China buildup a major concern

Satellite images released by the Asia Maritime Transparency Initiative of Washington-based think-tank Center for Strategic and International Studies (CSIS) showed new military and communications facilities being built by China on Kagitingan (Fiery Cross), Panganiban (Mischief) and Zamora (Subi) reefs in the Spratly Islands.

No one really knows how this situation will really pan out, but intelligence analysts cautioned that this should be a major concern that could lead to heightened regional tension sooner than later. President Duterte has repeatedly said that there will be a right time and place to discuss the South China Sea issue with China, but it’s obvious that this won’t happen anytime soon with the president busy with the situation in Marawi, plus the fact that Foreign Secretary Alan Peter Cayetano’s first official visit to China indicated no mention at all about the China buildup.

Despite the president’s independent foreign policy that seems to be distancing the country from its longtime traditional ally, it is rather ironic to note that that it is now the United States that is more concerned than ever about the situation because of its potential security implications on the Asia Pacific region.

During our lunch the other day with Walter Lohman, a Southeast Asia policy expert who is also the director of the Heritage Foundation’s Asian Studies Center, he said that the Philippines should have taken the lead in steering the ASEAN meeting last April towards promoting the rule of law as far as the territorial disputes in the South China Sea are concerned.

The July 2016 ruling by the Permanent Court of Arbitration that favored the Philippines and debunked China’s sweeping historical claims of ownership was a significant milestone that many feel could have been used by the Philippines to its advantage as chairman of ASEAN 2017.

Former Foreign Affairs Secretary Albert del Rosario has always said that the Philippines should take a firm stand regarding adherence to the rule of law, stressing that the development of the framework for the Code of Conduct should factor in the PCA ruling as the most important component. 

During the recent US-ASEAN Conference on legal Issues of Regional Importance held at Singapore, maritime security experts noted that “Competing territorial and maritime claims lead to increased risk of conflict and destabilize the overall security of the region. Although there has been progress in terms of clarifying territorial rights, more clarification of, and adherence to the rule of law, is required. Moreover, peaceful dispute settlement mechanisms should be bolstered to ensure the swift resolution of disputes and to ensure security in the region.”

Phl economy in good shape

An old friend of mine who retired recently from a fund management company based out of New York and now does investment analytics for clients all over the world, visited Manila for the first time in 10 years. While he was impressed with the new infrastructure developments like the NAIA Expressway, he says we still lag behind our neighbors in Asia.

Traffic continues to be a major setback, and he said we should have resolved this problem more aggressively in the past, noting that the difficulties experienced by the commuting public is obviously due to the lack of an efficient mass transportation system.

Nevertheless, the Philippine economy continues to show positive indicators, with bullish outlooks from lending institutions like the World Bank that expects a 6.9 percent GDP growth this year. Moody’s Investors Service also maintained its investment grade rating at Baa2 with a stable outlook, saying that it expects “growth to be sustained at above 6 percent per year over the next two years.”

According to Socioeconomic Planning Secretary Ernie Pernia, they are targeting economic growth at 6.5-7.5 percent for 2017 and 7-8 percent from 2018-2022, adding that the country has enjoyed 73 consecutive quarters of GDP growth.

Obviously, the negative publicity and criticisms about the president’s war on illegal drugs has not made any major dent on his popularity, with foreign investors continuing to show interest in the Philippines as a potential investment destination. In fact, even Moody’s noted that Duterte’s declaration of martial law in Mindanao and the military offensive in Marawi has not affected the economy. This can be attributed to the positive perceptions that the drastic move showed his political will to contain something as serious as an ISIS terrorist threat.

Malaysia and Indonesia’s collaboration with the Philippines to conduct joint maritime patrols to prevent terrorist incursion in Sulu Sea and North Sulawesi, plus the decision of Australia to provide surveillance support gives credence to the president’s claims that the terrorist threat was serious enough for the declaration of martial law.

The situation in Marawi has spurred strong support for our troops, with ordinary Filipinos pitching in and boosting the morale of our soldiers through statement shirts and big companies utilizing their resources to aid the displaced people of Marawi.

Asia Brewery for instance donated over 350,000 “white label” bottles of water (to prevent unscrupulous individuals from reselling them) for the troops and evacuees and installed water stations in a military camp, while the PAL Foundation conducts humanitarian cargo grants for victims, with over 4,250 kilos of donations (blankets, school supplies, underwear, etc.) airlifted for free. 

No one can really predict what the president will say during his State of the Nation Address on July 24, but whatever he says, indicators point to the economy being in good shape, with the administration’s economic managers led by Finance Secretary Sonny Dominguez, Budget Secretary Ben Diokno, and NEDA chief Ernie Pernia making many investors feel confident that the ambitious Dutertenomics program will drive the economy into even greater heights.

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