give to help address the problems faced by the Philippine government.

Mr. Lorenzana said they, in turn, asked what China can provide, and the Chinese ambassador gave a “100 million Yuan” figure, “which is equivalent to P720 million.”

Mr. Lorenzana quoted Mr. Tiankai as saying: “I know your problems in terrorism, I know your problems in drugs, so we would like to help you.”

This grant, which would likely be turned over by the second quarter next year, would be intended for the purchase of anti-terrorism paraphernalia such as small firearms, night vision goggles and faster boats, Mr. Lorenzana added.

The P25-billion long-term soft loan, meanwhile, would be made available should the government need more firearms and other equipment.

“Initially, sabi nila gusto nila kaming, tayong bigyan ng (they said they want to give us) $500 million worth of loan, long-term soft loan... kung kelangan natin pa ng equipment (if we need more equipment)” Mr. Lorenzana said.

Following Mr. Duterte’s state-visit to China last October, $13.5 billion worth of Chinese business investments were committed while Huang Rulun, a rags-to-riches Chinese billionaire, promised to build two huge drug rehabilitation centers in the Philippines.

Mr. Lorenzana said Mr. Tiankai also expressed plans to put up an additional drug rehabilitation center.

Mr. Duterte has been aiming to establish stronger ties with China despite the standing territorial dispute over parts of the West Philippine Sea that the emerging Asian superpower continues to claim despite an international court’s ruling in favor of the Philippines.

OIL EXPLORATION
Meanwhile, Presidential Spokesperson Ernesto C. Abella clarified yesterday that the possibility of a joint oil exploration with China at the disputed Scarborough Shoal is just an idea that the President is considering.

“These are not government to government agreements. So they’re not official. It may be private sector,” Mr. Abella said in a press briefing.

Mr. Duterte, in a speech in Malacanang on Monday, said he will have to deal with issues on the territorial dispute with China “during his time,” adding that he might consider a joint exploration of the oil reserves in the Scarborough Shoal area.

Mr. Abella said there are no government policies prohibiting the Philippines from joining other countries in the exploration of resources in its own territories.

“I’m just saying that since there is no government policy regarding... covering that matter at this stage. But I suppose what (the President was) saying -- what he was referring to is the possibility of business to business partnerships,” Mr. Abella said. -- Jumaine Christene V. Doctolero

source:  Businessworld

Russian nuclear, rail, mining firms to visit PHL

RUSSIAN COMPANIES in the nuclear, mining, and rail industries are set to visit the Philippine next year, the Department of Foreign Affairs (DFA) said, citing a Russian official.

The visits form part of the Philippines-Russia Joint Commission on Trade and Economic Cooperation (JCTEC) meeting in the Philippines scheduled for January.

The intergovernmental body will be co-chaired by Deputy Minister for the Russian Department of Inter-regional and Cross-border Cooperation of the Ministry of Economic Development Alexander Tsybulskiy and Department of Trade and Industry Undersecretary Ceferino S. Rodolfo, and is intended to expand trade cooperation between the two countries. 

In a statement released by the DFA on Monday, Mr. Tsybulskiy said that he will be joined on the visit by executives from Rosatom State Atomic Energy Corp., JSC Russian Railways, and MMC Norilsk Nickel. 

Rosatom has nuclear construction projects in Finland, Hungary, Iran, India, Vietnam and China. 

In its 2015 Key Facts report, the company has operations in 52 countries with annual overseas revenue of $6.3 billion. 

Russian Railways reported 2015 revenue of about $24.48 billion.

Norilsk Nickel has overseas operations in Finland, the United Kingdom, the United States, China and Switzerland with about $3.843 billion in revenue for the first half of 2016. It reported revenue of about $8.54 billion in 2015. 

Philippine Ambassador to Russia Carlos D. Sorreta met with Mr. Tsubulskiy last week to discuss this upcoming meeting. 

Sought for comment, Foreign Affairs Spokesperson Charles C. Jose said that the Philippine Embassy in Moscow will send to the DFA a full list of Russian companies set to visit the Philippines. 

“Per our Russia Desk, we don’t have yet the complete list of companies but we expect to receive it from our Embassy in Moscow,” Mr. Jose said in a text message, adding that so far the DFA has confirmed the three companies listed above. 

Maxim Anyanin, head of the Visa Section of the Russian Consulate, in a phone interview said that the meeting between Mr. Tsybulskiy and Mr. Rodolfo, which was originally set for this month was postponed to Jan. 20.

In a news conference last month, Russian Ambassador to Manila Igor Khovaev said that some Russian companies have expressed interest in investing in railway, telecommunications, energy and mining in the Philippines. 

