Posts Tagged ‘Joko Widodo’

Anti-Communist Mob Attacks Indonesia Meeting, 22 Arrested

September 18, 2017

JAKARTA, Indonesia — A mob opposed to public discussion of Indonesia’s 1965 massacre of communists tried to force its way into a Jakarta building where they believed communists were meeting, injuring five policemen.

Jakarta police spokesman Argo Yuwono said 22 people were arrested early Monday for rioting and five officers were injured in the confrontation.

The melee came a day after police blockaded the building on Saturday to stop a public forum on the massacre, in which historians say half a million people were killed, from going ahead.

Bonnie Setiawan, an organizer of the forum, said about 200 people were trapped in the building, which is home to a legal aid institute, for hours on Sunday night while more than 1,000 people protested outside.

The protesters shouted that the people inside were members of the long-outlawed Indonesian Communist Party and threw rocks, breaking windows, he said.

Indonesia held a ground-breaking symposium on the massacre last year, breaking a half century of near silence on the issue, but the military, Islamic groups and senior figures in the government are opposed to unearthing the truth, saying it could revive communism.

The Indonesian Communist Party was the third largest in the world with an estimated 3 million members when an unsuccessful coup by pro-communist military officers in 1965 triggered a monthslong bloodletting by the army and Islamic groups that engulfed the country and ushered in the Suharto dictatorship.

Yuwono said police blockaded the forum on Saturday because organizers hadn’t requested permission for it.

Setiawan said police had violated the constitutional rights to freedom of association and assembly. The meeting on Sunday was intended as a discussion of challenges to democracy in Indonesia, he said.


Fake news about communism in Indonesia blamed for triggering riot in Jakarta

By Jewel Topsfield

Fake news about Indonesia’s omnipresent bogeyman – communism – has been blamed for riots in Central Jakarta that injured five police officers and damaged vehicles in the early hours of Monday morning.

Police were forced to fire tear gas and water cannons to disperse anti-communist protesters who began to pelt police with water bottles and stones and attempted to force their way into the offices of the Jakarta Legal Aid Institute.

A weekend seminar on the 1965 anti-communist purge – a dark chapter in Indonesia’s history that remains extremely sensitive today – had already been banned by police on the grounds the organisers had not applied for a permit.

But this did not stop crowds chanting “Crush the PKI” (the now defunct Indonesian communist party) and surrounding the institute building.

The Indonesian Legal Aid Institute claimed “clearly hoaxes or false news have been broadcast … with instructions for attacking (the institute) done systematically and extensively”.

It asserted false claims included that the planned historical seminar was a re-emergence of the PKI and participants intended to sing genjer-genjer, one of the most controversial songs in Indonesia.

Genjer-genjer, which was adopted as a protest song by the PKI, was banned under the Suharto regime, amid military claims that female communists had tortured six generals while singing the song.

“People said we are PKI – that’s the hoax,” Muhammad Isnur from the Indonesian Legal Aid Institute told Fairfax Media.

“They said PKI was holding an event. It’s not true. We wanted to hold an academic discussion about what happened in 1965.”

Police have arrested five people suspected of provoking the riots.

Jakarta police spokesman Argo Yuwono told Fairfax Media that police had informed the institute that the planned seminar could not go ahead because the organisers did not have a permit.

But Mr Isnur said the police were “just making it up”. “Why would we need a permit for an internal, closed door discussion in our own office? We hold discussions every day.”

The 1965 tragedy was triggered by the kidnapping and murder of several high-ranking army officers, which was blamed on the PKI.

Last month Indonesian authorities disbanded a workshop in East Java on the findings of an international tribunal into the 1965 massacre – also on the grounds organisers didn’t have a permit.

In 2015 the Ubud Writers Festival cancelled sessions discussing 1965 – the first act of censorship in the history of the popular international event.

Amnesty International issued a statement last month saying there had been at least 39 cases since 2015 where authorities disbanded events related to 1965.

“These actions are a clear violation of the rights to freedom of expression and peaceful assembly,” Amnesty said.

Asked if hoax news had inflamed tensions at the weekend, Mr Argo said: “Listen, if people get together to make speeches, discussion, dialogue, they must notify the police, this should be understood by people who work in the legal business.”

Fake news was a huge problem in Indonesia in the lead-up to the gubernatorial election in February, with much of it targeting the ethnicity of former Jakarta governor Basuki “Ahok” Tjahaja Purnama.

Hoax news included that Indonesia was being flooded by 10 million Chinese workers, that its new currency bore an image of the banned communist hammer and sickle, that Ahok’s free Human Papillomavirus vaccine program could make girls infertile and that China was waging biological warfare against Indonesia with contaminated chilli seeds.

Smear campaigns during the last presidential election also asserted President Joko Widodo was a Christian and communist.

“Don’t forget, negative (news), slander, reproaching each other, hoax and fake news are spreading in social media today. They also become our challenge in the future,” President Jokowi told a group of boys scouts in Central Java on Monday.

Last month police arrested three people accused of spreading hoaxes against President Jokowi and Ahok, among others, on a “news” website known as saracen, which allegedly charges clients to publish and spread fake news.

“There is clearly a growing industry around the production of disinformation (false information spread to deliberately deceive) in Indonesia and elsewhere around the world,” says Australian National University academic Ross Tapsell, an expert on social media in Indonesia.

“Of course, Indonesia has a long history of government and non-government anti-PKI propaganda designed to incite and enrage,” he said.

“So the material may not have changed, but the technology used to disseminate it is changing rapidly.”


Indonesia, Long on Sidelines, Starts to Confront China’s Territorial Claims

September 11, 2017

JAKARTA, Indonesia — When Indonesia recently — and quite publicly — renamed the northernmost waters of its exclusive economic zone in the South China Sea despite China’s claims to the area, Beijing quickly dismissed the move as “meaningless.”

It is proving to be anything but.

Indonesia’s increasingly aggressive posture in the region — including a military buildup in its nearby Natuna Islands and the planned deployment of naval warships — comes as other nations are being more accommodating to China’s broad territorial claims in the South China Sea.

The two countries had three maritime skirmishes in 2016 involving warning shots, including one in which Indonesian warships seized a Chinese fishing boat and its crew.

Indonesia is challenging China, one of its biggest investors and trading partners, as it seeks to assert control over a waterway that has abundant resources, particularly oil and natural gas reserves and fish stocks.

The pushback from Indonesia takes direct aim at Beijing’s claims within the so-called “nine-dash line,” which on Chinese maps delineates the vast area that China claims in the South China Sea. It also adds a new player to the volatile situation, in which the United States Navy has been challenging China’s claims with naval maneuvers through waters claimed by Beijing.


The coastline at Ranai, the administrative center of the Natuna islands. Credit Ulet Ifansasti/Getty Images

Indonesia “is already a party to the disputes — and the sooner it acknowledges this reality the better,” said Ian J. Storey, a senior fellow at the Institute of Southeast Asian Studies in Singapore, where he researches South China Sea issues.

The dispute largely centers on the Natuna Sea, a resource-rich waterway north of Indonesia that also lies close to Vietnam’s exclusive economic zone.

Before naming part of the contested waterway the North Natuna Sea “to make it sound more Indonesian,” Mr. Storey said, Indonesia last year began beefing up its military presence in the Natunas. That included expanding its naval port on the main island to handle bigger ships and lengthening the runway at its air force base there to accommodate larger aircraft.

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People take pictures of a burning ship as the government destroyed foreign boats that had been caught illegally fishing in Indonesia waters, at Morela village in Ambon island, April 2017. Indonesia destroyed 81 mostly foreign boats on the weekend that had been caught illegally fishing in its waters, taking to more than 300 the number sunk since President Joko Widodo launched a battle against the poaching of fish in 2014. Antara Foto/Izaac Mulyawan — Reuters photo

For decades, Indonesia’s official policy has been that it is not a party to any territorial disputes with China in the South China Sea, unlike its regional neighbors Brunei, Malaysia, the Philippines and Vietnam. Last year, however, Indonesia and China had the three maritime skirmishes within Indonesia’s 200-nautical-mile exclusive economic zone off its Natuna Islands, which lie northwest of Borneo.

After the third skirmish, in June 2016, China’s Ministry of Foreign Affairs issued a statement in which it claimed for the first time that its controversial nine-dash line included “traditional fishing grounds” within Indonesia’s exclusive economic zone.

The administration of the Indonesian president, Joko Widodo, whose top administrative priorities since taking office in October 2014 include transforming his country into a maritime power, has ordered the authorities to blow up hundreds of foreign fishing vessels seized while illegally fishing in Indonesian waters.

Mr. Joko, during a visit to Japan in 2015, said in a newspaper interview that China’s nine-dash line had no basis in international law. (See map below) . He also chaired a cabinet meeting on a warship off the Natunas just days after last year’s third naval skirmish — a move analysts viewed as a show of resolve to Beijing.

On July 14, Indonesia’s Ministry of Maritime Affairs and Fisheries held a conspicuously high-profile news conference to release its first national territorial map since 2005, including the unveiling of the newly named North Natuna Sea. The new map also included new maritime boundaries with Singapore and the Philippines, with which Indonesia had concluded agreements in 2015.

Arif Havas Oegroseno, a deputy minister at Indonesia’s Coordinating Ministry of Maritime Affairs, told journalists that the new Indonesian map offered “clarity on natural resources exploration areas.”

That same day, Indonesia’s Armed Forces and Ministry of Energy and Mineral Resources signed a memorandum for warships to provide security for the highly profitable fishing grounds and offshore oil and gas production and exploration activities within the country’s exclusive economic zone near the Natunas.

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China says it has sovereignty over all the South China Sea north of its “nine dash line.” On July 12, 2016, the Permanent Court of Arbitration  in The Hague said this claim by China was not valid. But China and the Philippine government then chose to ignore international law.

