Japan - Philippines Tighten Defense Ties for Sea disputes over China

Bolstering defense Japan - Philippines

Japan and the Philippines agreed on during the visit of the Philippines' president to Japan September 27, 2011 to strengthen maritime security ties, while also underscoring the importance of preserving peace and stability in the West Philippines Sea (South China Sea) amid rising tensions with China.

China has pronounced many times that they owned everything the in West Philippines Sea that worries other tiger economies in Asia such as Japan & South Korea which major of their trades are passing the world's most busiest sea in the West Philippines Sea and South China Sea – Spratlys archipelago.

Prime Minister Yoshihiko Noda and the Philippines President Benigno Aquino III met, on a four-day visit to Japan. Japanese Prime Minister told reporters that the two sides committed to bolstering "cooperation between coastguards and defense-related authorities."

A joint statement said bilateral ties have evolved from friendly relations to a "strategic partnership," and called for more collaboration on "regional and global issues of mutual concern and interest." The two countries also agreed to conduct frequent discussions on defense at more senior levels and increase the number of Japan Coast Guard missions to help train their Philippines counterparts.

Although the agreement does not directly mention China, it is a major symbolic step toward a multilateral consensus in Asia on dealing with increasing territorial friction with China.

China maintain its claim to the whole West Philippines Sea & South China Sea  with its 9 dotted map inspite of criticism of the ASEAN neighbor with 200 Nautical Miles Exclusive Economic Zone claim in the sea.

The Philippines and China both lay claim to the Spratly Islands; an archipelago in the West Philippines Sea and South China Sea that geologists think may lie atop significant oil and gas deposits and rumored to be the 4^th largest oil and gas deposit in the world. Philippines' officials have accused Chinese vessels of hindering oil and gas exploration in a portion of the waters known as Recto Bank (Reed Bank) which is just few kilometers off Palawan Province – Philippines says this is not part of the disputed areas. Vietnam, which also claims part of the Spratly chain, has likewise complained of China's increasingly assertive claims in the region.

China's Fishing Vessel tactics

China has been noticed by the neighbors that they are using fishing vessel tactics which equipped with high powered weapon to enter other waters. Japan learned from China's tactic after China invaded the Mischief Reef few kilometers off Palawan province of the Philippines using the fishermen vessel to erect a fishermen shelter then later converted it into a Military Garrison even inside the Philippines territory.

In 2011 alone, Japan intercepted Chinese Fishing vessel entering their waters. Moreover, Indonesia's coastguard also arrested Chinese entering their seas using a fishing vessel.

The recent issue that escalate tension between Vietnam and China happened also this year when Chinese fishing vessel cut the cable of the Petro Vietnam, a Vietnam Government Owned Oil exploration which china alibi as it is just a Chinese Fishing vessel and mistakenly drag the cable but later admitted that Vietnam is illegally operating in the area as they said its owned and they do not violated any law and they are not invading.

The Philippines didn't escape from China's harassment. China harassed Filipino Fishermen in the Philippines Waters saying to leave the area because it belongs to china, then another incident happened when China fired the Filipino Fishermen in the Palawan Sea and put markers in the Island and waters in Palawan shore.

Japan too, has seen its relations with China strained by a territorial dispute, this one over islands in the East China Sea. A war of words broke out between Beijing and Tokyo last autumn following the arrest of a Chinese fishing crew by the Japanese coast guard, and the year since has brought a series of incursions by Chinese ships into the disputed waters. Mr. Noda earlier this month voiced concern over China's military build-up and increased maritime activity near Japan.

The agreement between Japan and the Philippines stresses the two countries' shared interests, bringing the similar but separate maritime squabbles with China under a larger cooperative umbrella.

"The peaceful settlement of disputes serves the interests of the two countries and the whole region," said the joint statement, signed by both leaders. Japan and the Philippines "share the recognition that these same interests should also be advanced and protected in the West Philippines Sea and South China Sea."

Responding to the Japan-Philippines meeting, China's foreign ministry on Tuesday (September 27, 2011) reiterated its claim to the disputed waters in the South China Sea.

"China has indisputable sovereignty over the island and surrounding waters of the South China Sea," said ministry spokesman Hong Lei in Beijing.

Regardless of many criticisms, China never leaves the phrases; "we owned everything" & "China has indisputable sovereignty over the island and surrounding waters". Philippines Challenged China to bring the disputes to the United Nations to end it but China refused and said we are only open to bilateral settlement not to the United Nations. 