He also cited the high demand for tropical fruit, particularly bananas, which could be supplied by the Philippines to Russia via the eastern city of Vladivostok. -- Lucia Edna P. de Guzman

source:  Businessworld

Teo hoping PPP will solve Mindanao’s infrastructure lack

DAVAO CITY—The lack of transportation infrastructure may dampen the government’s aim of increasing tourism in Mindanao during President Duterte’s term.

But, according to Tourism Secretary Wanda Corazon T. Teo, this could be addressed through the Public-Private Partnership (PPP) Program, a decades-old initiative that only came to fruition in the last administration.

“Yes, we are looking at tapping the [PPP] Program. There is actually a budget for us, but our budget for 2017 was already used last year,” she told the BusinessMirror in a chance interview here.

She was referring to the Tourism Road Infrastructure Project Prioritization Criteria, more commonly known as TRIPPC, a program that aims to develop roads leading to tourist sites.

The P60-billion tourism road-infrastructure master plan is part of the convergence program of the Department of Public Works and Highways (DPWH) and the Department of
Tourism (DOT).

It was pioneered in 2011, with the aim of constructing, upgrading, rehabilitating and improving roughly 463 roads and bridges.

Among the major tourism road projects completed and ongoing include the 5.6-kilometers access road to Puerto Princesa City Underground River, also leading to mangrove forest, white-sand beach, Sabang zipline and Ugong rock mountain in Palawan; the 44.6-km Taytay-El Nido Road, Palawan; the 11-km Ambangeg Junction National Road to Mount Pulag, known for its magnificent view of sunrise and sunset, in Benguet; the 24-km access roads to Donsol, Sorsogon, famous for whale-shark viewing, locally known as butanding; the 41-km Panglao Island Circumferential Road leading to location of  Bohol’s beach resorts and dive spots; and the 31-km Island Garden City of Samal Circumferential Road, which provides access to Pearl Farm Beach Resort and Samal Botanical Garden on Samal Island, Davao del Norte.

“I’m sure by 2018, we will have a bigger budget. But for now, we are asking for an additional P200 million to support other projects,” Teo said.

This will, hopefully, support the tourism department’s target of scaling up tourist arrivals in Mindanao through President Duterte’s term.

“The target that has been set is to really increase it by 10 [percent] to 20 percent, but that would actually depend upon the logistics support when it comes to infrastructure,”  Tourism Assistant Secretary Eden Josephine L. David said.

Over the last six years, tourist arrivals in the five regions in Mindanao grew by 10 percent on the average.

Last year saw Region 9 reporting a total of 800,000 visitors; Region 10, with 2.7 million arrivals; Region 11, with 2.8 million visitors; Region 12, with about a million arrivals; and Region 13, with 1.2 million visitors.

“There’s really an increase in number of tourists for Mindanao over the last few years,” David said. “That’s why there is a Mindanao Logistics Plan, which will support road travel across Mindanao.”

The tourism department has partnered with the Mindanao Development Authority to craft the Mindanao Logistics Plan, a proposed blueprint that aims to complement infrastructure development in the area.

“The Mindanao Tourism Development Plan would have to be started by 2017, when we start consolidating the efforts of each of the regions,” David said.

source:  Business Mirror

Duterte Plans $1 Billion Airport, Rail in Former U.S. Base

The Philippines plans to award at least $1 billion of contracts to build an airport and a railway to transform a former U.S. military base into a commercial hub as part of President Rodrigo Duterte’s push to distribute wealth outside congested Manila.

The Bases Conversion and Development Authority wants these and other major infrastructure projects for the area to be awarded by the second half of 2017 and for most to be completed as early as 2019, its Chief Executive Officer Vince Dizon said in an interview in Makati City. The authority will decide by the first quarter of next year whether to invite bids to build or operate the infrastructure, or do both, he said.

“We want the investment community to know that this government isn’t just about addressing crime and drugs,” Dizon, 43, said Nov. 11. “We’re also here to build, build and build.”

Duterte, who won the presidential election six months ago, is lifting infrastructure spending to a record and allocating resources away from the capital, Manila, where traffic and transport logjams cost the economy at least 2.4 billion pesos ($49 million) a day. His government is attempting to fast track development of the planned Clark Green City, which was carved out of the former Clark Air Base used by U.S. forces during World War II. It received just one bid last year to develop part of the proposed alternative capital city.

At 9,450 hectares (23,000 acres), Clark Green City would dwarf the main financial district of Makati in metropolitan Manila, home to the nation’s stock exchange and banks’ headquarters.

Building infrastructure outside the capital is key to attracting investment and boosting the country’s growth potential to as much as 9 percent, Rosemarie Edillon, deputy director general at the National Economic and Development Authority, said Thursday. Third-quarter economic growth was 7.1 percent, the fastest in Asia.

