Posts Tagged ‘Myanmar’

Philippines’ Duterte says Turkey, Mongolia could join ASEAN

May 16, 2017


© AFP | Philippine President Rodrigo Duterte has suggested Mongolia and Turkey should be granted membership of the Association of Southeast Asian Nations (ASEAN), despite not being located in southeast Asia


Controversial Philippine President Rodrigo Duterte said on Tuesday he would push for the inclusion of Turkey and Mongolia in a grouping of Southeast Asian nations, dismissing concerns about their geographic location.

Duterte said leaders of Turkey and Mongolia told him about their desire to join the Association of Southeast Asian Nations (ASEAN) while they were in China over the weekend for a summit on a global trade infrastructure project.

Duterte, whose nation holds the rotating ASEAN chairmanship this year, held separate meetings with Turkish President Recep Tayyip Erdogan and Mongolian Prime Minister Jargaltulga Erdenebat on the sidelines of the summit.

“They want to join ASEAN and since I am now the chair, the Philippines is, they wanted me to sponsor their entry and I said, ‘Yes, why not,'” Duterte told reporters in the Philippines.

The 10-member ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

A NATO member bordering the Middle East, Turkey straddles Europe and Asia. It’s application for membership of the European Union has been bogged down for years.

Mongolia is a landlocked nation wedged between China and Russia.

Geographic location is the first criterion for ASEAN membership, along with recognition by all other members.

Duterte said Myanmar’s de facto leader Aung San Suu Kyi, who also attended the summit in China, asked him if he had considered geography in deciding to sponsor Turkey and Mongolia’s ASEAN membership.

However Duterte insisted that the two nations were part of the region.

“They are. I would say that they are,” Duterte said.

“Turkey seems to be ambivalent on whether to be a bridge of Europe and Asia or being an Asian … Sometimes they say they are part of Asia. Sometimes they say they are a bridge of Asia to Europe.”

There was no immediate response to a request for comment from the ASEAN Secretariat, which is based in Indonesia.

Countries within the region like East Timor and Papua New Guinea have for years sought ASEAN membership but only hold observer status.

EU pushes Myanmar for aid access in northern Rakhine

May 15, 2017


© AFP | European Union aid commissioner Christos Stylianides speaking at a press conference in Brussels on September 8, 2016


A senior European Union official has urged Myanmar to allow full aid access to the north of Rakhine state, where thousands have fled their homes after a months-long army crackdown on Rohingya Muslims.

The area along the country’s northwestern border has been under lockdown since October, when the military launched a campaign to hunt down Rohingya militants who staged deadly attacks on police posts.

Some 100,000 people from the Muslim minority were displaced by the violence, most of them fleeing to Bangladesh and bringing with them harrowing stories of rape, torture and mass killings by soldiers.

Myanmar has rebuffed UN claims that its security forces may have committed crimes against humanity and has refused to allow international observers into the area.

De facto leader Aung San Suu Kyi this month publicly rejected a UN mission to probe the violence after meeting the EU’s diplomatic chief Federica Mogherini.

European Union commissioner for aid Christos Stylianides said he pushed for unrestricted humanitarian access during a three-day visit to Myanmar, which included a tour of northern Rakhine.

“A lot of problems remain in order to see what we want… about humanitarian access,” he told AFP late on Sunday at the end of his trip.

“I raised this issue a lot in my meetings, not only with ministers but also with the district commissioner of Maungdaw,” he added, referring to one of the locked-down areas.

The EU has pledged to give Myanmar some 800 million euros ($875 million) of development aid between 2014-20, making it the second-largest recipient in Asia after Afghanistan.

Stylianides is the highest-profile foreign official to visit northern Rakhine since UN rights envoy Yanghee Lee and former UN chief Kofi Annan, who leads a commission tasked with healing deep divisions between Buddhists and Muslims in Rakhine.

Over a million Rohingya who live in the coastal western state are treated as interlopers from neighbouring Bangladesh and denied citizenship, basic education and healthcare. Their movements are severely restricted.

Stylianides said some foreign aid workers had been granted access to northern Rakhine but more must be done to help 16,000 people who are still displaced before the imminent onset of the monsoon.

The commissioner also raised concerns about a push to forcibly rehouse Rohingya in state-built “model villages” in areas where troops are accused of burning hundreds of houses to the ground.

“It’s completely unacceptable to proceed on this project without the (voluntary) decision of the inhabitants,” he said.

Despite Crackdown, People-Smuggling Across Thai-Myanmar Border Has Risen

May 11, 2017

MAE SOT, Thailand — People smuggling across the border from Myanmar to Thailand is on the rise despite a crackdown by authorities in both countries that has made it more expensive and dangerous, Thai immigration police say.