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The next ASEAN tiger cited by Asia Inc & Business leader could be the Philippines

The Philippines has a most unique economy in the world which is highly dependent on domestic consumption that drives their economy that could be hardly hit for any possible global economic recession. Inspite of rich resources, Philippines did not rely on exports to drive a better and fast forward economy.

The Philippines now tagged with fresh opportunities in Asia, boosting and high grades gold mining, boosting of oil and gas exploration,  good political leader,  revived confidence from global investors and now named as to be Asia’s next tiger economy, potentially regaining the glory lost decades ago, according to a visiting regional business leader from Brunei.

Dato Timothy Ong, a leading Brunei businessman who founded and now chairs regional dialogue platform Asia Inc. Forum, said in a press briefing on last September 26, 2011 that he has seen signs that the Philippines could return to its goal of being the next Asian tiger despite staying at the bottom half of the 10-member Association of Southeast Asian Nations (ASEAN) in terms of economic performance for years.

Ong is also the convener of ASEAN 100 Leadership Forum, which will be hosted by the city of Makati on Sept. 28-29, 2011 at the Makati Shangri-La. This year’s ASEAN meet aims to foster insightful and intelligent discussions on the future of ASEAN and how the region can emerge as one of the world’s significant economic blocs.

According to Dato Timothy  Ong, the Philippines can join the ranks of Taiwan, Singapore, South Korea and Hong Kong, the so-called Asian “tiger” economies or newly industrializing countries. He cited five reasons why the country, though a “dark horse,” or a sick man in Asia had the makings of the next move to be the next “tiger.”

The Chair of the regional dialogue platform Asia Inc. Forum cited 5 following reasons why the Philippines could be the next ASEAN Tiger as:

1.      The new leadership under President Aquino has promised to weed out corruption in the country, which has been creating a lot of optimism. It’s widely perceived that the high level of corruption in the country has driven up the cost of doing business.

 

2.      Mr. Ong said that the Philippines’ would be vast pool of hardworking professionals and skilled manpower, many of whom have been deployed across the globe. “With this wealth of human resources, it’s important to ask then why the Philippines aren’t more successful economically,” he said. Many countries had been dependent on Filipino Professionals and skilled workers to drive their economy like for example banning the Filipino to work in Taiwan will paralyze the Taiwan’s economy. Banning the Filipino to work in the Middle-east might paralyze their economy. Deporting Filipinos in (North Borneo) Sabah might paralyze the Sabah’s economy which the world knew how important the human resources are.  The continues development in the other north Asian countries had been dependent on Filipino skilled workers like for example the Billion Dollar projects of Korea’s builder Hyundai Engineering in Kazakhstan and Turkmenistan which been dependent on Overseas Filipino Workers as highly skilled which the builder could not outsource such kinds from the local man power pool in the 2 ‘stan countries. Many Leading fortune 200 companies in the world are talents hungry but the Philippines have vast and awashing man power pool. Many countries take advantage of Filipinos for not just for cheap labor but also trustworthy multi-tasker and English speaker that could compete globally.

 

3.      The third factor would be the Philippines’ “centers of excellence,” Ong said, noting that the country has become a competitive hub for business process outsourcing. He likened the Makati central business district to a “First World” city in a Third World country.  “If the Philippines is capable of being first world in these centers of excellence, why can’t it be First World in every respect?” he said.

 

4.      Ong said the fourth reason would be the Philippines’ homegrown companies that were at par with the world’s best.  He cited fast-food giant Jollibee Foods Corp., international port operator International Container Terminal Services Inc. and the Ayala group of companies. “There is a sense of optimism that characterizes the country as a whole.  As the new government takes its steps in leading the country towards change, it may be able to experience higher standards of governance,” he said.

 

5.      Finally, Ong noted the Philippines’ “sharply improving competitiveness” as another factor supporting its aspiration to be the next tiger economy. He cited recent reports that the Philippines had jumped 10 notches to 75 from 85 in the latest ranking of the World Economic Forum. Ong said this happened only within the first 15 months of the term of the new president.

Meanwhile, Ong said ASEAN would likely partly meet its target to establish an integrated economic community by 2015.

“A One ASEAN is important for our collective future to accelerate the economic growth, social progress and economic stability in the region; to promote active collaboration and mutual assistance in economic, social, cultural, technical and administrative spheres,” Ong said.