Read more: Duterte’s spending plans for next year

The state body will invite bids for a new 15 billion-peso airport terminal in Clark, north of Manila, according to Dizon. It will include a new international terminal that will double Clark airport’s current capacity to 8 million passengers under the first phase of a 30-year plan developed by Aeroports de Paris, he said.

It will also invite bidders for some projects identified during Duterte’s state visit to Beijing in October. These include a cargo rail line costing as much as $700 million, running from Clark to the Subic coastal area northwest of Manila, an industrial park and facilities for telecommunications and utilities.

If the investments materialize, Clark Green City would bring a new lease of life to an area that now comprises a main industrial zone with factories for companies including semiconductor-maker Texas Instruments Inc. and plane-engine manufacturer Rolls-Royce Holdings Plc and an airport with limited international flights. Under the government’s plan, the existing Clark airport would be converted to a VIP terminal when the new aerodome is up.

Dizon said Bases Conversion will continue to bid out rights to develop more plots of land in Clark, a process started under former President Benigno Aquino.

Duterte’s government may choose to fund infrastructure projects through loans obtained at cheaper rates and then offer contracts to companies to run them, Dizon said. Under Aquino, the preference was to let private companies handle the projects at the onset, and such an arrangement remains an option, the executive said.

SSS plans to bid anew Manila Bay property

STATE-RUN Social Security System (SSS) plans to again bid out the long-term lease of a prime property near Manila Bay’s fast-rising gaming hub following a failed bidding last year.

SSS president and chief executive Emilio S. de Quiros also told reporters that they were considering to hire three fund managers that will manage P1 billion in investments each as soon as President Duterte has appointed the members of the Social Security Council, the highest governing body of the pension fund.

On the sidelines of SSS’s 59th anniversary celebration on Friday, De Quiros said they planned to publish the invitation to bid for the long-term, 10- to 20-year lease of the HK Sun Plaza property this month.

“The only reason why we’re leasing the HK Sun Plaza is that it is very close to the Entertainment City. The way we look at it, it may not be a good time, at this point, to sell it because we’ll see prices move up eventually. So we’re leaving it to the next administration, and later on whoever will manage SSS. We think he should keep it,” De Quiros explained.

In December last year, the SSS declared a failure of bidding because Filinvest Land Inc. did not submit its lease bid for the 25-year lease of HK Sun Plaza and an adjacent vacant lot.

Gotianun-led property developer Filinvest Land was the lone entity that had purchased the terms of reference for the lease of the HK Sun Plaza property covering a 44,000-square meter warehouse as well as the 6,000-square meter vacant lot located at the Financial Center area along Macapagal Ave. and Roxas Boulevard in Pasay City.

The SSS had pegged the minimum bid on rental rate at P16 million a month for the 25-year lease period, including a six-month fit-out period.

Besides the Pasay property, De Quiros noted that the SSS was also selling condominium units.

In an invitation to bid published last month, the SSS invited interested bidders for 19 condominium units, with each having two 13-square meter parking slots, as well as 17 extra parking slots located in Bella Villa One Condominium at No. 5 Hamburg Street, Merville Park, Barangay Merville, Parañaque City. These assets were worth a total of at least P134 million.

Also, De Quiros said they would again look for three fund managers after their search last year failed.

“The problem was [that] a lot of the banks and the trust companies [that expressed interest] had problems getting BIR clearances. We hope that they would be able to resolve it this year,” De Quiros explained.

The SSS had required interested fund managers to secure a tax clearance from the Bureau of Internal Revenue.

De Quiros said they planned to hire the fund managers before the year ends so that they could start investing next year.

The SSS chief said the venture would allow them to “test the waters” as he noted that the amount of funds to be handled by the fund managers—a total of P3 billion—was “very small” compared with the reserve fund of about P450 billion. “We would like to get the hang of it; we’d like to see how it will perform compared to in-house investment,” De Quiros said.

source:  PH Daily Inquirer

Reforms feared casualty in drug war

INVESTORS are losing appetite towards the Philippines as the government appears to focus heavily on its drug crackdown at the expense of economic reform, analysts at the Economist Intelligence Unit (EIU) said, flagging a potential unraveling of fiscal policies that had otherwise helped the country outperform peers in the past six years.

“Investor confidence has deteriorated somewhat over the past few months or so, especially if you look at how the Philippine peso has done versus the US dollar,” EIU economist Miguel Chanco said in a webinar on Thursday last week that discussed prospects of Southeast Asian economies.

“While the current government is very much ambitious in trying to clean the streets of Manila by a crackdown on drug use and criminality in general, this has caused a major unrest internationally which has significantly affected investor perceptions of the government in charge at the moment and its next six years, which will end in 2022.”