Thailand said earlier this year that it hoped its efforts against smuggling would be recognised by the United States in its annual Trafficking in Persons report expected next month.

But while fewer migrants appear to be braving hazardous journeys by sea, figures from immigration police on the land border show an increase in people smuggled from Myanmar since 2014, when Thailand’s military government seized power and vowed to crack down on human smuggling and trafficking rings.

“We’ve applied a lot of pressure so they have to find a new way to come,” Sompong Saimonka, deputy superintendent of Border Immigration Police in Thailand’s western Tak province, the main land gateway from Myanmar, told Reuters. “We can’t keep tabs on it all.”

While Myanmar’s economy has been booming – the World Bank forecasts annual growth will average 7.1 percent over the next three years – wages remain among the lowest in the region.

Migrants from Myanmar often do work Thais shun in sectors such as construction, agriculture and fishing, forming the backbone of Southeast Asia’s second largest economy.

The two countries signed an agreement last year to allow migrants from Myanmar to legally work in Thailand. But many are unwilling to wait up to six months for identity documents and take their chance with the smugglers instead.


Thailand’s crackdown on human smuggling and trafficking syndicates reverberated around the region in 2015 and drew global attention to the abuses suffered by some of those seeking a better life.

Boatloads of migrants, many of them Rohingya Muslims escaping persecution in Myanmar’s Rakhine state, were turned away by regional governments from Bangladesh to Malaysia after being abandoned at sea by smugglers.

Dozens of bodies of suspected migrants were discovered in jungle camps along the Thai-Malaysian border.

Thai police say the focus on sea routes to Thailand and Malaysia has prompted smugglers to resume overland trails where it is easier to avoid checkpoints.

Data from immigration police at Mae Sot, the main entry point into western Thailand, shows the number of people smuggled from Myanmar rose from 20,323 in 2014 to 24,962 in 2016.

Those were just the recorded cases, so the increase could partly be due to greater enforcement efforts. Few of those recently smuggled were Rohingya, police in Mae Sot said.

“At present Thailand is very conscious about human rights when it comes to labourers and we have opened for labourers from Laos, Cambodia and Myanmar to come and work in Thailand,” government spokesman Sansern Kaewkamnerd.

“Thailand needs overseas labour. We just ask that it is correct.”

Overall figures on illegal entry into Thailand were not available.


The 2015 crackdown led to the trial of some alleged human traffickers.

But police in Mae Sot say the network of people willing to act as brokers is wider than previously thought.

“Anyone can be a broker. The problem is more widespread than we think. A Burmese factor worker in Mae Sot with a mobile phone can be a broker,” said a former border police officer based in Mae Sot, who declined to be named because he said he feared for his safety.

Last year, in its closely watched report that ranks countries based on anti-trafficking efforts, the U.S. State Department upgraded Thailand’s status a notch to its Tier 2 “Watch List”. Thailand had been downgraded to Tier 3, the lowest level that could trigger sanctions, after the 2014 coup.

The report, which usually comes out in June, matters to Thailand’s junta as it tries to fully normalise relations with Washington and to show it is tackling tough issues better than previous civilian administrations.

The Thai-Myanmar border in Tak province is approximately 500 km (300 miles) long, and includes the 327 km Moie River. During the dry season, which typically begins in March and ends in May, parts of the river are low enough to cross by foot.

Since 2015, many brokers won’t risk transporting migrants in large groups, said the former border police officer. Checkpoints have become more stringent, prompting smugglers to charge more.

Migrants typically pay up to 15,000 Thai baht (332.51 pounds) to be smuggled from the border area to Bangkok and other cities and towns in Thailand.

“Supply has gone down but demand for workers is still there so the fee for smugglers has gone up,” Yunus, a Myanmar Muslim broker in Thailand, told Reuters in a telephone interview.

(Reporting by Amy Sawitta Lefevre; Editing by Alex Richardson)

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.

The Laos Connection: Mr X and the cartels hooking SE Asia on pills

May 8, 2017


© AFP/File / by Aidan JONES, Jerome TAYLOR | Xaysana Keophimpa, allegedly a key figure among gangs buying drugs from Myanmar’s meth labs, arriving at a criminal court in Bangkok


The downfall of millionaire “Mr X”, long shielded by cash and contacts in Laos, has highlighted the role of the secretive, communist country in showering pills across Southeast Asia.