“At the moment, Southeast Asia is like a big gated community where neighbors barely know each other. They know each other by name, they exchange pleasantries but they wouldn’t really go out of their way to have dinner at each other’s house,” he said.

Once integrated, he said, ASEAN could be a very influential bloc as it could become Asia’s third-largest economy next to China and Japan and the ninth-largest in the world.

The Philippines hinting to be a the second ASEAN tiger is so closed to achieve.

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Royal Dutch Shell Plc toplist the Philippines as Investment priority

Royal Dutch Shell- Shell Philippines Exploration BV is interested to invest another $1 billion to increase the production of the Malampaya deepwater gas-to-power project off Palawan and announced earlier that it would pursue its Floating Liquefied Natural Gas (LNG) Project in the Philippines. Shell Philippines vice president for communication Roberto S. Kanapi said there are opportunities for investment and expansion, unlike in the past when the Philippines was placed on low priority.

OIL AND GAS: The fifth largest company in the World - Royal Dutch Shell Plc has placed the Philippines in its investment map as it sees growth opportunities in the country.

The Royal Dutch Shell plc commonly known as Shell is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the fifth-largest company in the world (and the second-largest energy company) according to a composite measure by Forbes magazine and one of the six oil and gas "Super Majors". It is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading. It also has major renewable energy activities, including in biofuels, hydrogen, solar and wind power.

Shell has operations in over 90 countries including the Philippines and produces around 3.1 million barrels of oil equivalent per day and has 44,000 service stations worldwide

On a press conference in the Philippines, Shell V-President for communication Roberto S. Kanapi told reporters that there were opportunities for investment and expansion in the Philippines, unlike in the past when the Philippines were placed on its low priority.

“Increasing demands, opening of several areas for oil and gas exploration and strengthen competition makes the industry exciting as the Philippines untapped resources opens its gate for early birds. Shell did not show any details yet but putting the Philippines for their high priority of investments might say there are lots of things to happen soon... There are plans for Shell in the Philippines as saw that the Philippines is an attractive market and a growing market at that. And I think the change in governance also helped a lot,” Kanapi explained.

“As for the cases we are facing, we will go to courts with that and that is part of doing business in the Philippines, but we are prepared for that. We are looking more into the opportunities than the threats,” he added.

The Shell Companies in the Philippines is now in the process of completing a study that will determine the next steps for its refinery in Tabangao, Batangas—as to whether it will be expanded or upgraded to cater to the increasing local demand.

Kanapi said that they expected to complete the study next year in 2012. The decision to list Shell on the local bourse would also largely hinge on the results of the study, he added.

Royal Dutch Shell, through its upstream unit Shell Philippines Exploration BV, is likewise showing interest  to invest another $1 billion to increase the production and extend the life of the Malampaya deepwater gas-to-power project off Palawan.

SPEX, along with other consortium members Chevron and PNOC Exploration Corporation, plans to invest about $250 million for the second phase of the Malampaya project, which will entail the drilling and development of two additional wells. This is expected to be completed by February 2014. Another $750 million will be invested for the third phase, which will involve the installation of a new platform where additional equipment and facilities will be housed by December 2015.

“The projects, entailing new investments, are seen to further benefit the Philippines in energy self-sufficiency and government revenues and will continue to be a major source of power for Luzon’s energy requirements in the years to come,” SPEX said.

Meanwhile, Royal Dutch Plc has also expressed interest in participating in the liquefied natural gas program of the government.

Edgar Chua, country chairman for Shell Companies in the Philippines, had said that the company was interested in becoming a supplier of LNG as well as in putting up the necessary infrastructure, including the “regasification” facility and pipelines which required huge investments.

Mr. Chua did not indicate if Shell would be interested in bidding for the proposed 100 kilometer Batangas-Manila natural gas pipeline that will require as much as $1.3 Billion Dollars in investment of which $500 million will go to the construction of the pipeline while another $700 million to $800 million will be needed for the “regasification” facility and the receiving LNG terminal.

Chua only noted that Shell would likely look for other potential local partners for its planned foray into the Philippine LNG industry.

Royal Dutch Shell Plc announced earlier that it would pursue its Floating Liquefied Natural Gas (FLNG) Project in the Philippines.

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Hikot - Pinoy Social Network in its full blown like Facebook

Pinoy’s Social - Hikot aims to be better than Facebook

After the launching of the Philippines’ pride social network last February 14, 2011, it suddenly lost in space as their upgrade takes so long that deletes all existing accounts but recently their site, Http://www.hikot.com shows it full blown and perfect network; with a big congratulations aura in their recent upgrade.