EIU’s comment adds to growing statements of concern among other analysts earlier that President Rodrigo R. Duterte’s preoccupation with the war on narcotics could hold back progress in putting economic reforms in place.

Early into his election campaign, Mr. Duterte had been vocal about prioritizing the drive against narcotics as the biggest problem plaguing the country, saying he would order drug addicts and criminals killed and feed their corpses to fish in Manila Bay. Nearly four months into his administration, the nationwide crackdown has left over 3,000 people dead -- about half in the hands of the police and the rest of the cases still under investigation -- leading human rights groups and other observers to note that the killings appear to be state-sanctioned.

Mr. Chanco described the policy environment in Mr. Duterte’s first four months in office as “unpredictable” and cited growing concern among foreign investors that the government appears to have zoomed in on the war on drugs without giving similar attention to the economic front.

“Part of the reasons why this archipelago of 7,000 islands was able to sustain economic growth of over 6% this past few years is because of prudent economic policies of the previous administration, which for one, saw the government put its fiscal house in better order,” Mr. Chanco said.

“While it is still in its very early days, the country’s new government looks to be heading towards undoing some of that progress which risks undermining the confidence of investors,” he warned.

“The current administration’s controversial war on drugs is not helping matters on this front, either.”

Palace spokesmen did not reply to a request for comment.

Credit rater S&P Global Ratings affirmed the country’s investment grade status last month, but warned of “rising uncertainties” under Mr. Duterte, particularly in terms of policy predictability.

And just last week, Moody’s Investors Service raised its growth forecast for the Philippines to 6.5% this year and for 2017, but warned that the anti-drug war and general politics could “detract attention away from economic and fiscal reform.”

The same week also saw Nomura saying that it saw “a bigger risk from the war on drugs, as more negative headlines could weigh on sentiment and potentially prove a distraction to sound economic policy making or even lead to a reversal of policy.”

WHERE’S THE PLAN?
“One of the main factors that would turn off many investors in our view is that the current government hasn’t specifically outlined a clear economic reform plan that would encourage more investors to participate in the Philippines’ booming economy, [with] the fact that most of the administration’s efforts are more towards criminality and drug use,” EIU’s Mr. Chanco said.

“We don’t see any reform momentum on the economic side of things which will impact not only Manila as a city but also the Philippines in general.”

Mr. Duterte’s economic team bared a 10-point socioeconomic agenda just days after his landslide win in the May 9 polls, assuring investors with signals of continuity from the economic policies of his predecessor that had won for the country investor-grade credit rating in 2013.

The plan focused on achieving more inclusive growth, additional foreign investments by relaxing ownership limits, lower personal and corporate income taxes, and greater ease of doing business in the country, among others.

Analysts, however, have said they await concrete expressions of these proposed reforms in terms of laws and updated regulations beyond the President’s promises.

Mr. Chanco said that economic growth is expected to remain intact, with household consumption largely fueling expansion, despite Mr. Duterte’s verbal attacks on the United States.

“I think in the near term there wouldn’t be much impact on the Philippine economy. Most of the foreign investments are coming from the US, and it seems from the looks of it that investors are willing to take a wait-and-see game with the new administration,” Mr. Chanco said.

“While the current administration may want to turn towards more to China, certain legacy issues that tie both US and the Philippines together will not be erased in the near term.”

These remarks came ahead of Mr. Duterte’s speech in Beijing on Thursday night where he spoke of his “separation” from the US’ military and economic hold. This was later on clarified by his men and by the President himself to mean a foreign policy shift towards Southeast Asia, China, Japan and South Korea rather than a break with the West.

Economic managers have repeatedly said that investors should anchor their decisions on the Philippines’ sound macrofundamentals, instead of getting carried away by negative sentiment.

NO IMPACT ON GROWTH YET
“Certainly, most of the Philippines is still very much driven by domestic demand which we can’t forget. It’s not so much an economy driven by foreign investments,” the EIU analyst added.

“As long as remittances continue to flow to the Philippines regardless of where the US and the Philippines’ ties go in the next few years, Philippine consumers will remain strong and concrete, helping to keep growth to around 5.5-6% on average.”

Economic growth averaged 6.9% last semester, driven by a surge in investments and a boost from election-related spending.

Multilateral lenders last month hiked their Philippine economic growth forecasts to 6.4% for this year, which if realized will hit the government’s 6-7% growth goal.

Sought for his views, International Monetary Fund country representative Shanaka Jayanath Peiris said that Mr. Duterte’s statements will have no impact on the lender’s economic forecasts for now.

