Government needs to do homework on foreign policy
OFFICIAL statements about the brewing row with Taiwan betray the government’s lack of understanding about cross-straits issues and the country’s One China policy. That foreign affairs is the so-called Achilles heel of a national leader would not matter so much, if a particular issue did not have serious diplomatic, economic and sovereignty implications as seen in the case of the 14 Taiwanese who were deported to China earlier this month. Worse, President Benigno “Noynoy” Aquino 3rd seems, based on the statements attributed to him, to be misinformed about the issues.
Probably because the Palace wants to avoid violating the One China policy, for instance, the President said on Thursday that the Manila Economic and Cultural Office (MECO) would handle the situation. The problem with that is MECO cannot speak in behalf of the Philippine government—precisely because of the One China policy.
The Philippines has no diplomatic relations with Taiwan, which remains officially at war with the China. And to this day, China considers Taiwan a renegade province. The Philippines recognizes the government in Beijing as that of China, but Manila maintains cultural and economic relations with Taipei. The President should consult with experts at the Department of Foreign Affairs if MECO can officially speak in behalf of Manila, because we doubt it can.
President Aquino should also consult with experts about sending an emissary to Taiwan. He said also on Thursday that he might send someone to explain the government’s actions. He should be careful, because the One China policy restricts whom the government can send to deal with leaders in Taipei.
Actually, the Philippines has to tread a narrow path between Taiwan and China to avoid offending either one. Maintaining good relations with both is important to the national interests of the Philippines.
China is a military superpower and the second-largest economy in the world. Taiwan is the third-largest economy in Asia after Japan, host to some 90,000 Filipino workers, and a source of foreign direct investments. A hot war between China and Taiwan would have repercussions worldwide, especially the Philippines, which will be literally caught in the middle.
Again based on official statements, the Palace does not seem to grasp that by deporting the Taiwanese to China, the Philippines has unwittingly stepped into the sensitive cross-straits affairs.
Apologizing to Taiwan courts the ire of China, and conversely, refusal to say sorry would likely anger Taipei.
If Palace officials are listening carefully, though, Taiwan’s representative in Manila may have already provided a clue on how to deal with this sensitive issue. He has argued that the deportation is a matter of law, not at all concerned with the One China policy.
We, too, believe that the issue ought to be legal, not diplomatic. Were laws and procedures at the Bureau of Immigration and at the National Bureau of Investigation (NBI) broken in the deportation of the 14 Taiwanese? And if so, what is the Philippines doing about it?
Official statements argued that the Philippines did nothing wrong because the deported Taiwanese were criminals. But that is way off the mark. Whether they are criminals or saints, the issue is that they should have been deported to Taiwan, not China, in accordance with Philippine immigration laws. Also at issue here is what power—foreign or criminal—can trump a writ of habeas corpus issued by the Court of Appeals for the Taiwanese to appear before a hearing that did not happen because they were already flown out? And who or what was powerful enough to hasten the deportation ahead of hearings already scheduled by prosecutors?
To invoke the One China policy as a rationale for sending Taiwanese to China is plain ignorant. Palace officials also seem unaware or insensitive that the deportation issue is being used as ammunition against Taiwan’s President Ma Ying-jeou by the opposition in Taiwan. President Ma is up for reelection next year.
President Aquino and his people should consider making the issue a legal one, rather than diplomatic to avoid the One China policy trap.
Instead of turning down Taiwan’s demand for an apology so soon, the Palace should have taken time to study and consider the protest by Taipei’s representative, Donald Lee. Why respond so quickly, especially if the message is negative? If the Palace was compelled to reply, it could have said that it takes seriously all reports on alleged violations of laws and reports of maltreatment of foreigners, whether they be from Taiwan or elsewhere.
DOJ Secretary Leila de Lima
Instead of the Palace spokesman, perhaps the Department of Justice should do the talking for now. Justice Sec. Leila de Lima should order an investigation on the alleged breach of procedures by the Immigration bureau and NBI, which are both under her administrative control. Both bureaus are accused of mishandling the deportation. Sec. de Lima, too, should assure all foreigners, not just those from Taiwan, that the Philippines abides by the rule of law, and that the government is intolerant of those who believe otherwise.
Tough words should then be followed by an investigation into the allegations of Taiwan—not because it demands it but because that is proper. If laws and procedures were indeed broken, appropriate sanctions must be applied. And if there are foreign powers or criminal elements influencing government offices and public officials, they must be dealt with immediately and vigorously.
Finally, the President should consider using backchannels to soothe the feelings of Taipei. Sending an emissary from the President is a public act that may invite a protest from Beijing.
The Philippines needs to be careful, because it inadvertently walked into a minefield. The safest way out requires careful thought and deliberate moves.
Short URL: http://www.manilatimes.net/?p=2131
Saturday, 12 February 2011
Government needs to do homework on foreign policy
MANILA, Philippines – Commercial activity and rapid real estate development are running close on the heels of the South Luzon Expressway (SLEx) upgrading. Some 7000 hectares are now under development, including a new metropolis within the Laguna-Batangas corridor. LiMA Technology Center (LTC), a township project astride the boundary of Lipa City and Malvar, is already showcasing the early benefits of public-private-partnership (PPP) in the SLEx road network.