Thousands of Indonesians Join Anti-Myanmar Rally in Jakarta — Chanting “Allahu Akbar”

September 6, 2017

JAKARTA — Thousands of Indonesians, led by Islamist groups, held a rally near the Myanmar embassy in Jakarta on Wednesday to protest against the treatment of Rohingya Muslims and demand the snapping of ties between the two countries.

Indonesia has the world’s largest population of Muslims and there have been several anti-Myanmar protests in Jakarta and the Malaysian capital of Kuala Lumpur over the treatment of Buddhist-majority Myanmar’s roughly 1.1 million Rohingyas.

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A Muslim woman shouts slogans as she holds up a poster bearing a defaced portrait of Myanmar’s State Counsellor Aung San Suu Kyi during a rally against the persecution of Rohingya Muslim minority, outside the Myanmar’s Embassy in Jakarta, Indonesia, Monday, Sept. 4, 2017. Hundreds of people staged the rally in the third day of protests calling for the government of the world’s most populous Muslim country to take a tougher stance against persecution of the Rohingya. (AP Photo/Tatan Syuflana)

Roads were blocked and barbed wire barriers put up around the embassy, in a leafy district of the capital, which was patrolled by police in riot gear who set up water cannons.

Some protesters chanted “Allahu Akbar” (God is Greatest), while others shouted slogans such as “Slaughter Myanmar” and “Burn the embassy”.

Buddhists should respect Muslims in Myanmar in the same way that Muslims respected Buddhists in Indonesia, one speaker told the crowd, using a loud-hailer.

Almost 125,000 Rohingyas have been forced to flee clashes between Rohingya insurgents and the army in Myanmar’s northwestern state of Rakhine. Tens of thousands have crossed the border into neighboring Bangladesh.

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A Muslim woman raises her fist as she holds a poster during a rally against persecution of Myanmar’s Rohingya Muslim minority, outside Myanmar Embassy in Jakarta, Indonesia, Monday, Sept. 4, 2017. Hundreds of Muslim women staged the rally on the third day of protests calling for the government of the world’s most populous Muslim country to take a tougher stance against persecution of the Rohingya. (AP Photo/Tatan Syuflana)


Indonesian Foreign Minister Retno Marsudi met Myanmar leader Aung San Suu Kyi and top security officials this week to urge a halt to the bloodshed. Marsudi also visited Dhaka, capital of Bangladesh on Tuesday, to offer help in tackling the crisis.

Some protesters at the Jakarta rally called for the expulsion of the Myanmar ambassador over the issue, as well as for diplomatic ties between the two countries to be severed.

Myanmar embassy staff would be safe, however, said a foreign ministry spokesman, Armanatha Nasir.

“It is the responsibility of the host countries to ensure the safety of all diplomatic missions and their personnel,” the spokesman said. “Indonesia takes this responsibility seriously.”

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A man mourning a family member believed to have been killed by Rohingya militants in Maungdaw, Rakhine, last month. AFP photo

At the weekend, a petrol bomb was thrown at the embassy causing a small fire.

Indonesian police have also pledged to bar Islamist groups from staging a rally on Friday at the Borobudur Buddhist temple in central Java to protest against the treatment of Myanmar’s Rohingya Muslims.

(Reporting by Kanupriya Kapoor; Writing by Ed Davies; Editing by Clarence Fernandez)


Commentary: Indonesia an (unlikely) honest broker for Rohingya

  • Kornelius PurbaThe Jakarta Post

Jakarta | Wed, September 6, 2017 | 08:13 am

Commentary: Indonesia an (unlikely) honest broker for Rohingya

Humanitarian crisis: A protester tears up a picture of Myanmar’s Aung San Suu Kyi during a rally in front of Myanmar Embassy in Jakarta on Saturday to protest the actions of Myanmar’s army and the government of Aung San Suu Kyi. United Nations chief Antonio Guterres warned on Sept. 1 of a looming humanitarian catastrophe in western Myanmar and urged security forces to show restraint after hundreds were reported to have been killed in communal violence. (AFP/Bay Ismoyo)

For the first time since he came to power in October 2014, the usually inward-looking President Joko “Jokowi” Widodo has launched a weighty diplomatic offensive with his decision to engage himself in ending the gross human rights violations against the Rohingya Muslims in Myanmar.

The rewards are evident: He will boost his reputation abroad and at home voters will …

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After Political Storm, Indonesia President Faces Economic Clouds

September 4, 2017

JAKARTA — During the first months of this year, President Joko Widodo was an embattled leader grappling with Indonesia’s most serious political and religious tensions in two decades. Now, he has come through the storm looking stronger than ever.

His popularity is near record highs and, thanks to deft maneuvers against foes trying to exploit a blasphemy case against one of his allies, Widodo has stamped his authority on the ruling coalition, parliament and the security forces.

The quietly spoken former furniture salesman may have proved his political mettle, but his next challenge is an economy that refuses to respond to conventional policies to fire up growth. That could dent his re-election chances in 2019, especially with a budget that won’t stretch to lavish government spending.

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President Joko Widodo

Senior government officials worry that Widodo has been distracted by the battles with political opponents and taken his eye off the economy.

“We are suffering from bad policy right now … if we don’t fix it or we don’t regain the initiative I could easily see GDP growth going down, and is that a risk you want to take?” said one senior government official, who asked not to be identified.

According to a June survey, nearly 60 percent of people polled were satisfied with Widodo’s performance, almost an all-time high. But the poll also showed high expectations that he would deliver on promises to revive the lackluster economy.

“If he doesn’t perform on the economy, that would give ammunition to the opposition to challenge Jokowi in 2019,” said Djayadi Hanan of the Saiful Mujani Research Center, a Jakarta-based pollster, using the president’s nickname.


Indonesia’s GDP growth has shambled at around 5 percent for the past two years, too low to lift the country out of the middle-income trap, largely because domestic consumption – once the engine of the economy – and bank lending have been sluggish.

An unexpected cut in interest rates last month highlighted the struggle to lift growth despite government initiatives, including a tax amnesty program, an infrastructure drive, and a series of regulatory tweaks designed to make business easier.

The government has little fiscal room to breathe life into the economy: the budget deficit is already close to a legally mandated ceiling of 3 percent of GDP and parliament could impeach Widodo if he allowed the deficit to run past that limit.

David Sumual, chief economist at Indonesia’s Bank Central Asia, said a hike in electricity tariffs and slow disbursement of subsidies to farmers have weakened the purchasing power of middle- to lower-income households. Meanwhile, higher-income groups are worried that the government is pushing for aggressive tax reform that will leave them less well off.

“The problem now is confidence in the prospect of the economy. People don’t want to spend,” Sumual said.

In his state-of-the-nation address last month, Widodo pledged to tackle income inequality by cutting red tape and making land acquisition easier to accelerate infrastructure projects. And last week he urged his cabinet to focus on attracting investment to boost growth and create jobs.

But two officials who spoke to Reuters said they worried he was not matching his rhetoric with bold steps that need to be taken now for growth to be marching higher next year, when campaigning for the 2019 presidential election will begin.

On the to-do list remains finding a way to rein in the overbearing dominance of state-owned enterprises on the economy, which was singled out by the World Bank in July as something preventing private funds flowing in.

In addition, there is a need to speed up efforts to tackle a tortuous regulatory and licensing regime to lift investment, an area where Widodo said last week, during the launch of a new policy package, “there’s so much we have to improve, so much to fix”.


Just months ago, Widodo appeared to be fighting for his political survival as political opponents joined forces with radical Islamist groups to foment popular fury over alleged blasphemous comments made by Widodo’s ally Basuki Tjahaja Purnama, the former Christian governor of Jakarta.

Amid massive protests in central Jakarta, there were rumors of treason plots and even a military takeover.

Beating the drum of Indonesia’s “unity in diversity” motto, Widodo embarked on a frenzy of public appearances at military barracks, the homes of both political rivals and allies, and at moderate Islamic boarding schools – all aimed at projecting an image of unity and control.

“He has been busy in the past six to eight months fighting back against destabilizing forces,” said Endy Bayuni, editor-in-chief of the most widely read English daily, the Jakarta Post.

“He’s showed that he is very much in control of the situation and has become even more mature as a politician.”

Widodo’s latest move to regain political authority took aim at hardline Islamist groups. By executive decree, he banned Hizb-ut Tahrir, a group that calls for Indonesia to be ruled by Islamic sharia law, saying its ambitions ran counter to the country’s secular ideology.

Such political dominance could provide Widodo with a false sense of security, the senior government official said.

“The dark side of the story is … the economy,” he said. “I think the biggest threat now, potentially – and it’s the flip side of the incredibly strong political position he is in – would be complacency.”

(Editing by Ed Davies and Alex Richardson)

Vietnam asks Indonesia to investigate South China Sea shooting

July 29, 2017


JULY 28, 2017 / 9:43 AM

HANOI (Reuters) – Vietnam has asked Indonesia to investigate and clarify reports that the Indonesian navy shot and wounded two Vietnamese fishermen in the South China Sea.

Foreign Minister Pham Binh Minh told Indonesian foreign minister Retno Marsudi by telephone that the reported incident was “very serious … and not appropriate with the strategic partnership relationship between Vietnam and Indonesia,” the Vietnamese foreign ministry said in a statement on Friday.

“Vietnam is deeply concerned about this incident and proposes Indonesia to quickly investigate and clarify the incident and inform Vietnam of the results and to stop repeating similar acts,” Minh was quoting as saying.

Earlier this week, a local Vietnamese sea rescue committee said Indonesia’s navy had shot and wounded the Vietnamese fishermen last weekend.

The Vietnamese boat was about 132 nautical miles (245 km) southeast of Con Dao island when the fishermen were shot on Saturday night, the Binh Dinh provincial search and rescue committee said on its website.

The report was pulled off the website the next day.