“In the economic outlook, we can only assess the impact when there is greater clarity whether there is a change in economic policy, and if so, what the detailed changes might be,” Mr. Peiris said in an e-mail last weekend.

“At the moment, we don’t have information on any changes in economic policy and thus have not changed our outlook from the 2016 Article IV consultation report.”

source:  Businessworld

Itemized list of PH projects covered by China’s $15-B investment pledges to Duterte

The $24-billion investment and credit line pledges that the Philippine government secured from China earlier this week were a display of “greater confidence” in the future economic relationship of the two countries, according to Trade Secretary Ramon Lopez.

In a text message to reporters, Lopez said that the renewed friendships in this part of the world have opened huge opportunities for Philippines’ trade and investment in China and Asean market of over 1.9 billion people.

The deals secured during President Duterte’s state visit to China are expected to boost the trade and investment levels between the two countries, he added.

Lopez disclosed that the $15 billion worth of investment projects signed were as follows:

• Subic-Clark railway project by Bases Conversion and Development Authority (BCDA) and China Harbour Engineering Co.
• Bonifacio Global City-Ninoy Aquino International Airport Segment of Metro Manila Bus Rapid Transit-EDSA project by BCDA and China Road and Bridge Corp.
• BCDA-China Fortune Land Real Estate project (memorandum of understanding);
• Safe and smart city projects for BCDA by BCDA and Huawei Technologies
• Transportation and logistics infrastructure at Sangley Point by Cavitex Holdings, International Container Terminal Services Inc. and China Harbour Engineering
• Joint venture agreement of Jimei Group of China and Expedition Construction Corp. for infrastructure projects
• North Negros biomass and South Negros biomass project by North Negros Biopower and Wuxi Huaguang Electric Power Engineering
• Globe Telecom projects to improve network quality and capacity
• Jin Jiang hotel room capacity expansion from 1,000 to 2,000 by Double Dragon Properties and Hotel of Asia Inc.
• Joint development project on renewable energy by Columbus Capitana and China CAMC Engineering
• New Generation Steel Manufacturing Plant by Mannage Resources and SIIC Shanghai International Trade HK;
• Joint venture on steel plants by Global Ferronickel and Baiyin International
• Renewable energy projects by Xinjiang TBEA Sunoasis
• Davao coastline and port development project by Mega Harbor Port and Development and China Harbour Engineering;
• Manila Harbour Center reclamation by R-II Builders Inc. and China Harbour Engineering
• Cebu International and Bulk Terminal project by Mega Harbour Port and CCCC Dredging Company
• Cabling manufacturing facilities by MVP Global Infrastructure Group and Suli Grp Ltd.
• Manila EDSA Bus Transportation program by Phil State Group and Yangtse Motor group and Minmetals International
• Hybrid rice production by SL Agritech and Jiangsu Hongqi Seed Inc.
• Bus manufacturing facility by Zhuhai Bus and Coach Co.
• Banana plantation project by AVLB Asia Pacific and Shanghai Xinwo Agriculture Development Co.
• 300MW Pulangi-5 Hydro Project by Greenergy
• Co. and Power China Guizhou Engineering Corp.
• Pasig River, Marikina River and Manggahan Floodway bridges construction project by Zonar Construct and SinoHydro;
• Ambal Simuay sub-river basin flood control project by One Whitebeach Land Development and Sino Hydro;
• Nationwide island provinces link bridges by  Zonarsystems and PowerChina Sino Hydro; and
• Railway project (study) by MVP Global Infrastructure group and China Railway Engineering Corp.

These investment agreements are expected to generate 2 million jobs over the next five years.

Meanwhile, financing facilities worth a total of $9 billion would come from the China State ($6 billion) and Bank of China ($3 billion), Lopez said.

“We will maintain relations with our other partners but we would revive the stronger integration with our neighbors. We share centuries of trading, similar cultures and a better understanding of our region,” he said.

“For China alone, they continue to be the Philippines’ second major trading partner with $17 billion value in total trade. Our exports to China were $6 billion in 2015 but this still has high growth potential as we establish better relations and considering China’s total imports was around $2 trillion in 2015.

Another promising area again is investment from China. Their investment to the Philippines dropped to only $32 million in 2015.

But China’s total outward investments was around $130 billion in 2015,” the trade chief said.

source:  Philippine Daily Inquirer

Duterte announces ‘separation from the US’

PRESIDENT Rodrigo Duterte on Wednesday announced his “separation” from the United States in terms of military and economic cooperation, saying he would turn to China instead.

“I announce my separation from the United States, both in military and economics,” the President said in his speech during the Philippines-China Trade and Investment Forum in Beijing, China.

With this separation, the President told Chinese officials and businessmen that he would now be relying on China.