LTC covers 7,000 hectares divided into an export processing zone, a general trade zone, residential, commercial and leisure areas. Its large locators are undergoing sizeable widening of their facilities to accommodate expanding operations.
Kahn Sato, vice president for marketing of LiMA Land, reports that 30 days after the opening of the SLEx extension to STAR Tollway in Sto. Tomas, Batangas, they have cut travel time from Batangas to Manila by half an hour, and are saving on fuel cost as well.
“It used to take us 90 minutes from Manila to the LiMA Technology Center in Batangas. But with the upgrading of SLEx, this has been reduced to just one hour,” said a smiling Mr. Sato. “Our locators make faster turn-around and, of course, get bigger efficiency in their fuel consumption.”
Aside from the obvious savings, improved transport has also reduced the decades-long threat of missed shipping deadlines due to traffic congestion. Part of the risks taken by exporters are paying stiff penalties for delayed deliveries and having to air-freight the cargo at nearly triple the shipping cost.
LTC is home to multinational companies, among them Epson, Yamaha and LittelFuse. About 9,700 workers are employed by firms within LTC.
Still, Sato expects more development within LTC since the SLEx rehabilitation and link to STAR, which was pre-conditions of potential locators, is now fully operational.
He also anticipates a more vigorous tourism industry in Southern Luzon. “Countries like Thailand made tourism a huge source of revenue,” he said, emphasizing that “…one of the keys is those countries developed their infrastructure by building modern airports, ports and roads.”
Studies prove Sato right. Of 134 countries surveyed, the Philippines placed 118th in infrastructure development.
And private sector partnership was recognized as the main catalyst for government to improve in this crucial sector.
Other ecozone locators note that since the formerly 4-lane SLEx was widened to 8 lanes, cargo-carrying trucks and haulers plying the 36 kilometers from Sto. Tomas to Alabang are much safer even at night.
“Well SLEx is lighted now,” explained SLTC spokesperson Alma Tuason, adding it’s the first time in 30 years. “There are also 82 video cameras watching every inch of the expressway. Traffic controllers can dispatch emergency response units to any motorist in distress even before he calls.”
She said the travel time will be shortened even further when the on-going Skyway flyover construction is completed and Skyway’s ground level road is restored to its original width.
“Traffic builds up when vehicles from our 4 northbound lanes start funneling through the currently narrowed lanes beyond our boundary in Alabang Viaduct,” Tuason said. “This should be relieved soon since the Skyway construction may finish ahead of schedule.”
Sato, who in June 2010, urged then President Gloria Arroyo to open the SLEx extension to traffic on the day it was completed, now appeals to government to open the Batangas port as an alternative to the ports of Manila.
Cargo haulers agree with him that it is easier to go through SLEx to the Batangas port than through city traffic to and from the Manila port areas.
Friday, 11 February 2011
by Jeremiah F. de Guzman
Australian budget carrier Jetstar Airways will transfer over 400 airline jobs to the Philippines and plans to launch flights to popular local tourist spots such as Boracay and Cebu.
“The Philippines is a strong Asian market. Traffic is high due to Filipino workers outside the country,” Jetstar Group chief executive Bruce Buchanan told reporters in an interview Wednesday.
“We are always up for more space in the market place, maybe 5 to 10 percent. We are always looking for opportunities to boot up network presence in the market,” he said. “We are growing in excess of 200 percent in revenues from [flights originating in] the Philippines for the last 12 months. A sign of how popular the services are,” Buchanan said.
He said the government’s plan to endorse an open skies policy and efforts to privatize airports drove the carrier to expand its operations in the country.
“I think that is going to be very beneficial to the tourism in the Philippines and for the whole economy. As the market liberalizes, more competition will come in the marketplace,” Buchanan said.
He said Jetstar was considering flights to airports outside Manila, specially Caticlan Airport in Aklan and Mactan Airport in Cebu.
“Most are very excited about Caticlan because part of the airport is being upgraded to be of full service in the next few years. Cebu is also quite attractive due to a number of tourist destinations in the area,” Buchanan said. “We are very positive and supportive on government’s deregulation and privatization plans.”
Meanwhile, Buchanan said over 400 airline jobs would be brought to the Philippines, consisting mainly of call center and technical tasks from Australia.
Blunder over Taiwan
FROM the beginning, the Aquino government has shown an ineptitude at diplomacy despite retaining the services of a Foreign Affairs secretary with more than six years of experience. People may have forgotten, for example, about the embarrassment over the President’s premature plan to visit Indonesia in September, or perhaps even the poor etiquette of a member of the President’s party who griped about the wine and men in Vietnam on Twitter while attending Asean functions. Many more likely remember the hostage-taking fiasco that strained Philippine relations with Hong Kong and China that still influences the behavior of Filipino officials today.
The latest blunder has Taiwan seething. The Immigration bureau deported 14 Taiwan Chinese nationals to the People’s Republic of China. Reacting to the deportation, the government in Taipei issued a formal protest, recalled its representative in Manila, and revoked the visa-free entry privilege to Taiwan for Filipinos.