We have tried to contact the administration of the Hikot if this is their full and final blown but until now, they did didn’t comment back. The recent look of the hikot is closely the same with Facebook but it shows more sophistication and dynamic feature which could not be found in Facebook. With this recent version of Hikot, it seems that they are trying to compete with Facebook’s global market shares of users.

The concept of hikot.com is not just a social network but also a market place where you could sell your products, post jobs, seek jobs, with interesting forum which you could like and would appear in your feed and a very sophisticated site which links to Facebook and twitter. They also a very dynamic site which you could post tourist spots, places, company, product or even promote yourself to find a better career.

The sociability of the Filipinos will never fade and it is a Filipino culture. Before the existence of social network site like Friendster and Facebook or even Hikot; Filipinos are already sociable reasons why the Philippines become the TEXT or SMS Capital of the World which is now added another title as the Philippines is the Social Network Capital of the World. Filipinos are willing to spend times just to be connected with their love ones from anywhere in the world. For more than 9 Million Filipinos living abroad which keep connected to their family and relatives in the Philippines; Social Network like Hikot or Facebook is really needed. From the old system of postal mail, to MIRC in 1990’s YM & (Yahoo Messenger) to SMS / TEXT and Email in 2000’ now it is Social Network Generation.

Though Hikot is still new in the Social Network industry, they are trying to do their best to gain percentage of users from around Asia as they commented on their launching last February 14, a heart’s day in 2011.

Hikot shows features which even better than Facebook. Compare to Facebook, Hikot features the following which could not be found in Facebook:

1.      Forum (A free forum which open to discuss anything under the sun which linked to the user’s feed and activity)

2.      Marketplace (A free classified feature which users could post jobs, seek jobs, sell products services which would appear in their activity and feeds)

3.      Blog (A Specialized feature by Hikot which could not be found in Facebook)

4.      Polls and Quizzes

Facebook and Hikot similarities;

1.      Notification bubble.  Facebook and Hikot share the same features. This will bubble up to notify user for an incoming message,  add friend request, and other online activity and feeds which notify the user while online.

2.      Live Chat Feature. Hikot and Facebook have the same features f Live chat

3.      Photo viewing, tagging and liking features. Hikot and facebook share the same concept but Hikot expanded its feature by liking it to the Twitter and Facebook. Once you will like in hikot’s photo it will appear in Facebook if you Hikot nad Facebook accounts are interconnected. 

4.      Commenting feeds. Like Facebook, Hikot offer the same features

5.      Other features are almost in common except for the features which exist in Hikot and not in Facebook.

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Philippines to host Asean ZoPFF-C meeting over Spratlys disputes

Bridging UNCLOS and ZoPFFC

The Philippines will be hosting the Association of Southeast Asian Nations (Asean) Maritime Legal Experts’ Meeting this week to discuss Manila’s proposal for a Zone of Peace, Freedom, Friendship and Cooperation (ZoPFF/C) in the settlement of the West Philippine Sea (South China Sea) dispute.

Maritime legal experts from the 10 Asean member-states –

1.      The Philippines

2.      Brunei Darussalam

3.      Malaysia

4.      Indonesia

5.      Singapore

6.      Vietnam

7.      Cambodia

8.      Laos 

9.      Thailand

10. Myanmar–

The meeting will converge in Manila this 3^rd week of September 2011.

The meeting was based on the decision of the Asean foreign ministers during the 44th Asean Foreign Ministers Meeting in Bali, Indonesia “to study the proposal with the assistance of maritime legal experts.”

“The meeting seeks to establish a common understanding among Asean member-states on the ZoPFF/C proposal,” the Department of Foreign Affairs (DFA) said in a statement.

Its findings will be reported to the Asean Senior Officials' Meeting (Asean SOM), which will then make recommendations for the Asean Foreign Ministers to consider before the 19th Asean Summit in November 2011 in Bali, Indonesia.

The said meeting will be held at the Sofitel Philippine Plaza in Pasay City (Metro Manila).

Under the Philippine-proposed ZoPFF/C, Foreign Affairs Secretary Albert del Rosario said that disputed areas of the Spratly Islands must be segregated from the undisputed areas as consistent with the United Nations Convention on the Law of the Sea (UNCLOS).

In this framework, disputed areas can be transformed into an area of joint cooperation while undisputed areas will solely be under the jurisdiction of a particular claimant-country.