“So please, you have another problem of economics in my country. I have separated from them (US) so I will be dependent on you for a long time, but don’t worry, we will also help,” he said.

His comments came after he met his Chinese counterpart Xi Jinping at the Great Hall of the People on Tiananmen Square, with the two men pledging to enhance trust and friendship, while playing down a maritime dispute.

Duterte’s visit to Beijing capped a series of recent declarations blasting the US and President Barack Obama.

Addressing the Filipino community in Beijing Wednesday, the firebrand leader said the Philippines had gained little from its long alliance with the US, its former colonial ruler.

“Your stay in my country was for your own benefit. So time to say goodbye, my friend,” he said, as if addressing the US.

source:  Manila Times

$13.5-billion deals highlight Duterte's landmark China visit

BEIJING -- President Rodrigo R. Duterte's landmark visit to China, which Chinese President Xi Jinping on Thursday said could help “fully improve” ties that has been tested by a territorial dispute in the South China Sea, will see $13.5 billion worth of deals inked between the two Asian neighbors, the Philippines' Trade chief said in a business forum here.

Mr. Duterte’s state visit to China -- following a working visit to Indonesia, an official visit to Vietnam and this week’s state visit to Brunei -- marks a departure from the tradition observed by his predecessors to visit the US.

The China trip has been marked by the host country’s reception to Mr. Duterte, alongside a mutual affirmation of trade and investment ties ahead.

China and the Philippines will sign $13.5 billion in deals this week, Mr. Duterte’s trade secretary, Ramon M. Lopez, disclosed at a business forum in Beijing on Thursday.

Mr. Duterte in Beijing was joined by at least 200 top business people to pave the way for what he calls a new commercial alliance, as relations with Washington are increasingly being complicated by his anti-US stance.

On Wednesday, to the cheers of hundreds of Filipinos in Beijing, Mr. Duterte said Philippine foreign policy was veering towards China.

“I will not go to America anymore. We will just be insulted there,” he said. “So time to say good-bye, my friend.”

He also declared there will be “no more American interference” in the Philippines and belittled too the country’s gains in its decades-long alliance with the US following the latter’s colonial rule of almost half the 20th century.

“Do not tell us that you have provided us with education. We would have survived if there was no education in my country at that time, we would have invited one [country] better than what they have given us,” Mr. Duterte said.

Nationalist-oriented educators have long emphasized the Philippines’ having its own constitution and structure of government and public service, along with a highly articulate and expressive cultural elite in the ilustrado movement, before US colonial rule which began with a bloody pacification campaign at the turn of the 20th century.

But in the postwar era and thereafter, Filipinos are understood to have a favorable view of the US, despite occasional nationalist episodes such as the Philippine Senate’s 1991 vote rejecting the continued stay of US bases in Central Luzon.

A poll conducted late September by the Social Weather Stations found China having a “bad” -33 net trust rating among Filipinos, compared with a “very good” +66 for the US.

Mr. Duterte has been attacking the Western superpower in his profanity-laced speeches for its criticism of his war against illegal drugs and its spiraling death tally.

Beijing, meanwhile, has enthusiastically endorsed Mr. Duterte’s war on drugs, which has seen more than 3,700 people killed and led the International Criminal Court to warn that those responsible could face charges

China has, moreover, offered to train some Filipino cadets in “anti-illegal drug and VIP security protection,” according to Ramon Purugganan, deputy director of intelligence with the Philippine National Police.

Mr. Duterte has also been calling for his country’s pivot to Beijing and Moscow, In contrast to Washington’s Asia pivot -- although he has thus far shied away from his option to terminate the Philippines’ military arrangements with the US.

In his Wednesday speech, he said he will welcome any aid from China because “we are very poor.”

“The foreign policy gears now towards dito (here). I will not ask but if they offer and they would ask me, ‘You need this aid?’ Of course, we are, we are very poor. ‘You need this railway?’ Yes, sir. And if you can give us a soft loan, give us something like 20 years to pay, 15 years to pay. Even with the price, just give us a little bit of an elbow room,” he added.

“When was the last time, we have been with America? We’ve never had any railroad,” he also said, thus contradicting US legacy in its colonial rule. He added: “In Russia, it’s now crisscrossing African continent. It’s almost crisscrossing now the African -- the railway.”

SEA ROW TAKES BACK SEAT
For his part, Mr. Xi on Thursday told Mr. Duterte at Beijing’s Great Hall of the People that China and the Philippines were brothers and that the two sides could “appropriately handle disputes,” although the Chinese leader did not specifically mention the South China Sea row in comments in front of reporters.

“I hope we can follow the wishes of the people and use this visit as an opportunity to push China-Philippines relations back on a friendly footing and fully improve things,” Mr. Xi said.