It gets worse. An official of the Manila Economic and Cultural Office (MECO) confirmed during a radio interview on Thursday that the Taiwanese government would retaliate against Filipino workers. Documents of Filipinos that normally took Taiwan about two weeks to process may now take up to four months, he told Joe Taruc on dzRH. The Philippine economy is kept afloat by remittances from overseas Filipino workers, or OFWs, who are predicted to send home some $20 billion to their families in the Philippines this year. About 90,000 Filipinos work in Taiwan, including the undocumented OFWs, according to the MECO official.
Besides hosting Filipino workers, Taiwan is also a major source of foreign investments in the Philippines. And Taiwan conducts humanitarian and civic missions here, as well as scholarship grants to Filipinos to study there. It’s unclear whether these programs, too, will be affected by the deportation of the Taiwanese, although prudence demands consideration of all possibilities no matter how remote.
The Palace should not underestimate the gravity of the situation. In the eyes of Taiwan, the Philippines has unwittingly intervened in the sensitive cross-straits affairs by deporting the Taiwanese to archrival China. To date, it still considers Taiwan a renegade province. But it doesn’t serve Philippine interests to take sides.
Very significant is that the deportation may have repercussions on Taiwan’s domestic politics, because the issue is reportedly being used by the Taiwanese opposition to attack the ability of President Ma Ying-jeou’s government to protect its citizens. President Ma is up for reelection next year.
Options for the President
Taiwan’s representative in Manila, Donald Lee, demanded that the Philippines apologize to Taiwan. The Palace should weigh that heavily, hopefully with advice from experts at the Department of Foreign Affairs.
More importantly, we urge the President to look into the deportation case, and declare that he will not tolerate shenanigans at the Bureau of Immigration or elsewhere in government against foreigners, whether they are from Taiwan or someplace else. Looking into Mr. Lee’s allegations that Philippine laws and human rights were violated has nothing to do with the One China Policy.
The authorities should investigate why the Taiwanese were allegedly detained illegally. They, along with 10 Chinese from the mainland, were arrested by officers of the National Bureau of Investigation (NBI) on December 27, 2010, but the cases against them were not filed until January 4 and 5, 2011—after the Taiwan Economic and Cultural Office (TECO) wrote to complain about the detention.
Also, there ought to be a probe into the undue haste by the Immigration bureau and the lack of due process. According to TECO, the Taiwanese and Chinese were flown to China on February 2, 2011, in spite of a writ of habeas corpus issued by the Court of Appeals on January 31, 2011 that orders the NBI, the Immigration bureau and the Department of Justice to bring the detainees to a hearing on February 2nd. And the prosecutors had even scheduled a hearing on February 8 and 10, 2011.
The Immigration bureau instead held a hearing on February 1, 2011, but TECO claimed it was not informed. And when the 14 Taiwanese were about to be flown out, Mr. Lee said that he rushed to the airport with a copy of writ of habeas corpus to halt the deportation, but he was stopped by the authorities there.
Finally, the Palace should look into why the Taiwanese were classified as undocumented aliens. TECO alleges that their passports were confiscated by the NBI. Plus, TECO had contacted them several times about the 14 Taiwanese. If there was still doubt about nationality, the authorities could have asked MECO if it issued visas to the 14 detained. In sending the Taiwanese to China, Mr. Lee points out correctly that the Philippines violated its own immigration laws.
One China Policy
On a related matter, we urge Foreign Affairs Sec. Alberto Romulo to send someone to explain the One China Policy to the President and his spokesmen. They appear ignorant in invoking that policy with regard to this deportation scandal.
Officially, we have no diplomatic ties with Taiwan. But economic and geopolitical concerns make it essential for us to have strong “economic and cultural relations” with the government of that friend and neighbor. In a polite rebuke, Mr. Lee pointed out some truths. When Filipinos apply for a visa to work in Taiwan, they do so at TECO, not at the Chinese embassy in Manila. And when the Filipinos workers are paid for their labor, they receive Taiwanese dollars, not renminbi, the currency of the mainland.
Taiwan has a point that at issue here is not the One China Policy. The issue is whether Philippine laws and procedures were broken by Filipino authorities. And a related issue is the authority of a writ of habeas corpus issued by Court of Appeals, as well as the authority of prosecutors who have yet to complete their procedures in this case. It is unfortunate that because foreigners were involved, the Filipino people, particularly the innocent and hardworking OFWs in Taiwan, are the ones that end up suffering the consequences.
Short URL: http://www.manilatimes.net/?p=1897
JENNIFER A. NG
MERCHANDISE exports for the whole of 2010 breached the $50-billion mark on the back of the 40.11-percent increase in the shipments of electronic products, rising 33.7 percent to $51.39 billion, from $38.43 billion in 2009, the National Statistics Office (NSO) said on Thursday. This exceeded the government target of increasing shipments 15 percent.
The contributions of electronic products to the total merchandise exports were $31.07 billion, or 40.11 percent higher in 2009. Other top performers in 2010 were articles of clothing and apparel, coconut oil, woodcraft and furniture, and metal components.
Articles of clothing apparel went up 11.57 percent to $1.7 billion, while receipts from coconut oil were up 112 percent to $1.26 billion.
“If you will factor in the revenues generated from the services sector or those from the business-process outsourcing sector, total exports would be higher. We estimate that revenues from the services sector reached $8 billion in 2010,” said Philippine Exporters Confederation Inc. president Sergio Ortiz-Luis in a telephone
He said the last time the country’s total merchandise exports breached the $50-billion mark, also on the back of the strong performance of electronic products, was in 2007, just before the financial crisis hit major markets for Philippine-made products.