Allegedly a key figure among gangs buying drugs from Myanmar’s meth labs, Laotian Xaysana Keophimpha — dubbed ‘Mr X’ — is believed to have used his graft-riddled country to shuttle narcotics south, first through Thailand then onto Malaysia.

The heavy-set 42-year-old was arrested by armed Thai police on 19 January at Bangkok’s main airport en route to Laos where he lived freely, revelling in a lifestyle of celebrity parties and supercars.

He denies charges of drug possession and smuggling.

But subsequent police operations have turned up several more men accused of running drugs through Laos, an opaque country whose role in the regional narcotics trade is gradually emerging.

They are the suspected middlemen of the ‘Golden Triangle’, shifting pills, ice and heroin from the world’s second largest drug producing zone to a regional market.

Among the accused is Xaysana’s friend Sisouk Daoheoung — a minor Laos celebrity with a penchant for thoroughbred horses and a shared devotion to fast cars and fancy holidays flaunted on social media.

If police are right, their ostentation in one of Asia’s poorest countries was funded by smuggling highly-addictive caffeine-laced methamphetamine pills — better known as ‘yaba’ or crazy medicine — and crystal meth (ice).

“From Xaysana’s phone and Facebook records it was clear he and Sisouk are friends… their (drug) groups are connected,” Thai Police Major-General Supakit Srijantranon told AFP last week.

– Meth men –

At $8 a pop in Thailand, the best yaba pills rise in price the further they move from source, bringing extraordinary rewards to the traffickers.

Stamped with a distinctive ‘WY’, the pink and green pills of the Myanmar drug labs are supercharging everyone from Malaysian farm hands to Bangkok’s “Hi-So” (high society) party crowd.

Each year regional seizures break records, according to the UN’s crime agency.

That points to better law enforcement, they say, but it also show that the cartels can ramp up production at will to cover losses.

The highest quality pills (15-20 percent meth purity) come from the factories of the North and South Wa — armed ethnic groups marshalling a self-governing state on the Myanmar-China border — and by the Lahu hill tribe.

Poor, corrupt and bordering five countries, Laos makes for an ideal transit route to the rest of Southeast Asia.

Drugs are shifted across the Mekong river into Thailand then onto Malaysia and beyond.

Thailand is being hit hard by the trade.

Between October last year and April, Thailand seized 74 million pills, according to the kingdom’s Narcotics Control Board (NCB), as well as two tonnes of crystal meth and 320 kilogrammes of heroin.

Official estimates say the kingdom has around 1.3 million addicts, with drug convictions accounting for the bulk of Thailand’s prison population of 290,000 — the tenth highest incarceration rate in the world.

“Drugs are destroying everything. They affect the security of our country, our society and people,” NCB secretary-general Sirinya Sitdhichai told AFP.

Cops are fighting back and say they have battered three major Laos-linked drug networks, confiscating tens of millions of dollars-worth of assets including hotels, cars, cash and even a horse riding school in Vientiane.

They are still hunting a fourth group led by Usman Salameang, a Thai believed to be holed up in Laos, wanted for moving gear through Thailand’s violent border area into Malaysia.

“He is the only big boss we are still trying to arrest,” Sirinya said.

– All roads lead to Laos –

Historically, communist Laos has been reluctant to admit it has a drug problem.

But under Prime Minister Thongloun Sisoulith the country is keen to show it is flushing out criminals and corrupt officials.

The recent arrests are part of his get-tough message to the drug gangs.

Last year Laos authorities reeled in a record 144 kilogrammes of crystal meth and nearly 21 million yaba pills.

The once toothless Lao National Commission for Drug Control and Supervision (LCDC), has been beefed up under control of the Ministry of Public Security.

The fall of Xaysana and co. is being bundled up as victory for intelligence-sharing between Laos and Thailand.

But with many western embassies still unable to post specialist narcotics police in Laos it is hard to get facts on the country’s suspected role as a haven for drug producers.

The LCDC did not respond to AFP requests for comment.

And while Laos authorities sweep up mid-ranking henchmen they do not touch “the major organised crime behind significant production and trafficking,” according to Jeremy Douglas of the UNODC.

Questions remain over how high-profile suspects could have operated beyond the law for so long.

One reason for that impunity is their aversion to publicity and violence — in contrast to their Latin American peers — a western drug enforcement official told AFP, requesting anonymity.

They live by a maxim of “Don’t bring attention to your operations. You work in silence, you work in the dark.”

by Aidan JONES, Jerome TAYLOR


Amid watered down statement, ASEAN ministers share South China Sea concern with Tillerson

May 5, 2017
Foreign ministers from Southeast Asia take their seats for a meeting with Secretary of State​ Rex Tillerson at the State Department in Washington, Thursday, May 4, 2017. AP/Jacquelyn Martin

MANILA, Philippines — Some Southeast Asian nations remain concerned over the militarization and land reclamation activities of Beijing in the South China Sea, according to the US Department of State.