Spratly Islands is a group of islets, reefs and atolls that are purportedly rich in oil and mineral reserves.

They are being claimed in whole by China and in part by the Philippines, Vietnam, Taiwan, Malaysia and Brunei Darussalam.

The past months saw the flaring of political tensions between Beijing, Manila and Hanoi over alleged increasing Chinese military activities in the contested waters.

As the Philippine government lodged diplomatic protests over the perceived Chinese intrusions, Beijing was quick to deny the allegations.

Del Rosario said that the issue be settled under maritime international laws, and even suggested it to be brought before the United Nations-backed International Tribunal on the Law of the Seas (ITLOS).

The Asian economic powerhouse, however, remained adamant that it will only negotiate with claimant-countries in a bilateral level.

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Hainan China Mounted Nuclear Weapon Facing Manila

When China’s largest offshore petroleum producer launched a $1 billion oil rig this summer from Shanghai, Lt. Gen. Juancho Sabban, the commander of Philippine military forces commented that China of 1,500 miles away in the South China Sea, began preparing for trouble.

The drilling platform, said China, would soon be heading in the 38 general’s direction - southward into waters rich in oil and natural gas, and also in volatile fuel for potential conflict.

China pointing the Map down south adjacent to the City of Puerto Princesa Palawan, Province of the Philippines. China is willing to face war and conflict just to drill the oil and gas with or without approval from the Philippines government as they claim the area as undisputable and it core interest.

Regardless of the UNCLOS provision of 200 Nautical Miles Exclusive Economic Zone for the Philippines and other neighboring country within the proximity of the West Philippines Sea (South China Sea), china believed their map is right and will surpassed / overpower the United Nations International laws of Sea as they have their own laws and concept.

Red Alert- Philippines for the unexpected attack of China

Few information leaked that china is preparing to sink the new Philippines Navy Warship Flagship BRP Gregorio del Pilar, a newly acquired and refurbished from the USA high endurance Hamilton Class Cutter Frigate.

Chinese nuclear submarine armed with nuclear missiles has been mounted in Hainan island south of China and high powered weapon are now facing Manila for ready to attack anytime.

Leaked information mentioned that China will target to paralyze the Philippines by attacking the BRP Gregorio del Pilar prior of their planned launching of the $1 billion Dollar oil rig in the area near Pruerto Princesa this year or early next year in 2012.

The Philippines is not yet aware of this china’s plan. The United Nations is now the only chance to intervene or to mediate prior the leaked information to happen.

The cooling of the West Philippines Sea (South China Sea) issue is the preparation of China for their ready to launch $1 billion Dollar oil rig and a simultaneous attack to destroy the BRP Gregorio del Pilar.

“We started war-gaming what we could do,” said Sabban, a barrel-chested, American-trained marine who, as chief of the Philippines’ Western Command, is responsible for keeping out intruders from a wide swath of sea that Manila views as its own 200 Nautical Miles Area from the shore but that is also claimed by Beijing.

China oil hungry giant to attack Spratlys

Arguments over who owns what in the South China Sea have rumbled on for decades, ever since the doomed Chinese government of Chiang Kai-shek in 1947 issued a crude map with 11 dashes marking as Chinese almost the entire 1.3 million-square-mile waterway. The Communist Party toppled Chiang but kept his map and his expansive claims, though it trimmed a couple of dashes.

Today, China’s insatiable thirst for energy has injected a highly combustible new element into long-running quarrels over cartography, arcane issues of international law and ancient shards of pottery that Beijing says testify to its “indisputable sovereignty” over the West Philippines Sea (South China Sea).

China, which imports more than half its oil, will nearly double its demand for the stuff over the next quarter-century, according to the International Energy Agency in Paris. Its demand for natural gas — which is believed to be particularly abundant beneath an archipelago of contested islands and reefs, known as the Spratlys, just west of here — is projected to more than quadruple.

With consumption soaring and the price of imports rising, China is desperate for new sources to boost its proven energy reserves, which for oil now account for just 1.1 percent of the world total — a paltry share for a country that last year consumed 10.4 percent of total world oil production and 20.1 percent of all the energy consumed on the planet, according to the BP Statistical Review of World Energy.

As a result, Beijing views disputed waters as not merely an arena for nationalist flag-waving but as indispensable to its future economic well-being.