University of the Philippines economist Benjamin Diokno said, however, that while merchandise export performance exceeded expectations, it is unlikely such will be repeated in 2011. “We’re not yet out of the deep hole. For one, our trading partners are currently in what you call fiscal austerity mode.”
At best, he added, merchandise exports for 2011 will post a 10-percent increase.
For the whole of 2010, the top three destinations for Philippine-made products were Japan, the United States and Singapore. Japan was the top buyer purchasing almost $7.8 billion.
What a fine mess; $1-B penalty seen
BUTCH DEL CASTILLO
I was both surprised and amused to learn that the Aquino administration is in the midst of efforts to draft a proposed accord with Belgium on a variety of issues, including a common stand on international questions before the United Nations and other international bodies.
Apparently, such an accord—if it can be struck at all, which I seriously doubt—is intended to ensure smoother bilateral ties between the Philippines and Belgium.
I am afraid, however, that before the Philippines can even begin to dream of having smooth bilateral ties with that country, it must first iron out a diplomatic wrinkle it had unwittingly created. That wrinkle, sad to say, came about when the Aquino administration unilaterally, unceremoniously, and unjustifiably refused to honor the perfectly valid P18.7-billion Laguna de Bay rehabilitation contract with a Belgian dredging company, the Baggerwerken Decloedt En Zoon (BDC).
(It was the BDC that volunteered to undertake the lake’s rehabilitation with no other purpose than to make the 94,900-hectare lake a showcase of what its technology can do to clean up similar water bodies rendered useless by pollution. Its unsolicited proposal, which it submitted to the Arroyo administration after completing exhaustive hydrological and environmental studies, enjoyed the full backing of the Belgian government. Thus, the funding of the project was never a problem, having been made under an official development assistance program, or ODA.)
In fact, the Belgian foreign ministry has already formally advised Foreign Secretary Alberto Romulo that it wants to see a satisfactory resolution to the problems created by the whimsical cancellation of that contract. And now, with that issue still in the way, the Philippines has the gumption to expect Belgium to pretend that everything’s just fine and dandy?
For some reason, however, the Department of Foreign Affairs (DFA) says the proposed accord—actually a Joint Plan of Action, or JPA, would be signed as schedule in Brussels on February 23. The expected signatories are Romulo and Belgian Foreign Minister Steven Vanackere. Presumably, the JPA would be the basis for further talks to cover trade and investments, the repatriation of convicted persons and greater collaboration on other matters of mutual interest to Brussels and Manila.
I just don’t know where the DFA is getting all that optimism. What could be of mutual benefit to both countries at this juncture than the reactivation of the canceled LLRP contract?
Belgium happens to be the Philippines’s 18th-biggest trading partner with the latest trade figure at $639.8 million. About two decades ago, Manila signed an investment treaty with the Belgo-Luxembourg Economic Union. This stimulated the entry into the Philippines of private companies from Belgium and Luxembourg. One of those companies was the BDC, whose dredging expertise had long ago protected Belgium (situated below sea level) from being swallowed up by the sea. Soon its fame spread throughout the world. Its services have since been tapped for various mammoth dredging jobs in Hong Kong, South Korea, China and other Asian countries.
The BDC has been known to bring back to life water bodies and waterways that had long been pronounced ecologically “dead.” In the Philippines, the BDC made short work of the dredging of the Pasig River. It completed the job two months ahead of schedule to the delight of the Pasig River Rehabilitation Commission (PRRC), including no less than its head, Gina Lopez, an environmentalist whose chief advocacy is the restoration of the integrity of Metro Manila’s esteros.
And so you can imagine the stunned reaction of the Belgian government when President Aquino announced the scrapping of the LLRP contract of the BDC. I am told that the announced cancellation immediately gave rise to speculations in Brussels that some other business group—most probably from China—had wormed itself into the good graces of the newly installed President. There were other, nastier, speculations. One of them even linked the cancellation to a hefty campaign contribution that was allegedly arranged by a member of Aquino’s campaign team. But that’s neither here nor there.
Right now, as I said, there is no reason to be optimistic in expecting the outcome of the scheduled signing of the JPA in Brussels on February 23.
For a clearer understanding of what the country is up against, it should be pointed out that Belgium is the current president of the European Union, which counts among its members 27 European countries. Needless to say, it has a big say on whether the EU should continue to support development projects in the Philippines.
The Fraport fiasco has already resulted in a substantial reduction in German assistance to the Philippines. The unjustified cancellation of the BDC contract, for all we know, has already damaged whatever remains of the goodwill coming from that continent. That’s very sad, considering that Finance Secretary Cesar V. Purisima had mentioned Europe as one of the expected major investment sources for the administration’s ballyhooed public-private partnership (PPP) program. (Now you don’t hear him mentioning Europe among the scheduled destinations of a “road show” he would lead around the world. He did mention Japan in his latest pronouncements, but Tokyo, I’m afraid, had long committed to invest in the Philippines.)
To its credit, however, the Aquino administration now seems to have embarked on a damage-control offensive to assuage the hurt it caused on the Belgian government and the BDC. There was a meeting that took place the two Fridays ago, but the outcome of that meeting was not less than “bloody,” according to my sources.