Mr. Duterte on Wednesday reversed an earlier statement that he would take up the South China Sea arbitration case -- this time saying the dispute would “take the back seat” during talks, and that he would wait for the Chinese to bring up the matter rather than doing so himself.

Chinese Vice-Foreign Minister Liu Zhenmin said for his part the two countries would return to the track of dialogue and consultation in seeking a proper settlement of the South China Sea issue. “The two sides briefly mentioned the South China Sea. Both sides agreed that this issue is not the sum total of bilateral relations,” he told reporters after the Xi-Duterte meeting.

But Mr. Liu said the issue of Scarborough Shoal, which China seized in 2012, was not mentioned and did not answer a question about whether Philippine fishermen would be allowed to fish in what had been their traditional fishing waters.

He did say both countries agreed on coast guard and fisheries cooperation.

For her part, Chinese foreign ministry spokeswoman Hua Chunying told a regular briefing that Beijing was pleased to move towards resolving the territorial dispute “through consultation and dialogue”.

“Anyone who truly wishes for peace, stability, development and prosperity in the Asia Pacific should welcome Duterte’s visit,” she said.

In an editorial Wednesday, China’s nationalist Global Times newspaper said Washington had treated Manila “as a pawn,” adding Mr. Duterte was now “redesigning Philippine foreign policy based on Philippine interests.” -- reports by Reuters, AFP, Ian Nicolas P. Cigaral

---

List of agreements between PHL and China

• MoU (Memorandum of Understanding) on Production Capacity and Investment Cooperation and the Agreement on Economic and Technological Cooperation between the Government of China and the Philippines

• MoU on Strengthening Trade, Investment and Economic Cooperation, the MoU on Drafting China-Philippines Economic Cooperation Development Plans and the Tourism MoU Implementation Plan 2017-2022

• MoU on the Lists of Transportation and Infrastructure Cooperation Projects and the MoU on Financing Cooperation between the China’s EXIMBANK (Export-Import Bank of China) and the Department of the Treasury of the Philippines

• Agricultural Cooperation Action Plan 2017-2019 and the Protocol on Cooperation between PDEA of the Philippines and the Narcotics Control Bureau of the Ministry of Public Security of China

• MoU on the Establishment of a Joint Coastal Guard Committee on Maritime Cooperation and the MoU on Supporting Conduct of Feasibility Studies for Major Projects

• MoU on News Information Exchange Training and for Other Purposes

• MoU on Cooperation on Animal and Plant Inspection and Quarantine

Source: Presidential Communications Office

Globe signs fresh deals during President Duterte’s China visit

LISTED telecommunications giant Globe Telecom, Inc. has signed $750 million worth of deals with Nokia and two technology companies based in China during President Rodrigo R. Duterte’s state visit there.

In a statement released on Friday, the no. 2 largest telco company said the agreements will accelerate its use of new Long-Term Evolution (LTE) technologies across the country for over a period of 5 years, improving its broadband services.

The deals were with Huawei Technologies, Nokia and Wuhan Fiberhome International Technologies, it said. Globe has nurtured long ties with Huawei, signing in November last year a partnership for its 3G and 4G network.

“Globe is deeply committed in giving a wonderful experience to our customers by continuing to build and invest on our network. We are confident that our collaboration with Huawei, Nokia and Wuhan FiberHome will translate into a more robust Globe network that will meet the country’s future digital demands,” Globe President & CEO Ernest L. Cu said in the statement.

Mr. Cu and Globe Director Fernando Zobel de Ayala signed a memorandum of confirmation with Chen Yuhua, the head of Nokia international business, for the project’s rollout in Visayas and Mindanao.

The deal with Huawei covers deployment of LTE spectrum in Luzon.

Globe said that the project would provide wider LTE coverage and better indoor penetration, through an estimated 4,600 sites in the country. This would increase data and fixed-wireless broadband capacity to provide telecommunications services in order to provide access to areas of the country that currently have no access to broadband.

Morever, the telco noted that the project would strengthen telecommunications infrastructure and address the adverse impact of typhoons.

Globe signed a separate memorandum of confirmation with Huawei and Nokia for the capacity expansion program for its corporate data network.

Globe has also tapped Huawei and Wuhan FiberHome for a plan to build a fiber infrastructure to support the rollout of fixed broadband lines in the country. Fiber optics will be deployed to about 20,000 barangays by 2020 which, according to Globe, would provide ultra-fast internet access to around 2 million homes nationwide.

Globe shares fell 0.42% to close at P1,892 per piece. -- R.S. C. Canivel

source:  Businessworld

China in PPPs, a risk for locals

Fitch-research arm BMI Research said increased Chinese involvement in the Philippines’ infrastructure sector will pose a risk to the country’s public-private partnership (PPP) sector.