US Secretary of State Rex Tillerson recently hosted a meeting with foreign ministers of member states of the Association of Southeast Asian Nations (ASEAN) in Washington.

The meeting comes a few days after the conclusion of the 30th ASEAN Leaders’ Summit in Manila.

US Department of State spokesperson Heather Nauert said that Tillerson and the ASEAN foreign ministers reaffirmed their adherence to a rules-based order in the Asia Pacific and to the common principles stipulated in the 2016 joint statement of the US-ASEAN Special Leaders’ Summit.

“The Secretary noted shared concerns by many in the region regarding militarization and land reclamation in the South China Sea,” Nauert said in a statement released Friday (Manila time).

In the “Sunnylands Declaration” issued in February last year, former US President Barack Obama and ASEAN leaders expressed stronger commitment to keeping peace in the South China Sea.

READ: ‘Sea freedoms must be respected’ | US: No valid reason for China to restrict navigation in disputed sea

The leaders agreed to respect the sovereignty of every nation and abide by the rules provided for under the 1982 United Nations Convention on the Law of the Sea.

Tillerson and the ASEAN ministers shared the same commitment to adhering to peaceful resolution of disputes with full respect for legal and diplomatic processes and in accordance with international law, according to Nauert.

“The Secretary and the Ministers stressed the need for ASEAN Member States and China to ensure the full and effective implementation of the Declaration on the Conduct of Parties in the South China Sea in its entirety, and took note of efforts towards the early conclusion of a meaningful Code of Conduct in the South China Sea,” Nauert said.

Under Philippine chairmanship this year, the 10-member regional bloc released a statement weakening its resistance against Chinese activities in the South China Sea.

READ: Philippines goes easy on China in final ASEAN statement

President Rodrigo Duterte’s chairman statement removed any mention of international concerns over China’s “militarization” of newly built islands in the disputed waters.

The ruling of an international tribunal over the Philippines’ complaint against China’s nine-dash line claim over the South China Sea was also not mentioned in the final communique.

In July 2016, a United Nations-backed tribunal issued an award in favor of the Philippines, invalidating China’s historic claims.

The Duterte administration, however, is keen on setting aside the arbitral ruling in talks with China.


 (The authors say, China prefers places with lots of poverty and corruption and not too much interest in rule of law or human rights…)


No automatic alt text available.

On July 12, 2016 a ruling of the Permanent Court of Arbitration in the Hague said China’s nine-dash line claim (shown above) was invalid and not recognized in international law.

US Secretary of State Rex Tillerson hosts Asean foreign ministers in Washington

May 4, 2017

WASHINGTON – Asean Foreign Ministers have commenced a meeting over a working lunch in Washington DC with US Secretary of State Rex Tillerson, in the first such high level engagement with the new US administration.

Foreign ministers from all 10 Asean member states were present, though Vietnam was represented by its deputy foreign minister. Myanmar was represented by National Security Adviser Thaung Tun.

The discussion will be followed by a reception in the evening by the US-Asean Business Council. The ministers are due to meet National Security Adviser H.R. McMaster the next day.

Top of the agenda is enhanced US engagement with Asean across a broad range of issues including economy and trade, technology and training, and security and the situation in disputed waters of the South China Sea. The crisis over the Korean peninsula is expected to figure prominently as well.

Today, Congressman Joaquin Castro (TX-20), founding co-chair of the US Congressional Caucus on Asean and member of the House Foreign Affairs Committee, released the following statement welcoming foreign ministers from Association of South East Asian Nations (Asean) member states to Washington, DC.

The Secretary of State and ministers crossed hands in the trademark interlinked Asean handshake, but took no questions from the media which was only allowed briefly into the room at the start of the scheduled 45-minute meeting.

In a statement on the eve of the meeting Texas Congressman Joaquin Castro, founding co-chair of the US Congressional Caucus on Asean and member of the House Foreign Affairs Committee, said: “This year not only marks the 40th year of the US-Asean relationship, but also the 50th anniversary of Asean’s formation.”

“I’m pleased that dignitaries from our South-east Asian partners are in the United States at this historic time, and I look forward to our countries’ increased collaboration on economic, security, and human rights matters.

“Together, the United States, Asean, and our strategic allies can foster a more stable and prosperous Asia-Pacific.”