Indonesia’s foreign minister told Reuters the information provided by her country’s navy on the incident was different and said illegal fishing involving Vietnam had been a long-term issue.

Marsudi said in a text message she had underlined to Vietnam’s foreign minister the importance of the countries settling negotiations on their exclusive economic zones. She said the two would meet in Manila during a regional forum next month.

The Indonesian navy has yet to comment on the incident.

Disputes over fishing rights and oil drilling have stoked tension in the South China Sea, through which about $5 trillion in goods is shipped each year.

China claims almost the entire sea, but Brunei, Malaysia, the Philippines, Vietnam and Taiwan also have claims.

Although Indonesia says it is not a party to the dispute, it recently renamed the northern reaches of its exclusive economic zone, asserting its own maritime claim.

The coordinates given by the Vietnamese search and rescue committee indicated that the shooting happened close to the area Indonesia now calls the North Natuna Sea.

Indonesia has sunk hundreds of mostly foreign boats caught illegally fishing in its waters since President Joko Widodo launched a crackdown on the poaching of fish in 2014.

Indonesia and Vietnam said in May they would launch a joint investigation after reports that Vietnamese coast guards had tried to forcibly free five fishing boats and their crew detained in waters near Indonesia’s Natuna Islands.

Reporting by Mai Nguyen; Additional reporting by Bernadette Christina Munthe and Agustinus Boa Da Costa in Jakarta; Editing by Catherine Evans and Kim Coghill

Indonesia Will Follow The Philippines and Shoot Suspected Drug Traffickers

July 24, 2017
In this March 8, 2017 file photo, Indonesian President Joko Widodo waits for the arrival of his South African counterpart Jacob Zuma at Merdeka Palace in Jakarta. President Jokowi says police should shoot drug traffickers who resist arrest because of a narcotics crisis facing the country. Jokowi’s spokesman, Johan Budi, said Sunday, July 23, 2017, that the president made the comments at a recent meeting of an Indonesian political party. AP/Dita Alangkara, File

JAKARTA, Indonesia — Indonesian President Joko “Jokowi” Widodo says police should shoot drug traffickers who resist arrest because of a narcotics crisis facing the country.

Presidential spokesman Johan Budi said Sunday that Jokowi made the comments at a recent meeting of an Indonesian political party.

“We have to take firm action. If drug dealers who operate in Indonesia fight back when arrested, officers can shoot them, because we are in a narcotics emergency position now,” Jokowi said, according to his spokesman.

Local media reported last week that police shot dead a Taiwanese man for resisting arrest during a seizure of 1 ton of crystal methamphetamine, Indonesia’s largest-ever seizure of the drug.

Philippine President Rodrigo Duterte launched an anti-drug crusade last year in which thousands of alleged drug dealers and users have been killed, often in circumstances akin to lawless summary executions. The crackdown has been condemned by rights groups and governments around the world.

RELATED: Duterte to PNP: Kill 1,000, I’ll protect you | ‘Not acceptable’: Morales slams Duterte’s order to kill criminals

Indonesia has tough anti-drug laws and traffickers can receive the death penalty. Four people, one Indonesian and three Nigerians, were executed by firing squad last year, and dozens are on death row for trafficking.

Budi said Jokowi’s comment is not a shoot to kill order and police actions should be measured and in accordance with the law.

It’s a message to all Indonesians to show the commitment of the government to fighting narcotics, he said.


Indonesian National Police Chief Tito Karnavian, left, Philippine National Police Chief Ronald Dela Rosa, center, and Royal Malaysia Police Inspector General Khalid Abu Bakar link arms together prior to the start of their Trilateral Security Meeting in suburban Pasay city, southeast of Manila, Philippines Thursday, June 22, 2017. The Philippines, Indonesia and Malaysia plan to closely cooperate to halt the flow of militants, weapons, funds and extremist propaganda across their borders as they expressed alarm over recent attacks in their countries. (AP Photo/Bullit Marquez)

Indonesian National Police Chief Tito Karnavian, left, Philippine National Police Chief Ronald Dela Rosa, center, and Royal Malaysia Police Inspector General Khalid Abu Bakar link arms together prior to the start of their Trilateral Security Meeting in suburban Pasay city, southeast of Manila, Philippines Thursday, June 22, 2017. The Philippines, Indonesia and Malaysia plan to closely cooperate to halt the flow of militants, weapons, funds and extremist propaganda across their borders as they expressed alarm over recent attacks in their countries. (AP Photo/Bullit Marquez)

Indonesian President Orders Officers to Shoot Drug Traffickers — Following Lead from the Philippines

July 22, 2017

JAKARTA — Indonesia’s President Joko Widodo has instructed law enforcement officers to shoot drug traffickers to deal with a narcotics emergency facing the country.

“Be firm, especially to foreign drug dealers who enter the country and resist arrest. Shoot them because we indeed are in a narcotics emergency position now,” Widodo said in a speech delivered at an event held by one of Indonesia’s political parties late on Friday.

His remarks have drawn comparison to that of Philippine’s President Rodrigo Duterte, who launched a brutal anti-drug crackdown about a year ago that saw many alleged drug dealers killed.

The bloody campaign in the Philippines has drawn condemnation from the international community, including the United Nations.

Indonesia also has tough laws against drugs. Widodo has previously been criticized for ordering executions against convicted drug traffickers who were given a death penalty by the court. Rights activists and some governments have called on Indonesia to abolish the death penalty.

Indonesia’s President Joko Widodo

Friday’s shooting order from Widodo came a week after Indonesian police shot dead a Taiwanese man in a town near the capital Jakarta.

The man, who was part of a group trying to smuggle one tonne of crystal methamphetamine into the country, was killed for resisting arrest, police have said.

After the incident, Indonesian National Police chief Tito Karnavian was quoted by media saying he had ordered officers not to hesitate shooting drug dealers who resist arrest.

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Indonesian National Police chief Tito Karnavian

(Reporting by Jakarta bureau; Writing by Gayatri Suroyo; Editing by Shri Navaratnam)

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Indonesian National Police Chief Tito Karnavian, left, Philippine National Police Chief Ronald Dela Rosa

Indonesian National Police Chief Tito Karnavian, left, Philippine National Police Chief Ronald Dela Rosa, center, and Royal Malaysia Police Inspector General Khalid Abu Bakar link arms together prior to the start of their Trilateral Security Meeting in suburban Pasay city, southeast of Manila, Philippines Thursday, June 22, 2017. The Philippines, Indonesia and Malaysia plan to closely cooperate to halt the flow of militants, weapons, funds and extremist propaganda across their borders as they expressed alarm over recent attacks in their countries. (AP Photo/Bullit Marquez)

Indonesian National Police Chief Tito Karnavian, left, Philippine National Police Chief Ronald Dela Rosa, center, and Royal Malaysia Police Inspector General Khalid Abu Bakar link arms together prior to the start of their Trilateral Security Meeting in suburban Pasay city, southeast of Manila, Philippines Thursday, June 22, 2017. The Philippines, Indonesia and Malaysia plan to closely cooperate to halt the flow of militants, weapons, funds and extremist propaganda across their borders as they expressed alarm over recent attacks in their countries. (AP Photo/Bullit Marquez)

Indonesia seeks assurances from China on code of conduct for South China Sea

May 15, 2017

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Chinese Foreign Minister Wang Yi meets his Indonesian counterpart Retno Marsudi ahead of the Belt and Road Forum in Beijing on May 13, 2017. PHOTO: REUTERS

JAKARTA (JAKARTA POST/ASIA NEWS NETWORK) – Indonesia has asked China to make good on its promise to conclude by mid-year the ongoing negotiations on a framework for a code of conduct (COC) in the South China Sea (SCS), as Foreign Minister Retno LP Marsudi met her counterpart Wang Yi in the Chinese capital.

Retno met Wang in Beijing on Saturday (May 13) to discuss various issues of common concern, including the SCS debate, wherein Indonesia is not a claimant but acts as an honest broker.

“One of the issues that will definitely be tabled by the foreign ministers is what to do next to expedite the process of the post-COC framework negotiations,” ministry spokesperson Arrmanatha Nasir said.

Asean and China are currently in the final stages of finalising a framework for a COC, an instrument that aims to prevent open conflict in the disputed waters.

Negotiations over the code have persisted for the better part of 15 years, after an Asean-China non-binding agreement was introduced in 2002 to discourage hostile acts in the SCS.

Both parties finally agreed to use a shared draft framework during negotiations in Bali in February and made significant progress in a subsequent meeting in Siem Reap, Cambodia, in April.

Asean and Chinese diplomats plan to convene another meeting in Guiyang, China, later this month with an eye towards concluding the COC framework by midyear.

“Last year China made a commitment to revitalise negotiations so that the COC framework could be agreed upon by the middle of this year. We are nearing the end of this process, so we truly hope it will be done,” said Arrmanatha.

Jakarta is now thinking about the next step, he said, and stressed that it would seek Beijing’s commitment to a clear timeline for the earliest conclusion of the COC.

China is not a member of Asean, but has made sweeping claims over the SCS, through which US$5 trillion in seaborne trade passes each year.

Asean member states Malaysia, Brunei, the Philippines and Vietnam have more or less agreed to negotiate with China bilaterally over their competing claims in the sea, but Beijing has been extremely sensitive about objections to its expansion activities there or any mention of the international tribunal ruling that outlawed its claims last year.

Asean published a non-confrontational statement on the issue during the Asean Summit in Laos last year and has since published similar statements.

Asean chair, the Philippines, which won an international tribunal case against China last year, issued a neutral statement on the South China Sea in April, while another one was published earlier this month after an Asean-United States special foreign ministers meeting in Washington.

Besides consultations on regional issues, Retno is also expected to discuss efforts to strengthen Indonesia’s bilateral mechanisms with China, as well as follow up on a few “pending issues” from a previous meeting between the two countries’ heads of state last November.