How could it be anything less? Consider the fact that the President wants the BDC service contract scrapped “without penalties,” as what Purisima had been promising to his colleagues in the Cabinet.
Problem is Aquino actually believes it can be done. Already, the BNP-Paribas, which owns the Fortis Bank, the bank that secured a concessional yen-denominated loan to fund the lake-rehab project, has rejected the preposterous idea. The bank had expected a drawdown from the loan in the first quarter of the year pursuant to the terms of the loan contract.
Purisima actually wants the loan contract canceled, but BNP-Paribas insists he has to scrap the service contract first before the bank even begins to consider his outrageous proposal. Purisima should have known better. Of all people, he very well knows that banks go strictly by the book, and the rules say one must pay a penalty in the form of commitment fees for not using an approved loan. The latest figure is that the commitment fee has gone up to over P60 million for our failure to draw from the loan proceeds.
And what is the BDC’s position on the service contract? It stands firm on the contention that scrapping it is out of the question. It believes the contract is binding and must be enforced.
This, of course, has complicated the issue in more ways than one. It places the Philippine government in a sort of stalemate that only an international arbitration court can resolve.
Thus, unless the Aquino administration reconsiders its position, the Philippines might end up paying penalties to the aggrieved parties (the BDC, BNP-Paribas) of up to $1 billion. The amount would cover not only the P400 million already spent by the BDC in the Philippines for the preliminary studies and equipment mobilization, the bank penalties, plus the unquantifiable damage to the BDC’s international reputation.
What a fine mess we’re in! Meanwhile, Laguna de Bay languishes untended. It continues to die a little every day, with no hope of ever being resuscitated as devoutly wished by the millions of families around the lake.
THE BUSINESS MIRROR
A FINE royal mess, indeed. This best describes the current imbroglio sparked by the Philippine government’s hasty deportation, over Taipei’s objections, of 14 Taiwanese fraud suspects to Beijing to face trial, along with 10 others, for involvement in an international scam.
As Thursday’s main story in this paper said, the fallout continues, even after the recall by Taipei of its special representative (or de facto ambassador) to Manila, Donald Lee. The Taiwanese authorities have imposed a virtual hiring freeze on Filipino workers by extending from just 12 days to four months the processing for any new hires; signaled a tighter watch on the nearly 80,000 Filipino workers in Taiwan, and sent word that investments are being reviewed.
So what? Some quarters may ask; the Taiwanese suspects are part of a global ring that China wants to try and punish, along with 10 mainland Chinese, so let justice take its course. After all, Manila observes a “One China” policy. Yet the reality on the ground is that, despite this policy, the Philippines and Taiwan have observed robust economic and cultural ties for many decades, and the benefits to both sides have been substantial. It’s not as if such goodwill, anchored on years of mutual gain, can be so quickly brushed aside for geopolitics.
What complicates the situation, though, are the unfortunate details that indicate Manila rushed—or was pressured into rushing action by aggressive Beijing officials—in disposing of the Taiwanese suspects, even though it could have, or should have, waited awhile.
The latest complicating detail surfaced on Thursday, when the Court of Appeals demanded an explanation from the Bureau of Immigration (BI) for the hasty deportation, despite the earlier issuance of a writ of habeas corpus directing the BI to produce six of the 14 Taiwanese before it. Instead of complying with the writ, it now appears Philippine authorities hastily deported the Taiwanese, in a chartered flight from the mainland that flew in and bundled them off on February 2.
There is also the problem with supposedly confusing documentation of the suspects. Malacañang officials, citing the BI, earlier said the 14 suspects kept saying they were from Taiwan, not the mainland, but could not produce documents to that effect. Yet the de facto embassy here, the Taiwan Economic and Cultural Office (Teco), said documentation was available and, at the very least, Manila should have believed its own people at the Manila Economic and Cultural Office (Meco), the Teco’s counterpart.
Reference was made to a cross-straits agreement between Taipei and Beijing, which Philippine officials said made it incumbent upon the two Chinese sides to settle the matter between themselves, without dragging Manila. Yet by its hasty act of deportation, Manila put itself in a position where it virtually decided the matter in Beijing’s favor, on the basis of its interpretation of the One-China policy, and put itself at the receiving end of Taipei’s anger. Why couldn’t have Philippine authorities compelled the two sides to settle the tug-of-war over the suspects first, and imposed a deadline for them to do so—or it would release the suspects to their lawyer, and no one will have a case. This last gambit was floated by former Makati Congressman Teodoro Locsin Jr. in dwIZ’s top-rated Karambola morning show on Thursday, after it surfaced that in a previous case involving Chinese suspects, the latter were released on recognizance to their Filipino lawyer, and later vanished.
Yes, some Executive and congressional officials may prefer to talk tough now and say they can’t be threatened by Taiwan, but that’s easier said than done. After ignoring Beijing’s and Hong Kong’s sensibilities at the height of the August 23 hostage crisis that killed eight Hong Kong tourists, Philippine officials have swung to the other extreme of the pendulum and, in abject obeisance to the mainland, now allowed itself to be stampeded into a move that not only alienated a long-time ally, but also flouted a Philippine court’s order. As antihuman-trafficking activist Susan “Toots” Ople put it, Filipino officials could have minimized the damage by doing more quietly and talking less.