Myanmar coal plant growth could kill 280,000: study

May 4, 2017


© AFP/File | A fishmonger uses battery-powered portable lamps in Yangon in Myanmar, where less than a third of the population have regular access to electricity


Myanmar’s plans to grow the country’s desperately needed but polluting coal-fired power plants could kill more than a quarter of a million people in the coming decades, environmentalists said Thursday.

The country’s air is among the dirtiest in the world and pollution is only expected to worsen as the economy opens up after decades of isolation under the former junta.

A new study by Harvard University and Greenpeace warned that the government’s plans to expand its current network of two coal-fired plants to 10 could have a major human toll.

Six of its cities already have higher counts of dangerous microscopic particles known as PM10 than China’s famously smog-filled capital Beijing, according to 2016 data from the World Health Organization.

“These plans do not take into account the human health costs when making choices about the country’s energy future,” Lauri Millyvirta, from Greenpeace, said.

The extra pollution would likely cause more than 7,000 premature deaths a year, totalling 280,000 over the 40-year operating life of the eight new planned plants and the two operating ones, it predicted.

Half would be in Myanmar and the rest in neighbouring countries, mainly Thailand and China but also other parts of Southeast Asia, the study found.

The pollution would likely increase the risk of heart attacks, breathing problems and lung infections.

Myanmar has made coal-fired plants a cornerstone of a government plan to provide electricity to its entire population of more than 50 million people by 2030.

Less than a third of people have regular access to electricity through the country’s dilapidated power grid, which frequently breaks down, and a lack of power is a major issue for attracting foreign investors.

While the country has abundant reserves of gas off its shores in the Andaman Sea, the vast majority is exported, mainly to Thailand and China.

Plans to build the $3.6 billion Myitsone hydroelectric dam on the mouth of Myanmar’s Irrawaddy river, which would sell some 90 percent of its power to China, have also faced strong public opposition.

Myanmar: Aung San Suu Kyi Says “No” To U.N. Human Rights Investigation Into Abuse of Rohingya Muslims — Crimes Against Humanity and Ethnic Cleansing

May 3, 2017


Aung San Suu Kyi in Brussels, Belgium 

Aung San Suu Kyi in Brussels, Belgium  CREDIT: REUTERS


Aung San Suu Kyi on Tuesday rejected a decision by the UN’s rights council to investigate allegations of crimes by Burma’s security forces against minority Rohingya Muslims.

The UN body agreed in March to dispatch a fact-finding mission to the Southeast Asian country over claims of murder, rape and torture in Rakhine state.

“We do not agree with it,” Ms Suu Kyi, Burma’s de facto leader, told a press conference with EU diplomatic chief Federica Mogherini during a visit to Brussels, when asked about the probe.

“We have disassociated ourselves from the resolution because we do not think that the resolution is in keeping with what is actually happening on the ground.”

Nobel laureate Suu Kyi said that Burma, also known as Myanmar, would be “happy to accept” recommendations that were “in keeping with the real needs of the region.

“But those recommendations which will divide further the two communities in Rakhine we will not accept, because it will not help to resolve the problems that are arising all the time.”

Ms Suu Kyi has seen her international star as a rights defender wane over failing to speak out about the treatment of the Rohingya or to condemn the crackdown.

Children recycle goods from the ruins of a market which was set on fire at a Rohingya village outside Maugndaw in Rakhine state
Children recycle goods from the ruins of a market which was set on fire at a Rohingya village outside Maugndaw in Rakhine state CREDIT: REUTERS

Rights groups say hundreds of the stateless group were killed in a months-long army crackdown following deadly attacks on Burma border police posts. Almost 75,000 Rohingya have fled to neighbouring Bangladesh where they have related grisly accounts of army abuse.

But Ms Suu Kyi rejected suggestions that she or Burma authorities were deliberately overlooking atrocities.

“I am not sure quite what you mean by saying that we have not been concerned at all with regards to the allegations of atrocities that have taken place in the Rakhine,” she said.

“We have been investigating them and have been taking action.”

Aung San Suu Kyi with Federica Mogherini in Brussels
Aung San Suu Kyi with Federica Mogherini in Brussels CREDIT: AFP

Ms Mogherini called on Burma to support the UN inquiry.

“The establishment of the fact-finding mission is one of the very few issues of disagreement between us,” she said alongside Ms Suu Kyi.

“This can contribute in establishing the facts for the past, provided that we fully agree on the need to work together on the way forward,” she said.

UN investigators say the crackdown likely amounts to crimes against humanity and ethnic cleansing.

But Ms Suu Kyi told the BBC earlier this month: “I don’t think there is ethnic cleansing going on.”