“The main issue the foreign minister will follow up on has to do with the 2017-2021 Plan of Action that is meant to implement Indonesia’s comprehensive strategic partnership with China,” the spokesman said.

Arrmanatha said both foreign ministers would also discuss the North Korean issue, with Indonesia focusing on China’s contribution to maintaining peace and stability on the Korean Peninsula.

Meanwhile, President Joko “Jokowi” Widodo and Chinese President Xi Jinping agreed to strengthen a comprehensive strategic partnership during the former’s attendance of the Boao Forum for Asia Conference in 2015.

Jokowi and Xi are slated to meet again on the sidelines of the Belt and Road Forum in Beijing on Sunday and Monday.


Investigative: Romancing China under Duterte

May 9, 2017
This handout photo taken and released on May 1, 2017 by the Presidential Photographers Division (PPD) shows Philippine President Rodrigo Duterte (C) standing in front of Philippine (R) and Chinese national flags during a tour of the Chinese guided missile frigate Changchun berthed at the Davao international port on May 1, 2017. Philippine President Rodrigo Duterte on May 1 visited Chinese warships docked in his home town and raised the prospect of future joint exercises, highlighting fast-warming relations despite competing claims in the South China Sea. Simeon Celi/PPD/AFP

First of two parts

SECOND PART: Manila, Beijing dating again: ‘Who is the screwer, screwed?’

Here on Peace and Freedom:


‘$24-B’ not yet a cinch: Brokers stalk talks, contracting so tedious

MANILA, Philippines (Philippine Center for Investigative Journalism) — At the close of his four-day state visit to Beijing last October, a pleased President Rodrigo Duterte proclaimed to the world that the Philippines and China were now besties, or the best of friends.

As proof positive, Duterte and his Cabinet secretaries showed off to reporters and businessmen from 300 Philippine-based companies who joined the Beijing entourage sheafs of paper—13 various bilateral agreements (via memoranda of agreement or MOA and memoranda of understanding or MOU) that they had signed with their Chinese counterparts.

The documents supposedly testify to Beijing’s love for Manila. These papers, though, offer only indicative values of how much in pesos and centavos that love is worth. That love, too, has to move beyond intention to reality, across months or even years of negotiations between Manila and Beijing.

Yet Duterte and his Cabinet secretaries were quick to quote a fabulous figure at the end of the visit: They pegged the agreements to be a total of $24 billion or about P1.2 trillion in loans and grants for mostly infrastructure projects that the Duterte administration plans to roll out, as well as for investment projects that Filipino and Chinese companies want to launch.

Duterte’s senior officials would later clarify that the amount consists of two major parts:

  • $9 billion or around P450 billion for about 40 proposed government-to-government or G2G projects that have been proposed to be funded with loans from China; and
  • $15 billion or about P750 billion for 27 proposed business-to-business or B2B projects that will come from “direct investments” of China companies in partnership with Philippine companies.

The $9-billion facility for the G2G projects consists of $6 billion in Official Development Assistance (ODA) and $3 billion in commercial tied loans, according to the Department of Finance (DOF).

The National Economic and Development Authority (NEDA) says, however, that the total amount consists of $7 billion in commercial tied loans (through the China Development Bank and Bank of China) and $2 billion in concessional loans (through the Export-Import Bank of China, which is entirely owned by the government of China).

In addition, China has offered small “gifts” or grants: at least $91 million (P4.56 billion) for two bridges along Pasig River, anti-illegal drugs and security cooperation, and for Surigao earthquake victims. This amount has been coursed through the DOF.

During a two-day mission to Beijing last January, Philippine officials also submitted for possible financing by China some 40 “small and large” infrastructure projects.

A pittance for Philippines

The $9 billion in ODA for G2G projects will actually stretch across the full term of the Duterte administration, or until 2022. That redounds to an average annual value of $1.5 billion—surely a pittance if weighed against China’s total overseas investments and construction activities across the world that reached $1.5 trillion in 2015, according to the American Enterprise Institute and the Heritage Foundation’s “China Global Investment Tracker” portal.

Last year, China’s overseas investments alone doubled in size since 2012, “due primarily to investment in the United States, which exceeded $50 billion in 2016,” said the Tracker. “Acquisitions by private enterprises are at its heart.”

Still, the new fund pledges for Manila at the very least indicate progress in terms of Beijing’s openness to resume doing business with a neighbor over which it has locked horns on maritime and territorial disputes in the West Philippine Sea.

What the Duterte party has secured—$1.5 billion in loan and grant pledges on average per year—merely restores the value of China’s assistance program for the Philippines to its 2010 levels.

Data from the NEDA show that the Philippines had $1.94 million in grants from China in 2010, which then fell to $1.59 million in 2013, and rose to $5.7 million in 2014. From 2010 to September 2016, the Philippines had only $1.14 billion in active loans from China; the figure was actually at zero in 2015. As of September 2016, China’s remaining ODA to the Philippines was $1.56 million in the form of grants. (See infographic)

Imbalance of trade

With the new fund pledges, Philippine officials have been quick to lionize China as the country’s emerging top trade partner. But this may be all talk. Official data show over the last five years, for every dollar that the Philippines gets from its exports to China, China gets a dollar more for its exports to the Philippines.

What may be true only is that with the new fund pledges, China will soon emerge as the Philippines’ No. 1 lender, eclipsing Japan, which currently has $5.8 billion in active loans and grants for the Philippines. (See infographic)

By 2015, China had already become the Philippines’ second largest trading partner, after Japan. Data from the Philippine Statistics Authority showed that total trade between Manila and Beijing amounted to $17.646 billion, or 13.6 percent of the Philippines’ total external trade of $129.894 billion that year.

The Philippines, however, raised only $6.175 billion for its exports to China, even as it paid $11.471 billion for its imports from that country. The result: a $5.296-billion trade deficit for the Philippines.

The Philippines in 2015 was selling to China only 10.6 percent of its total exports (984 products), but also buying from China 16.36 percent of total imports—3,803 products, according to the World International Trade Statistics portal of the World Bank and United Nations agencies.

By all indications, thus, China’s touted generosity to the Philippines is just a lot of intentions, the MOUs mere “frameworks for cooperation,” and the projects that China has pledged to finance, mere concepts for now. MOUs mere “frameworks for cooperation,” and the projects that China has pledged to finance, mere concepts for now.

Quick-fix brokers

Put another way, a lot of money had been pledged in Beijing for a lot of stillborn or still-to-be-born project ideas from Manila. But the situation has not stopped those on the lookout for quick fixes and quick bucks, to join in the fray this early.

A senior government official privy to the discussions between Manila and Beijing told PCIJ recently that the supposed windfall from the China state visit consists of “a lot of tied loans, a sprinkling of grants, and unclear investment prospects.”

“These are not done deals, not solid yet,” the official said, stressing though that the signal message of the agreement was that “basically, economics will drive the relationship now, trade, tourism, then infrastructure, public investments.”

The official also said that the so-called reboot in China-Philippine relations and the projects “will not be this month or this year, but during his whole term of the Duterte administration. We must look at it as a timeline.”

Yet while the official said that what Manila has offered to donor countries is a veritable “wish list,” there are already various personalities angling for pieces of the big pie of funding to be had for the projects.

“Ang daming brokers, they are all over the place,” said the official who asked not to be named, citing the supposed sensitivity of ongoing talks between Manila and Beijing. “There are more brokers than there are principals.” To be fair, though, the official added that the brokers are plying their trade in both Manila and Beijing.

PCIJ asked if these “brokers” possibly include senior government officials, relatives, and friends of senior officials, or those from the private sector. The official’s reply: “All of the above… they take the usual approach—not just Chinese but all businessmen. Lapit sa kamag-anak, lapit sa kaibigan… Naghahanap ng padrino, sino malakas (They are approaching relatives, friends…they’re looking for sponsors, those who have clout).”

Expect corruption?

The official’s prognosis about the new China deals is not totally bright: “I expect some amount of corruption, lagayan (bribery), scandal, kamag-anak na sasabit (relatives who will get interested). That is human nature perhaps. We are not saints.”

The Philippine side, the official said, is worried that another scandal over kickbacks fleeced from past deals with China could happen. “Dapat iwasan (It should be avoided). Whether they will succeed, it’s too early to tell. There are forces at work on both sides… we really need to keep our eyes and ears open.”

Keeping watch, however, may mean a considerable investment of time. Duterte’s own Cabinet officials acknowledge that at least one to at most three of the government projects may approach groundbreaking only late this year to early next year.

Last month, NEDA Director-General and Socioeconomic Planning Secretary Ernesto Pernia said that in all, the Duterte administration has lined up a total of 57 “game-changing” or “flagship projects” that it wants to implement until Duterte’s term ends in 2022.

Yet while some of the 57 had been pitched to China, others have been discussed with Japan, and the rest will probably be taken up with other bilateral donors still unknown or unnamed for now.

No quick rollout

The so-called project brokers are not only what could cause confusion and delay in the projects’ rollout. The long, testy process of procurement and project implementation, by Philippine laws, is also a big hurdle for both donor and donee governments.

It is only after the two sides finish work on a series of tedious requirements of procurement and public contracting laws that the Philippines’ deals with China could become a reality. These requirements, under Philippine laws, apply most especially to the procurement of infrastructure projects, including those funded by ODA.

They include, for instance, the conduct of feasibility study/ies by the proponent agency/ies for each of the projects. This, by the record of previous big-ticket infrastructure projects of the government, may take from four to seven months on average.

The Department of Public Works and Highways (DPWH) has pegged the allowable cost for feasibility studies at three percent only of indicative project cost. China has already expressed willingness to finance the conduct of the feasibility studies for some of the projects. Among the documents signed in Beijing last October, in fact, was the “MOU Supporting the Conduct of Feasibility Studies for Major Projects,” in which China offered “financing and/or support” to the Philippines in undertaking feasibility studies “for big-ticket projects in infrastructure, agriculture and rural development.”