The irony of it all: as in the bus- hostage crisis in August last year, the overseas Filipino workers—whether in Hong Kong or Taiwan—are paying the price for official bungling. What a mess.
Thursday, 10 February 2011
South China Morning Post
The diplomatic debacle over the killing of Hong Kong tourists by a gunman in Manila six months ago should have been an epiphany for Philippine President Benigno Aquino. His decision to put protocol ahead of common sense by communicating first and foremost with Beijing drove ties with our city to all-time lows. But that lesson does not seem to have sunk in, as the handling of the deporting of 14 Taiwanese suspected criminals to the mainland demonstrates. From a politically correct viewpoint, it would seem sensible, but in the cold light of reality it is a poor substitute for doing what is right.
OUTSIDE THE BOX
‘Trust is the oil in the engine of capitalism; without it, the engine seizes up. Confidence is like the gasoline; without it, the machine won’t move.”
Trust is the belief that a person or other entity has integrity. That is, that their word is good. They will do what they say.
Confidence is the belief that the person or entity will be consistent and reliable over time in doing all that they can to maintain the trust that you have placed in them.
The most common public perception of “trust” in the Philippines is found in the frequent surveys, which ask respondents if they trust a particular political leader or institution. These are often headlined as “approval” ratings, but that is not accurate. Probably we all have a friend whom we approve of, but who deserves so little trust that we would never lend him/her money, expecting not to be paid back.
While we expect that public officials maintain their integrity to the job they hold by not being corrupt, the truth is that these officials can still be corrupt and also be “trustworthy.” Simon Cameron, US financier and politician, said in the late-1800s, “An honest politician is one who, when he is bought, will stay bought.”
We hold trust and confidence in many other institutions far removed from the government. We trust that the cashier at the department store is going to charge us the right price for the goods we buy and we continue going back to that store because we have confidence that our trust will be continuously fulfilled
Economies move up and down, in large measure, based on trust and confidence in that trust. A major factor in the global meltdown these last years was that people lost trust and confidence in their governments. When the problems first surfaced in 2007, governments responded with the typical, “we’ve got it under control” and “we’re going to fix it” assurances. Both were lies. And once trust and confidence are broken, it takes time to restore them.
Trust eroded much farther in 2008 and 2009, when US government action—the trillions of dollars of bailouts—failed to produce positive results. Combined with the US government’s continuously providing absolutely false and made-up economic numbers about a recovery, trust was at virtually zero. However, confidence was high; Americans firmly believe that the government will continue to lie about the economy.
Note the major bull market in gold over the last two years as trust and confidence in that trust of governments had deteriorated. Gold has always been a store of value when people do not trust the political stability of governments or believe in a better economic future.
So why then do the US stock markets continue to go higher and higher? Federal Reserve Chairman Ben Bernanke may be the most “trusted” man in the world.
Bernanke has made it clear over these past two years that 1) the government will provide an unlimited amount of money to “bail out” the banks; 2) that the Fed will continue to print money and loan to the US government in whatever amounts necessary; and 3) that this policy will continue forever, if he thinks necessary.
An interesting financial-market phenomenon occurred that little has been said about. Bernanke has lowered interest rates to almost nothing. The result has been that financially sound companies were able over the last two years to borrow cheap money to keep them in business.
Companies that were on the verge of bankruptcy were also able to borrow because of the situation. These companies issued high interest rate, “junk bonds.” Investors were willing to buy this “junk” because of the high return and because Bernanke has indicated that he will not let these companies fail. Hundreds of thousands of small businesses in the US have closed shop because they do not have access to the capital markets and banks are not lending. But the thousands of publicly listed companies are kept afloat through government policy. And because they are still alive, stock prices have boomed in the last six months.
Add the fake economic numbers as a justification for higher stock prices, and you have a rising stock market.
Now, if trust and confidence that the trust that you place will be rewarded over the longer term is important for stock prices, do we dare ask why the Philippine Stock Exchange is currently struggling?
Positive and increasingly better corporate results are almost taken for granted. With only a few exceptions, listed companies have experienced great financial results over the last two years. Stock prices have both predicted and reflected those results. There is no reason to believe that the next 12 months will hold any negative surprises for our local companies. Expansion and development plans continue, and the amount of money allocated to these ventures is growing. The bottom-line profit results will continue to be very favorable for stocks prices.
It might be easy to say that stock prices have gotten ahead of corporate results, but that is not accurate either. PLDT and Megaworld, for example, are both selling at a PER of less than 12. Because of some unique situations like Meralco’s PER of 40+, the overall exchange is selling at 16 times earnings but that is acceptable.
The stock market looks like it wants to fall another 275 points before a bottom is found. That would be about a 20-percent drop from the higher; perfectly acceptable in technical terms. However, the timing is suspect in that it is too soon after the high, reached only in November 2010.
Perhaps, it is trust and confidence in government, as embodied in the President? While the President still commands a very favorable “approval/trust” rating, maybe there is a growing lack of confidence for the future. So growing a sense of caution or hesitation in the President could be reflected in our stock exchange. The next weeks of trading activity will be very interesting as we get nearer to 3,600 on the index.