In its latest analysis, BMI Research said the previous government under Aquino highly favored PPPs as a method for meeting the country’s infrastructure needs and has implemented a number of favorable policies, including, most recently, allowing PPPs to list on the Philippine Stock Exchange. 

“Increased Chinese involvement may have the dual effect of both reducing the number of PPPs in the pipeline as well as increase competition in the market,” BMI said.

“China-backed bids will likely be able to undercut competitive private bids and companies which have positioned themselves to expand in the Philippine PPP sector may lose out,” it added.

(Bank of China  has agreed to provide a $3-billion credit facility for infrastructure investments in the Philippines, Dept of Trade and Industry Secretary Ramon Lopez told reporters in Beijing yesterday.)

BMI also said downside risks to its outlook for the Philippines attracting greater investment from China primarily arises from near-term political uncertainty. 

“Although (President) Duterte has taken a less confrontational approach to the South China Sea dispute, there is the risk his position could change in the future given his unorthodox political style and populist politics, which would then place into question any China-backed infrastructure projects in the pipeline,” BMI said.

It also noted that public opposition to Chinese construction projects could derail projects in the Philippines. 

“A string of accidents in 2015 at the Ha Dong-Cat Linh elevated rail project site – for which China Railway was the main contractor – in Vietnam resulted in government officials criticizing Chinese contractors of having poor safety practices, a concern that may be present in other markets,” it said.

The North South railway system, funded by Chinese entrepreneurs, started under the Arroyo government did not take off.  

However, on the positive side, BMI said friendlier ties with China will provide a boost to the Philippines’ infrastructure industry, as competitive Chinese construction firms and financing options become available. 

“Although the full extent of investment deals may be muted by underlying political tensions, increased Chinese involvement in the Philippines’ infrastructure will help close funding gaps in Duterte’s infrastructure spending ambitions,” BMI said.

“We expect President Rodrigo Duterte’s tilt toward friendlier relations with China will provide a boost to the Philippines’ infrastructure industry as Chinese construction and financing agreements help fulfil his plans for a ‘Golden Age of Infrastructure’ in the country,” it added.

BMI noted while underlying tensions over the South China Sea may dampen initial talks during Duterte’s visit to Beijing this week, both countries have clear incentives for closer ties.

“China sees befriending the Philippines as a way of reducing the United States’ influence in Asia; while the Philippines seeks to gain access to China’s generous infrastructure investment packages which peers in Southeast Asia are already benefitting from,” BMI said.

The research arm said such deals will help bring to reality Duterte’s plan to spend at least P7 trillion on infrastructure through 2022.

BMI said this supports its forecast for real growth in the construction industry averaging 8.2 percent between 2016 and 2020. 

“Although Duterte is continuing PPPs initiated by his predecessor Aquino, we expect him to shift more in favor of a government-centered investment approach, which he regards as more efficient and cost-effective,” BMI said.

The report cited data from PPP Center which showed that only three of the 53 PPP projects launched since 2010 have been completed and only around four under construction. 

The government attributed the delays to a lengthy review and approval process under the previous administration and has expressed doubts about the efficacy of PPPs for shorter-term projects, BMI said.

“As a result, we expect a reduction in the proportion of projects open to private bidders and subsequently greater demand for government budgets to fund infrastructure developments,” it said.

The analysis said Duterte will face many of the same obstacles of bureaucratic and financing bottlenecks as his predecessor. 

“As a result, the Philippines currently has a bloated project pipeline which sees a significant number of projects failing to move beyond the tender phase,” BMI said.

“According to our Key Projects Database, around 97 projects worth more than P2.5 trillion in total are in the pre-tender phase,” it added.

The report noted Duterte is eager to drive momentum into infrastructure projects since he approved nine projects worth P171 billion in September.

“Increased involvement from Chinese firms will fit neatly into the Philippine government’s shift toward state-backed projects, as trade and investment deals that come out of a friendlier relationship with China help meet the Philippines’ growing infrastructure funding needs,” BMI said.

“Other Southeast Asian countries have welcomed Chinese government-backed investments in part due to their low costs, short timelines and favorable financing terms,” it added.

The report cited as an example the $5.5 billion Jakarta-Bandung High-Speed Railway under construction in Indonesia, which is largely financed by a two percent interest, guarantee-free loan from the China Development Bank and will be built without any funds from the Indonesian government. 

“For Duterte, greater cooperation with China will also act as a hedge against uncertainty in Philippines-US relations – as noted by our Country Risk team, Duterte is unlikely to establish good terms with either US presidential candidate,” BMI said.

source:  Malaya