(Just last March, the Asian Development Bank also committed to extend to the Philippines this year another $100-million “soft loan” to finance feasibility studies for rail, bridge, irrigation, and road projects. “We have so many projects in the pipeline, they need feasibility studies,” press reports quoted Pernia – whose other title is Director General of NEDA—as saying. “It [loan] will be available this year for sure.”)

What is an FS?

In 2014, NEDA issued “Guidelines on the Utilization of the Feasibility Studies (F/S) Fund” for projects to be funded with ODA, local funding under government appropriations, or combination of both.

It explained that Project Feasibility Study refers to “the culmination of all the preparatory work that provides a comprehensive review of all aspects of the project before a final decision about its viability is taken.”

“An ideal F/S,” the manual stated, contains eight modules to provide the basis for project evaluation: demand-and-supply or market; technical or engineering; manpower and administrative support; financial; economic; social; institutional; and environmental.

Once done, the feasibility studies will have to be submitted to Project Evaluation Review by NEDA. The task may run from four to six months, depending on the scale or complexity of the project.

NEDA’s Investment Coordination Committee (NEDA-ICC) must approve the Project Evaluation Review before the proponent agency can work on the financing requirements (i.e. if funding will be secured via a loan from bilateral partners like China). Among the many caveats, however, is that like Japan, China typically offers tied loans, which means that the contractor will have to be Chinese or Japanese, or based in the country lending the money.

The financial kinks have to be sorted out before the agency can proceed to conduct a bidding for the supply contract for the project/s or to open it to a Swiss challenge by other interested companies. The company/ies or entity/ies and the proponent state agency will then enter into a supply contract, but only after completion of numerous required documents and permits (i.e. detailed engineering study, environmental compliance certificate, community impact assessment, etc.).

Of bananas and tourists

For sure, ahead of the big-ticket projects that will be funded by China loans, the “sprinkling of grants” from China has been deployed relatively faster. In recent months, there has been quick turnaround in the construction of a drug rehabilitation facility in Nueva Ecija, discussions on the export of local bananas and other fruits, and the lifting of a travel advisory against visits to the Philippines that China had issued two years ago.

Remarked the senior official interviewed by PCIJ: “Nagtutulakan na sila, hindi ganoon kabilis ang hard projects, matagal talaga. Ang mabilis lang, drug rehab, saging at prutas, tourism (They’ve been pushing each other, but the hard projects just aren’t moving fast, they are really taking a long time to process. What has been done fast are [projects involving] drug rehab, bananas and fruits, and tourism).”

But the legal requirements have left the bulk of the projects supposedly with China and Chinese businesses mostly tied up for the time being. As a result, from the euphoria and bluster that marked their press releases on the $24-billion that China had supposedly pledged to the Philippines, caution and sobriety now mark the tone of senior Duterte officials when they talk about the China deals, half a year after the state visit.

For the government projects, it was Finance Secretary Carlos Dominguez III who signed on behalf of the Philippines’ three agreements with China.

According to the Finance department, these are:

  • The Agreement on Economic and Technical Cooperation, which provides Manila with a RMB Yuan 100-million grant to implement projects for “anti-illegal drugs and law enforcement security cooperation”;
  • The MOU Supporting the Conduct of Feasibility Studies for Major Projects, in which China will provide financing support to the Philippines in undertaking feasibility studies for big-ticket projects in infrastructure, agriculture, and rural development; and
  • The MOU signed by Dominguez on Financing Cooperation with China EXIM that would allow the Philippines to tap EXIM Bank China funds for its major projects through the usual approval processes.

Three priority projects

In the meantime, it was only on Jan. 28, 2016—or three months after the Beijing state visit—when Pernia announced the approval by the NEDA-ICC of only three of the 12 “priority” projects to be submitted for loan financing by China EXIM.

Nine other projects, from a list of 23 with no feasibility studies as yet, have also been proposed for China funding. The MOU for this activity states that China will make available “financing and/or support through dispatch of technical experts and consultants within its comparative advantage to undertake the conduct feasibility studies for major projects.”

Press reports have quoted Dominguez as saying that “the Philippine government will apply the three priority projects for loan financing under the $3.4-billion assistance made available by the Export-Import Bank of China (China EXIM) to the Philippines, of which $2 billion represents new commitments.”

The three projects the NEDA-ICC had approved for funding by China are:

  • The 653-kilometer south line of North-South Railway. Estimated project cost: PP151 billion or $3.01 billion. This project involves the construction and subsequent operation and maintenance (O&M) of a 581-kilometer, standard-gauge, long-haul railway operations from Manila to Legazpi, Albay, with an extension line from Legazpi to Matnog, Sorsogon; and a branch line from Calamba, Laguna to Batangas. The project aims to achieve less than five-hour travel time from Manila to Legazpi.

Status as of January 2017: The NEDA Board during its Nov. 14, 2016 meeting approved the project. The Department of Transportation (DOTr), in a letter to DOF dated Jan. 13, 2017, said the DOTr is preparing to procure a consultant to update the Detailed Feasibility Study for the long-haul segment.

  • The New Centennial Water Source-Kaliwa dam in Quezon province. Estimated project cost: P18.724 billion or $374 million. This project proposed by the Metropolitan Waterworks and Sewerage System (MWSS) involves the construction of a dam and conveyance tunnel that will provide additional 600 million liters of raw water to ensure water security in the whole of Metro Manila and parts of Cavite and Rizal. It aims to meet future potable water demand and as a redundant water source, thereby reducing the dependence on the Angat Dam Reservoir.

Status as of January 2017: The feasibility study for this project is done, and preparation of bid documents is underway, and two bidders have been pre-qualified.

  • The Chico River pump irrigation project in Cagayan and Kalinga provinces. Estimated project cost: P2.696 billion or $53.6 million. This project involves the installation of pump and construction of sump pump with the proposed pumping station located at the right bank facing downstream of the Chico River. The project will irrigate 8,700 hectares of land and will benefit 4,350 farmers in the area. It targets 21 barangays in Cagayan and Kalinga and is expected to be finished within a three-year period.

Status as of January 2017: The NEDA Board during its Nov. 14, 2016 meeting deferred confirmation of the project’s ICC approval, with the instruction for the proponent agency, the National Irrigation Administration, to include a hydropower-energy component and in coordination with the Department of Agriculture, introduce the production of high-value crops in the area.

In addition, the Philippines has requested grant assistance from China for the conduct of feasibility studies for nine other projects. These are the:

  • Agus 3 hydroelectric plant;
  • Ambal-Simuay sub-basin of the Mindanao River basin flood control and river protection project;
  • Camarines Sur expressway;
  • Davao City expressway;
  • Dinagat (Leyte)-Surigao link bridge;
  • Luzon-Samar link bridge;
  • North Luzon Expressway east project;
  • Panay Guimaras-Negros Island bridges, and
  • Pasacao-Balatan tourism coastal development program.

What fits, what doesn’t

Dominguez and Pernia were among those PCIJ recently interviewed on the China deals. According to Dominguez, the three “priority projects” and 35 other infrastructure projects they brought to the table in Beijing in January are a mix of those pitched in the past and the present. “There were already projects from the past,” he told PCIJ. “And we added some more.”

“We added the Agus-Pulangui Dam (because it) has to be rehabilitated,” Dominguez said. “So we took some of their projects and we got some of our own and then we made that list. You go back to our 0-10 point economic program. So we said, this is our program.”

Asked how the Duterte Cabinet chose which projects to prioritize, Dominguez replied, “What fits that and what doesn’t fit? So (what) doesn’t fit, out.”

He said that the government is “looking for projects outside the mega-Manila area to create jobs. We’re looking at projects that will improve logistics, investments that will improve productivity, agricultural or otherwise. We are also looking for projects that will improve the traffic here in Manila. But basically we want to invest outside so a railway to Bicol, which one of the most depressed regions in the country, makes sense, doesn’t it?…. Now, this Kaliwa dam, we need water here in the Mega Manila area. So that also makes sense. Of course this pump project in the Chico River in the Cagayan Valley makes sense.”

For projects in the China pipeline, DOF and NEDA met with agencies to draw up the list. Projects were assigned priority based on their consistency with the Philippine Development Program (PDP) or Public Investment Program (PIP), impact of financing to targets, geographic spread, applicability of Chinese technology, and cost of feasibility study proposals for those without one yet. Studies for some of the projects had been completed during the Aquino administration.

“The development strategy of the Duterte administration is regional and rural development so disbursing development outside the mega-urban industrial region of Metro Manila, Calabarzon, and Central Luzon (was prioritized),” said Secretary Pernia. “And the projects that are going to be put up for Metro Manila will be mostly to address the traffic congestion.”

The selection of ODA-funded projects was also reportedly based on the country-assistance frameworks of development partners, including bilaterals such as the Australian Agency for International Development (AusAID) for Australia, Japan International Cooperation Agency (JICA) for Japan, and the U.S. Agency for International Development (USAID) for the United States, as well as multilaterals like the Asian Development Bank (ADB), World Bank (WB), and the United Nations (UN).

By procurement rules

Pernia, meanwhile, noted that if the projects involve government, then these would have to go through ICC and follow Philippine procurement rules.

The Government Procurement Reform Act (Republic Act No. 10667) requires the procurement of goods, infrastructure projects, and consulting services to undergo competitive and public bidding.

As a general rule, agencies need to adopt competitive bidding as the general method of procurement and see to it that the procurement program allows sufficient lead-time for such bidding to be conducted. While there are alternative modes of procurement such as limited-source bidding, direct contracting, repeat order, shopping, and negotiated procurement, agencies can resort to these only under highly exceptional cases following procurement rules.