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Wednesday, 9 February 2011
Competition from neighbors expected to rise
By Paolo Montecillo
Philippine Daily Inquirer
MANILA, Philippines—Business process outsourcing (BPO) companies operating in the Philippines will have to innovate and start offering higher-value services to clients if the country is to be able to maximize the industry’s potential for growth in the next five years.
Maulik Parekh, president and CEO of SPi Global, said that despite the impressive performance of the offshoring and outsourcing industry in the Philippines, “BPO companies should not be complacent.”
SPi Global is the biggest Filipino-owned BPO company employing 11,000 people in the country.
Speaking to industry executives at the recent Asia CEO Forum, Parekh said companies should be able to create value for their clients, nurture their leaders to their full potential and take advantage of the opportunity to employ many good employees because BPO is a people-intensive business.
“The Philippine offshore market size is expected to triple by 2016 with revenues growing from $9 billion to $25 billion. Globally, the revenues in the BPO sector may reach $124 billion in 2016, up from the $45 billion recorded in 2010,” Parekh said.
But with competition growing, especially from neighbors in the region such as Malaysia and Vietnam, companies must be able to differentiate themselves and be able to offer services with increasing value for their clients.
“One of the trends that we should all watch out for is the shift in the level of business that’s generated from voice to nonvoice. In 2016, the nonvoice sector is expected to grow to 58 percent from 2010’s 43 percent. Nonvoice is the future,” Parekh said.
For its part, Parekh said SPi was poised for the “next generation” in BPO.
Maulik said one of the firm’s recent major initiatives was the establishment of a so-called SPi Healthcare Academy, which aims to train workers to fill a gap in the industry that has yet to be fully tapped.
“Knowing the huge potential of healthcare information management in the major markets and aware that the Philippines can play a key role in the sector, the academy aims to develop the required talent that can prepare Filipinos in the healthcare industry for high-value work,” Parekh said.
He said other companies need to consider similar initiatives that would help the industry grow to the benefit of all firms that would compete against one another.
“I really believe that if a company creates a more people-centric culture and create an environment that is sticky to the people, we won’t have to worry about trying to bring in 100,000 people incrementally into the system every year,” he said.
SPi is a unit of Philippine Long Distance Telephone Co. (PLDT) through wholly owned unit ePLDT Inc.
Tuesday, 8 February 2011
by Roderick T. dela Cruz
Bangko Sentral on Monday said its gross international reserves climbed further to a new record of $63.608 billion at the end of January, led by inflows from the peso-denominated global bonds issued by the government last month.
The January figure was up by $1.237 billion, or 2 percent, from the end-December level of $62.371 billion last year. The reserves rose $18 billion, or 39.5 percent, from $45.592 billion year-on-year.
The forex reserves over the past decade, grew fourfold from just $15.7 billion in 2001, as the economy began to record strong balance of payments surpluses.
At $63.6 billion, the foreign exchange reserves were more than enough to cover the country’s external debt estimated at $59.8 billion as of end-September 2010.
The government raised $1.25 billion from a 25-year global peso bond float in the first week of January to help plug the fiscal deficit.
“Foreign exchange inflows coming from the foreign currency deposits by the national government of proceeds from its peso-denominated global bonds issuance maturing in 2036, as well as the foreign exchange operations and income from investments abroad of Bangko Sentral, contributed to the appreciable increase in the reserves level,” Bangko Sentral Governor Amando Tetangco Jr. said.
The inflows were partially offset by payments for maturing foreign debt of the national government and revaluation losses on Bangko Sentral’s gold holdings, given the drop in gold prices in the international market.
Tetangco earlier said the bank was looking at a GIR level of $63 billion to $64 billion in 2011, although this figure is likely to be exceeded given the pace of foreign exchange inflows into the country.
Economists said the Bangko Sentral’s intervention in the foreign exchange market to temper the appreciation of the peso against the US dollar had been supporting the increase in the foreign exchange reserves.
The peso appreciated 5.4 percent against the US dollar in 2010, and continued this trend this year. On Monday, the peso closed at 43.63 against the greenback, up by P0.10 from the Friday’s close of P43.77 per dollar.
OUTSIDE THE BOX
The topic of the month for February appears to be food prices and “food inflation.” Expect to see countless “gloom-and-doom” articles about this subject.
There is no question that global food prices are out of control, particularly in certain countries. India is in a crisis, with food-cost increases averaging an annual upsurge of 15 percent for the last two years. Note something, though. Food prices in India have been going up at this phenomenal rate for the past two years. This is not a current event.
The United Nations Food and Agriculture Organization says its Food Price Index averaged 231 points, the highest level since they began measuring prices in 1990. Further, wheat prices rose 47 percent last year, corn more than 50 percent and US soybeans 34 percent. The CRB (Commodity Research Bureau) food index is up an incredible 36 percent over last year. The price of sugar is at a 37-year high. I was a bit shocked to see local red onions selling at nearly P200 a kilo this past weekend at Shopwise.
There are two basic reasons for this current global spike in food costs —bad weather and bad government policy. Poor weather is in the hands of God, but bad policy is a man-made disaster.
From the American Thinker: “In 2010, the United States produced 13.1 billion bushels of corn. Of that amount, 4.2 billion bushels went into ethanol [33 percent of total production]. That represents for 2011, a year in which global stocks are down nearly 8 percent, over 14 percent of all corn grown in the world being used in the most inefficient manner possible—being put into American gas tanks.” In other words, the global corn shortage of 8 percent could be more than wiped out if the wacko environmentalists had not pushed to turn 14 percent of global corn production into fuel for American cars. Without the implementation of this stupid policy, corn prices would not be up 50 percent.
However, (and there is always a “however”), in spite of all the worried prognostications, the current situation is not as serious as in 2008. Again from the American Thinker: “Jonathan Anderson, who covers emerging markets for UBS, said global-food price indexes would have to rise another 50 percent to deliver the same inflation impact as three years ago.”
That is why even with P200-a-kilo onions, the recent Philippine inflation numbers are still within estimates and manageable. Further, weather-induced supply shortages are not systemic and, therefore, not serious in the longer term. “While weather shocks are disrupting food supplies, there has been no repeat of the leap in energy and fertilizer prices or of the accompanying hoarding seen in 2008, Anderson said.”
When you look behind the press- release inflation numbers, what you find is that it is fuel costs that pull all other prices higher. The government lumps fuel, lights and water in a single index component. But fuel costs are a substantial factor in the cost of electricity and water. Fuel may not be the largest element in the pricing of food. But it is the most important, as it effects most critically the cost of transportation of fertilizer, etc., to grow the crops and the cost to bring foodstuffs to the market.
Lower the cost of fuel, and you will lower the cost of food. It is a simple equation.
Food self-sufficiency is an altogether other issue. The fact is that the Philippines is not going to be able to reach this objective in the foreseeable future. It is an unrealistic goal.
What needs to be done is to maximize the agricultural resources we have. By that, I mean to capitalize on where we can get the greatest financial return in order to be able to afford to fill the gaps in the Philippine food production. From Radio Australia news: “Cyclone Yasi in Australia’s tropical north has made things worse. With much of the sugar and banana crops destroyed, prices for both commodities—domestically and for any exports—are set to soar. ‘A box of 12 kilo, we were paying $28 on Wednesday, yesterday we pay $65,’ he said on Friday. But it is good news for some. Philippines banana growers are hoping to cash in with renewed efforts to export their fruit to Australia. Yet despite the severe shortage, Australian Banana Growers Association president Cameron Mackay does not welcome that prospect. He says quarantine restrictions should continue to apply. Them coming in would jeopardize our industry completely, you know. They’ve got pests and diseases over there we don’t have that would absolutely annihilate our industry, make a cyclone look like nothing.”
The Philippines produces 7.5 million tons of bananas each year, mostly in Mindanao. Australia grows 270,000 tons and the Australian market could be worth $50 million to the Philippines. The Philippine government should be making this a top agricultural priority. It is not. Recently I spoke to a large banana exporter in Davao who has thousands of hectares under production. Ecuador can ship bananas more cheaply to Japan than the Philippines. Crop yields are about the same, but production costs are higher here.
The Philippine government has never been able to formulate a viable, creative and practical agricultural policy meant to increase efficiency and increased production. The so-called “agrarian reform” is a political/social policy not an agricultural policy. And it has not worked even to meet its political agenda.
Food-cost inflation is not a critical issue to the Philippines. A stagnant, regressive and politicized agricultural policy is the only issue that is important.
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Sunday, 6 February 2011
by Jeremiah F. de Guzman
The Transport Department said Friday local airlines should expect the entry of Australia-based Jetstar Airways in the Philippines by the end of 2011.
“[Jetstar] made a courtesy call this week. Their plans are very similar to the proposal of Air Asia,” Transport Undersecretary Glicerio Sicat told Manila Standard in a text message. “Most probably, it will be by end of 2011.”
Malaysia-based Air Asia International Ltd. formed local unit Air Asia Philippines last year and will start mounting regional flights on Sept. 1.
Air Asia owns 40 percent of the local unit while Filipino businessmen Antonio Cojuangco, Marianne Hontiveros and Michael Romero hold a combined 60 percent.
Transport Secretary Jose de Jesus said in a separate phone interview that Jetstar executives disclosed during the courtesy call that the airline was in talks with local companies for an airline venture.
“They said they are in talks with local companies but I cannot name them,” De Jesus said.
“According to them, they want to mount international flights from the Philippines. They also plan to go domestic, if [the unit is] incorporated,” he added.
De Jesus said the entry of another airline in the local aviation industry was a welcome move because cheaper air fares would encourage travel within the country and boost tourism.
“This is a free enterprise. More competition, the better,” he said.
A source earlier confirmed that Jetstar was in talks with San Miguel Corp. for its planned local unit in the country. The source said there was nothing definite yet on the planned partnership.
Jetstar earlier disclosed that a tri-weekly direct Manila-Darwin service will start on Feb. 9 as part of the airline’s increasingly integrated pan Asian network.
The service, which will use Airbus 320, will link Jetstar’s Darwin hub to key southern interstate markets, including Sydney, Melbourne and Cairns.
Jetstar’s Singapore unit is also mounting flights between Manila and Singapore.
The International Air Transport Association said passenger volume of airlines in the Asia-Pacific region grew 9 percent in 2010, ahead of the global expansion of 8.2 percent.
IATA said passenger demand growth slowed to 2.9 percent in December last year. The group said the economies of China and India continued to lead the region’s recovery.