In truth, Dominguez said, the MOUs and MOAs signed during Duterte’s state visit were just agreements, or statements of intention or willingness of the two nations to do business with each other. “Those are just general, you know, we are willing to fund project studies,” he said. “‘We are willing to help you in rehab. We are willing to do this.’ Willing-willing lang ‘yun.”

Dominguez said that the projects have yet to be worked out, and are “not in the bag” because the two sides have to move from agreement stage “and then we start to work on the real things already.” That means not only contending with Philippine rules, but also with those of China.

Recounted Dominguez: “So the next meeting we had was with the NDRC (National Development and Reform Commission), which is like the NEDA, although in steroids. This is a real big agency. They have their own auditor, project management, talagang malaki.”

After the NEDA-ICC has approved the projects for funding by China, loan programming will take at least four to at most 14 months, according to NEDA.

And so, beyond pledges of loan and grant support, the government-to-government or G2G projects will have to take a slow, tedious path to project rollout, with the feasibility studies for most not yet begun, and many others still without NEDA-ICC approval.

B2B entrepreneurs

The business-to-business (B2B) deals, though, are barely doing much better, and are turning hazier by the day.

Pernia told PCIJ that the B2Bs are “commercial” projects, “parang foreign direct investment.”

But Dominguez said that companies identified in the deals could just be “forming to bid,” with possibly no concrete plans set yet. “They are entrepreneurs trying to look for business opportunities in this infrastructure,” he said.

In any case, he said that the companies identified in the deals may also propose a project to a government agency, and convince the latter to submit the project to the ICC for review.

The Build-Operate-Transfer Law provides guidelines for “unsolicited proposals,” wherein project proposals may be submitted by the private sector, not in response to a formal solicitation or request by the government. But such projects need to involve a new concept or technology that is also not part of the government’s list of priority projects. No direct government guarantee, subsidy, or equity is required in these proposals. The project need not be a component of an approved project as well.

According to the Public-Private Partnership Center’s Guidelines for Unsolicited Proposals, unsolicited proposals require a greater need to combat the perception of “lack of transparency in the process, avoidance of competition and proper due diligence during Swiss Challenge, opportunities for corruption and political patronage; and acceptance of poor quality projects.”

DTI clams up

Budget Secretary Benjamin E. Diokno said that the best state agency to talk about the B2B projects would be the Department of Trade and Industry or DTI. The Department of Foreign Affairs (DFA) had also told PCIJ earlier that it had referred the Center’s letter requesting access to documents on the China deals to DTI.

Indeed, it was Trade and Industry Secretary Ramon Lopez and the DTI who made public the list of 27 projects with Filipino and Chinese firms already identified or paired as potential contractors at the close of Duterte’s state visit to Beijing. It was also the DTI that coordinated signing of memoranda of understanding pertaining to these proposed investments.

On Oct. 21 last year in Beijing, Lopez had even waxed ecstatic about what he said they were about to bring home from China. He told reporters, “Based on the numbers we are putting together now, in terms of investment, credit facilities opened, $24 billion.”

This was even though a day earlier, Lopez was quoting a total take-home windfall from the Duterte’s state visit of only $13.5 billion, in apparent reference to only the initial agreement on the business-to-business deals that are a separate portfolio of projects from the government-to-government ones.

Yet still, Lopez said the China deals were projected to create two million jobs, and even more in the next five years. He called Duterte’s state visit “highly successful,” and described Manila’s renewal of friendship and economic ties with Beijing as “like opening a faucet.”

No money, no track record

But PCIJ’s review of the corporate records of the 22 companies listed as proponents or partners in the business-to-business deals shows that some of them have no track record in doing big-ticket infrastructure projects, have negative or scant operating profit or reporting losses, and have significantly small asset bases.

Two of the companies are not even registered with either the Securities and Exchange Commission (SEC) or DTI. Two other firms registered with the SEC only in November 2016 and January 2017—or after the Beijing state visit where they apparently signed MOUs already with their Chinese counterparts.

READ: Analysis: Duterte’s China deals dissected

Moreover, only four of the 22 companies appear in the database of government contracts of the Philippine Government Electronic Procurement System or PhilGEPS, for the period 2012-2016. These four are “Expedition Construction Corporation,” “R-II Builders, Inc.,” “SL Agritech Corporation,” and “Trademaster Resources Corporation,” which altogether won a total of P1.03 billion worth of projects during the five-year period.

A big chunk of this total amount or P607.2 million was paid to SL Agritech Corporation to provide agricultural products, mostly “hybrid rice seeds” to various regional offices of the Department of Agriculture, Philippine Rice Research Institute, Central Luzon State University, and at least 15 local government units.

SL Agritech’s biggest contract in the last five years amounted to P136.6 million for the supply and delivery of 97,638 packs of hybrid palay seeds to DA-Region 1 in 2015. This was procured through public bidding, similar to how 64 percent of SL Agritech’s contracts in the covered period were processed. Some of other contracts were awarded to the company through negotiated procurement (19 percent) and direct contracting (15 percent).

Trademaster Resources Corporation, meanwhile, implemented P352.8 million worth of projects from 2012 to 2016. The supply and delivery of solar home systems and other electrical systems and lighting components make up 80 percent of these contracts, in addition to airconditioning systems and office equipment.

Trademaster Resources’s top project worth P104.8 million was for the “supply, delivery, installation, testing, and commissioning of 6,460 units of photovoltaic solar home systems” to the Department of Energy in 2012.

R-II Builders Inc. only implemented two contracts—both in Quezon City and in 2014—between 2012 and 2016. PhilGEPS data show the contractor bagged P68.9 million for the “Construction of Four Storey School Building (15 Classrooms w/ Multi-purpose Room) at Payatas B Elementary School including Land Development and another P3.9 million for “Airconditioning Unit with Installation” of the city government. These two projects were both procured through public bidding.

As for “Expedition Construction Corporation,” it is listed as having been awarded a P5.7 million contract for the “Proposed Road Improvement of 5th St. (Burgos St.) & 7th St. (Dagohoy St.), located at Brgy. West Rembo, Makati City.” This was procured through public bidding in 2012.

The rest of the 18 companies that signed on to the MOUs on the business-to-business deals with China, as well their name variations, do not appear in PhilGEPS database from 2012 to 2016, raising the possibility that they may not have done regular business with the government. (The PhilGEPS database relies on agencies supplying the information and so may not cover all awarded contracts.)

Last March 8, PCIJ wrote Lopez to request documents on the business-to-business deals, confident of a positive outcome. After all, the Departments of Finance and Budget had granted similar requests from the Center, as had NEDA. DFA for its part said that it had no copies of the documents, which was why it pointed PCIJ to DTI.

Three weeks later, on March 27, Lopez’s chief of staff, DTI Undersecretary Rowel S. Barba, replied in his stead. Barba turned down PCIJ’s request, writing: “Since the agreements listed in the letter are business-to-business agreements, and this Department is not a signatory to the said documents, we suggest that PCIJ directly request for copies of the agreements from their respective proponents/signatories.”

Still and all, the B2B projects mostly remain project concepts for now. If the B2B projects will focus on infrastructure or require government support, are unsolicited proposals, or involve to right-of-way issues, the government will unavoidably have to step in, and the projects enrolled in the investment plans of the partner or procurement agencies.

Manila, Beijing dating again: ‘Who is the screwer, screwed?’

May 9, 2017
Philippine President Rodrigo Duterte (C) returns a salute from a Chinese naval officer (L) as Philippine Defence Secretary Delfin Lorenzana (R) looks on during Duterte’s arrival to visit the guided missile frigate Changchun berthed at the Davao international port on May 1, 2017. Philippine President Rodrigo Duterte on May 1 visited Chinese warships docked in his home town and raised the prospect of future joint exercises, highlighting fast-warming relations despite competing claims in the South China Sea. Manman Dejeto/AFP

Last of Two Parts

FIRST PART: Investigative: Romancing China under Duterte

MANILA, Philippines (Philippine Center for Investigative Journalism) — They call it “Dutertenomics.” Its tagline: “Build, build, build.” Its boast: “The golden age of Philippine infrastructure.” Its estimated bill: P8.4 trillion, to be sourced from taxes, foreign and local loans, and Official Development Assistance (ODA) from bilateral partners.

By 2022, senior officials of the Duterte administration promise that roads, bridges, skyways, and rapid mass transport systems will rise and connect the 7,000-plus islands of the Philippines. The full bundle consists of 57 mostly infrastructure projects that the current government plans to implement, courtesy of money pledged by minted friends like China and Japan.

It has become a peculiar habit of President Rodrigo Duterte and his men to brag about the bacon they say they bring home from state and official visits overseas. Going by their press statements alone, they have already raised tens of billions of dollars—in pledges at least.

From his trip to the Middle East last month, Duterte has reportedly secured $925 million in potential investments from Saudi Arabia, Bahrain, and Qatar.

There has also been China’s assurance of $9 billion (about P452 billion) in loan and grants for government-to-government projects, and the possibility of $15.3 billion (P753.5 billion) more in joint ventures and investments by private companies (still on the drawing boards), across a six-year period.

Then there is Japan’s offer of a trillion yen or another $9 billion in ODA and investments in the next five years.

READ: Analysis: Duterte’s China deals dissected

Soon, on May 14-15, Duterte will fly again to Beijing to attend the conference on the “One Belt, One Road” flagship project of China’s President Xi Jinping. It envisions, like “Dutertenomics” the launch of major and massive China-funded infrastructure projects, across Asia, Europe, and Africa.

Duterte, Russian President Vladimir Putin, Turkish President Recep Tayyip Erdogan, Malaysian Prime Minister Najib Razak, Indonesian President Joko Widodo, Vietnamese President Tran Dai Quang, and Myanmar’s leader Aung San Suu Kyi are among the 28 world leaders who have reportedly confirmed their attendance at the summit.

Duterte’s bacon: $34B?

Finance Secretary Carlos Dominguez III himself says that Duterte has raised $33 billion in combined aid and investments from China and Japan alone. The claimed windfall from the recent Middle East trip brings the total to $34 billion. The operative word, Dominguez agrees, is “pledges.”

In just nine months in office, the peripatetic President has already visited 16 countries, albeit mostly quick trips. Apart from China, Japan, and Saudi Arabia, Bahrain, and Qatar, Duterte has also visited the nine other members of the Association of Southeast Asian Nations or ASEAN that the Philippines chairs this year: Brunei, Laos, Indonesia, Vietnam, Malaysia, Thailand, Cambodia, Singapore, and Myanmar. He has also been to Peru and New Zealand.

Excluding the president’s latest journey to the Middle East, the government has so far incurred total expenses of $5.5 million or about P270 million for his travels overseas, news reports have quoted Dominguez as saying. That is supposedly a small investment with big return value.

But do the aid pledges that Duterte has sought and secured make for a truly seamless story of goodwill between nations, yielding good results for all their citizens? The checkered past of China-funded projects in particular has had observers worried and raising questions regarding ODA-supported ones in general, and especially those marked for funding from Beijing.

Among the questions are: Will these pledges of aid and loans translate to good projects contracted with integrity, and how, where, and when in fact would they be started and finished?

What additional taxes, debt-service burden, or other relocation or dislocation costs must the citizens bear to pay for the loans that Dutertenomics would acquire, even after Duterte’s term ends in 2022?

And does China now deserve the full trust of an old friend like the Philippines; will the new projects be spared of the corruption and scandal that marred past projects?

A senior official queried by PCIJ had this comment: “The question only is, who is the screwer, who is the screwed? The relationship should be mutually beneficial.”

‘Plan big, achieve big’

But Dominguez told PCIJ recently, “Look, we are just beginning to date again. There was a six-year hiatus. This is confidence-building time.”

“Basically, the president has decided that one item of dispute should not decide our relations (with China),” Dominguez said, referring to the territorial squabbles Manila has with Beijing. He added that there would always be economic, commercial, political, and security issues that unite or divide nations. Said Dominguez: “It’s okay to have disputes, but we must not focus the relationship on that.”

“Every relationship is like that, you have to work at it,” he also said. “It’s not going to stay sweet if you don’t work at it.”

Dominguez said that he has offered the president this counsel: “I told him, look, China is not doing this solely because they love us. They have an overcapacity of their steel mills industry.”

Rather than have China close its factories, Dominguez said, the Philippines could get steel from China. He pointed out, “We’re helping each other. It’s an opportunity for them, it’s an opportunity for us. He (president) understands.”

The aid bonanza is not about “oversell” or press release, said Dominguez. Rather, he said, it is about setting higher goals. “If you don’t plan big, you will not achieve big,” he said.

This has prompted the government to use its own money to roll out the first three “priority projects” on its list of 57 projects. “The big ones,” Dominguez said, “we have decided to start projects on our own.”

The three projects are the south line of the North-South Railway, the New Centennial Water Source-Kaliwa Dam in Quezon province, and the Chico River pump irrigation project in Cagayan and Kalinga provinces. They have been allotted a P10-billion starting budget altogether, and their groundbreaking will supposedly take place between June and October this year.

“We will do these on our own budget and start project groundbreaking,” Dominguez told PCIJ. “We’re borrowing at low cost, 80 percent pesos, 20 percent foreign (loans).”

The rest of the projects could take some time later to launch, however. Dominguez acknowledged that the completion of project feasibility studies to the award of supply contracts may take 18 months in all. That would come in October 2018—at which time the political pot could start boiling on account of the scheduled midterm elections in May 2019 or, should legislation for the proposed shift to federalism pass, the conduct of a national plebiscite.

Dominguez noted, though, that 18 months is a much shorter period than the 30 months it reportedly took the administration of President Benigno Aquino III to launch projects under its Private-Public Partnership Program or PPP.

Avoid ‘abject lessons’

But Dominguez admits to one thing. He worries about what might, but should not, happen again: two failed and foiled China-funded projects approved by then President Gloria Macapagal-Arroyo, a close ally of both Duterte and China. These projects, which Dominguez calls “abject lessons that must be avoided,” are:

  • The $330-million NBN-ZTE national broadband project that was aborted in 2006 amid allegations of kickbacks sought and received by certain senior officials close to Arroyo; and
  • The $400-million loan from China Export-Import Bank for the 32-kilometer first section of the North Luzon Railways Corp. (Northrail) project that the Arroyo administration awarded in 2003 to a subsidiary of a China state-owned enterprise or SOE. Hailed then as China’s biggest loan ever extended to the Philippines, the second section of the Northrail project was to have been funded by another $500 million loan from the Export-Import Bank of China (China EXIM).

In 2012, because of supposed project revisions and delays, the Aquino administration canceled the supply contract for the Northrail project. In a decision dated Feb. 7, 2012, the Philippine Supreme Court en banc declared the contract invalid because it had been awarded without public bidding. The total loan value for Northrail’s Section 1 component came up to $503 million in combined principal and interest payments.

But Beijing said that what happened was not a “justified cancellation” and threatened to declare the Philippines in default of its loan. Beijing then submitted the case for arbitration proceedings in Hong Kong, which have yet to be finished.

In the meantime, to avoid being declared in default, Manila in 2012 agreed to pay Beijing installment amounts on more than half the total loan that had already been disbursed, or $180.8 million plus annual interest of three percent.

By September 2013, a Philippine treasury official was telling reporters that instead of one lump-sum payment, Manila had opted to pay equal tranches starting 2012 to 2014. By then, Manila had already paid China about $46.1 million.

Millions for nothing

Manila is still paying for the botched Northrail project, according to Dominguez. “My hand bleeds every time I sign checks for that loan because we got nothing, nothing at all,” he told PCIJ. “It’s okay to pay if we got something, but we got nothing.”

It was on Sept. 14, 2002 when China National Machinery & Equipment Corp. (Group) or CNMEG, represented by its chairperson Ren Hongbin, entered into a Memorandum of Understanding with the North Luzon Railways Corporation (Northrail), represented by its then president Jose L. Cortes Jr., for the conduct of a feasibility study on a possible railway line from Manila to San Fernando, La Union.

CNMEG itself did the project’s feasibility study for the NEDA, for free.

Eleven months later, on Aug. 30, 2003, the state-owned China EXIM and the Philippines’ Department of Finance (DOF) entered into a Memorandum of Understanding wherein China agreed to extend “Preferential Buyers Credit” to the Philippine government to finance the project.

Under this MOU, China EXIM agreed to extend a $400-million loan to the DOF as borrower payable in 20 years, with a five-year grace period and an annual interest rate of three percent. (In contrast, ODA loans from Japan typically carry a 0.5-percent interest rate per year.)

On Oct. 1, 2003, then Chinese Ambassador to the Philippines Wang Chungui informed Arroyo’s finance secretary, Jose Isidro Camacho, in a letter that Beijing had designated CNMEG as the Prime Contractor of the Northrail Project. No bidding for the supply contract was conducted.

On Dec. 30, 2003, Northrail and CNMEG executed a Contract Agreement for the construction of Section I, Phase I of the North Luzon Railway System from Caloocan to Malolos on a turnkey basis, at a contract price pegged at $421.05 million. The project was envisioned to ferry over 150,000 passengers daily to and from Manila.

Northrail’s second section costing about $673 million would have extended the line by another 48 kilometers and connect Manila to the former U.S. air force base in Clark, Pampanga that is now an international airport and a special economic zone. Another $500-million loan from China EXIM was to have funded the second section, bringing total Chinese funding for the venture to $900 million and making the entire Northrail project one of the biggest Chinese-funded projects in Southeast Asia.

Dominguez knows full well that the loan burden for the scuttled Northrail project and the kickbacks-ridden NBN-ZTE project continue to spook the recently rekindled China-Philippines relations.

‘Reputations at risk’

By all means possible, Dominguez said, the Duterte administration wants to prevent a repeat of the NBN-ZTE and Northrail projects. “We must protect everyone’s reputation here,” he said. “Everybody’s reputation is at risk here.”

As a key step, Philippine officials have reportedly served notice that only the principal companies with good track record and which China has designated would be considered for the supply contracts for the new projects.

For another, Philippine officials remain on guard about the now multiple brokers who have started to negotiate for their supposed Chinese principals.

“The Chinese usually have three or four brokers,” said one official who requested anonymity. “We said, we don’t like that. We told the Chinese government that’s why and how we ended up with Northrail and ZTE. We know about your projects in Africa.”

Personal and cultural conflicts had also marred relations between the Filipino-led North Rail Corporation and the management of the Chinese contractor CNMEG, which by 2010 had changed its name to Sinomach.

According to Aquino’s public-works secretary Rogelio ‘Babes’ Singson, the Arroyo government had realized too late that the state-owned CNMEG had at least four subsidiaries, and that Sinomach was just one of them. In truth, Singson told PCIJ in a recent interview, Arroyo’s officials had entered into contract with “just a subsidiary” of CNMEG.

Without a doubt, Singson said, China has a lot of competent contractors and “they do have capacity for these projects as they have built the longest railway network than any other country in the world had.”

The greed of brokers

But, he said, “the key is to tap into the expertise of contractors with track record, and talk to principals, not their representatives or subsidiaries.”

He also said that the government must parry the influence of brokers who claim to represent, truthfully or not, project proponents and potential contractors. “Brokers?” said Singson. “Talagang ganoon, you will have to accept that, even for some other donor countries, not just China, so long as the amount is not too far from the estimated (project) cost.”Singson. “Talagang ganoon, you will have to accept that, even for some other donor countries, not just China, so long as the amount is not too far from the estimated (project) cost.”

Contractors unaware or unsure of how project contracting unfolds in the Philippines tend to hire consultants or representatives or brokers, Singson explained. As for the brokers, “they’re after the commission, of course,” he said. “And that would depend on how greedy they are.”Singson explained. As for the brokers, “they’re after the commission, of course,” he said. “And that would depend on how greedy they are.”

Dominguez said that Manila intends to keep the new projects clean; hence it has sent new, clear messages to Beijing. “We have spoken with the Chinese government,” he said. “We told them we don’t know your SOEs, the subsidiaries of your SOEs, the subsidiaries of their subsidiaries. We told them we would much prefer that the Chinese decide to nominate three bidders for a particular project.”

China for its part has been amenable to conducting limited competitive bidding among Chinese firms for projects to be funded by China money. It used to insist on unilaterally nominating contractors for all Chinese-funded projects. For the Northrail project, for instance, Beijing designated a single contractor, CNMEG. To this day, it remains the nightmare that would not go away.

Six years after the China signed and sealed its loan for the Philippines, Sinomach had accomplished only 15 percent of the Northrail project, PCIJ reported in its 2010 story “Chinese foreign aid goes offtrack in the Philippines.”

A tragic tale

PCIJ had exposed how nearly nothing came of the project, noting in the story: “There are neither trains, stations, nor even a single kilometer of track. Many segments of the line are still occupied by illegal structures, including multi-story office buildings and factories. But even on most segments cleared of illegal dwellers, there is no construction activity. Only in a handful of sites can one see heavy equipment and laborers working to drive or bore huge concrete piles to lay the foundation of the giant posts for the elevated segments of the railway.”

How or why did China’s loans turn off-track at the time? PCIJ’s story presents a portent what might happen again under Duterte: “At heart, the Northrail project is a tragic tale of what happens when cheap Chinese aid money hooks up with weak governance in a borrowing country. From talks with current and former Philippine planning and Northrail officials, it is clear that a major driver for the project was the extreme concessionality of Chinese financing: an unprecedented three-percent annual interest rate, five-year grace period, and 20-year maturity.”

As it was under Arroyo, under Duterte, the same terms may apply for the new China loans. According to Dominguez: “About three percent interest rate, roughly the same 20-year payment period.”

He then said that the Philippine proposal for the terms of the loans from China is ready and that PCIJ should just get this from his staff. As of this writing, however, multiple PCIJ requests for the information have yielded no response from Dominguez and his staff.

Grid gridlock

Aside from the Northrail and NBN-ZTE projects, though, there was a third, equally big, bone that the Aquino administration had picked with China: the transfer to Manila of full control over the operations of the National Grid Corporation of the Philippines (NGCP) in which China’s State Grid Corporation has 40-percent equity control. This happened on account of a 25-year concession agreement that SGCC obtained from the Arroyo government in 2007 and which the Philippine Senate ratified in 2008.

The SGCC concession agreement expires in 2033 yet, or beyond the terms of two more Philippine presidents after Duterte.

Technical management of the operations of the grid—a high-voltage power transmission network that supplies electricity to millions of households,—came under full control of Filipinos only in July 2016. Manila had started negotiations with Beijing for the grid’s turnover as early as 2013 but it was only in 2014 when Manila decided against renewing the visas of 18 Chinese technical experts working at NGCP.

Apart from China’s SGCC, two Filipino firms—the Monte Oro Grid Corp. and Calaca High Power Corp.—own 30 percent equity each in NGCP.

In September 2013, Aquino sent to Beijing then Transportation and Communication Secretary Manuel ‘Mar’ Roxas II to discuss “some of the conflicts that exist” over the Northrail and NGCP contracts.

In both cases, Roxas said that Manila had wanted to disengage from Beijing.

Press reports had quoted Roxas as saying that the Philippine government wanted China to transfer the NGCP’s operations and technology, and train Filipinos on how to control “our national electric grid.”

“It’s not comfortable that foreigners are the ones handling the (electric grid),” Roxas had said.

The loan and the sea row

When Aquino visited China in 2012, Roxas said that Manila had proposed to “reconfigure” or rebid or continue the Northrail project loan, and even allow China to still participate in it, according to Philippine procurement rules.

“In short, both sides were trying to push through with the anomalous project by reconfiguring some of the elements so it would pass our Procurement Law,” media reports quoted Roxas as saying in September 2013. “But since then and until now, there was really no progress that transpired.”

It was amid the testy words exchanged over the Scarborough (Panatag) Shoal that Roxas said China decided to “call” the loan it had extended for the Northrail project.

“It was ‘called’—meaning it became due and demandable,” Roxas said. “So it was discussed how we would pay for it and since we got the money, we would settle it… in installments over the next two years.”

According to the Public Investment Staff of the National Economic and Development Authority or NEDA, only four projects had been assisted by grants from China from 2012 to 2017: the Philippine-Sino Center for Agricultural Technology (PhilSCAT) Technical Cooperation Phase II; Bilateral Seminar on Disaster Mitigation and Management; Rice Donation for Haiyan Victims; and 540 Units of Prefabricated Houses for Haiyan Victims.

In addition, NEDA said at least eight Philippine projects had been funded by loans from China from 2001 to 2014. These are the:

  • Non-Intrusive Container Inspection System Project;
  • Non-Intrusive Container Inspection Project II;
  • Angat Water Utilization and Aqueduct Improvement Project Phase II;
  • Northrail Project Phase I, Section I;
  • Banaoang Pump Irrigation Project;
  • General Santos Fishing Port Complex Expansion/Improvement Project;
  • Northrail Project Phase I, Section II (canceled); and
  • Agno River Integrated Irrigation Project.

The NBN-ZTE National Broadband Deal was supposed to be on that list, but in the end it didn’t push through. There was also the Cyber-Education Project or CEP, but that failed to even start as well.
Described as “a satellite-based distance-education program that provides real-time interactivity to public schools” and supposedly separate from the NBN-ZTE project, the CEP would have been funded by a $466-million or P22-billion loan from China. Plans also called for the Philippine Treasury to contribute P4 billion more to implement it.

Scuttled, too

CEP was designed to be a partnership between the Department of Education (DepEd) and the Tsinghua University, China’s top technology university, which manages the China Education and Research Network that covers 320 million beneficiaries.

It planned to link all DepEd administrative units, including the central office, 17 regional offices, 187 division offices, and 37,792 public schools, as well as provide 12 video channels, wireless wide-area networking, local-area networking, and wireless Internet to even the most remote parts of the country.

But in their review of the NBN and the CEP projects, University of the Philippines professors Raul Fabella and Emmanuel de Dios noted that the CEP “was scaled up to entail a government-operated backbone which consequently amplified its cost to P26.48 billion from its original no-separate backbone project estimate of P5.2 billion.”

The academics suggested that the P26.48 billion that would go to CEP could be put to better use. For example, they said, the amount could build 48,145 classrooms at P550,000 per classroom. Fabella and de Dios noted that the estimated classroom shortage for 2008 was 11,862 but had a budgetary requirement of only P6.52 billion.

NEDA approved the CEP in March 2007, or just two months after officials of the two nations signed a Framework Agreement on Bilateral Economic and Trade Cooperation.

In August 2007, then opposition congressman Teofisto ‘TG’ Guingona III of Bukidnon asked NEDA for copies of the contracts on the CEP, NBN-ZTE, and other projects that Arroyo and her officials had signed during their brief visit to China in April that year.

China’s ZTE Corp. on criticisms of National Broadband Network project of President Gloria Macapagal Arroyo.

Told by NEDA’s staff that the documents had gone missing, Guingona remarked, “It is bad enough that many citizens do not trust their government in matters of state like elections, foreign affairs, the dispensation of justice, human rights, and all that is important to us Filipinos. It is dismaying when our government can’t even be trusted with safeguarding public documents.”

In October 2007, amid the public outcry and congressional inquiry into the kickbacks-laden NBN-ZTE project, Arroyo finally suspended the CEP project.

Trojan horse trap?

These days, the Duterte administration is willing to bet that China can turn around its dismal record of projects in the Philippines. But some Filipino scholars on China say the Philippines should be more cautious when dealing with its giant neighbor.

“These are people, companies that felt that just because they have political connections, they can bribe, they can bring all their hanky-panky in our country,” commented U.P. political science assistant professor Jaime Naval. “Huwag naman tayo pagisa sa sarili nating bansa (We shouldn’t let ourselves be taken advantage of in our own country).”

China is “also very astute like the West and we have to be as astute as them,” said Naval, a China and ASEAN specialist. “They’re not giving because they love us, they’re giving because they take something back.”

He recalled reading a study that asserted that “for every one renminbi that China gives as ODA, it gets back six renminbi.” Said Naval: “It’s a political tool. It’s a given. I accept that. But we should not be naive that China is benevolent, that it hasn’t wrung us dry.”

“There’s a big difference between ODA coming from China and ODA coming from Europe, and U.S., and Japan,” Naval continued. He said that while “ODA from these developed countries are normally on health and education and certain advocacies that have something to do with the politics of the land and democracy…when it’s an ODA from China, it is extractive. There will be digging for minerals, they will get lumber, they will be harvesting natural resources.”

Dr. Renato de Castro, who holds the Charles Lui Chi Keung Professorial Chair in China Studies at De la Salle University, for his part observed, “With Chinese deals,‘yung binigay ng mga Greeks, sabi nga…’beware of the Greeks giving gifts, it’s a trap.’ You become dependent on Chinese aid. You become dependent on Chinese market. That’s why we become strategically and politically vulnerable to Chinese agenda.”

In de Castro’s view, “you don’t allow someone whom you have a territorial dispute (with) to dominate… this is very dangerous kasi we still have territorial disputes with China so that will give China a leverage in resolving those disputes. That would favor China (and) solve those disputes on Chinese terms, because China has economic leverage.” — With research and reporting by Karol Ilagan, PCIJ, May 2017.