“The potential for what lies beneath the sea is clearly a big motivator” in a recent shift by China to a more pugnacious posture in the West Philippines Sea (South China Sea), said William J. Fallon, a retired four-star admiral who headed the U.S. Pacific Command from 2005 until 2007. China is wary of pushing its claims to the point of serious armed conflict, which would torpedo the economic growth on which the party has staked its survival. But, Fallon said, such a thick fog of secrecy surrounds China’s thinking that “we have little insight into what really makes them tick.”

A big factor in this uncertainty is a meshing of Chinese commercial, strategic and military calculations. Like other giant energy companies in China, the China National Offshore Oil Corp., or CNOOC, the owner of the new Chinese rig, pursues profit but is ultimately answerable to the party, whose secretive Organization Department appoints its boss.

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The Philippines Offers the Best Value Investing

Philippines Mining Boom

The Philippines will attract $18 billion in mining investments over the next five years as global commodity prices soar.

Mining output had already spiked 31 percent year on year in the six months to June to P63.92 billion ($1.48 billion), according to Environment and Natural Resources Secretary Ramon Paje.

A new mining law allowed foreign investments in 2005, and high metals prices were drawing even more investor interest.

“In terms of investments, the aggregate amount of $3.835 billion has been invested in the sector over the last six years. Total investments are projected to reach $18 billion by 2016,” he told a mining conference in September 2011.

The Philippines has an untouched mineral wealth estimated by Heffernan Capital Management at over $1 trillion, valuable metals like copper, gold and chromate deposits are among the biggest in the world.

Mining has had a checkered history in The Philippines, environmental issues, foreign investment restrictions, and accidents have slowed the industry for decades.

Ramon Paje said with just 30 major mines in operation, the Philippines was still not producing enough to take advantage of climbing gold, nickel, copper, iron and chromite prices.

Seven major projects should boost both mining investment and output over the next few years.

Xstrata PLC, LON:XTA $5.9 billion Tampakan project in the southern Philippines, one of the largest undeveloped copper-gold deposits in the Western Pacific, should start producing in 2016.

Tampakan project is estimated to yield an average of 375,000 tonnes per annum of copper and 360,000 ounces per annum of gold in concentrate over a 17 year life of mine.

Japan’s Sumitomo Metals, Australia’s Oceana Gold, and Britain’s FCF Minerals also plan to go ahead with separate nickel, copper-gold, and gold-molybdenum projects, according to Paje.

The three projects have a combined investment value of more than $1.8 billion.

Chamber of Mines of the Philippines president Philip Romualdez also told the conference President Benigno Aquino’s recent state visit to China drew $2 billion in mining commitments.

Economy starts bubbling

The Asian Development Bank (ADB) has slightly lowered its 2011 growth forecast for the Philippine economy amidst subdued government spending and exports, but increased public and private investment should see a pickup in economic activity next year.

In its latest Asian Development Outlook 2011 (ADO), ADB trimmed its gross domestic product (GDP) forecast for the year to 4.7%, from 5.0% seen in April.

Growth for 2012 is projected to pick up to 5.1%, with brighter prospects seen for investments, which since 2010 have been a major contributor to GDP growth.

“Job creation remains lackluster, with the youth unemployment rate more than double the overall jobless rate,” said ADB Chief Economist Changyong Rhee.

“Further increases in investment along with policy and governance reforms are needed to boost jobs.”

Government spending fell back in the first half of 2011 after high election and typhoon-linked outlays in 2010 with government agencies taking a more cautious stance amidst an anti-corruption drive.

However, private investment grew strongly, while private domestic consumption also increased, supported by a firmer labor market and remittances from overseas workers.

Merchandise export growth, in contrast, was weaker than expected. Electronics, which make up about half the economy’s exports, are still affected by insipid global demand and supply chain disruptions linked to the earthquake in Japan.

Inflation averaged 4.8% over the first eight months, driven by higher food and oil prices. In response, the central bank raised policy interest rates and banks’ reserve requirements twice. Net portfolio investments in the first seven months remained high, helping to push stock prices to record highs in August, but foreign direct investment remains subdued with delays in bids for planned infrastructure projects.

For 2012, increased investment supported by upgrades in sovereign credit ratings and resilient consumer spending will help GDP growth to pick up. Inflation forecasts are retained at 4.9% for 2011 and 4.3% in 2012, assuming that global oil and food prices moderate as expected.

“The Philippine Development Plan 2011-2016 focuses on improvements in the business environment to raise investment and employment with higher outlays on infrastructure supported by public-private partnerships,” said Neeraj Jain, Country Director for ADB’s Philippines Country Office.

‘Some of the public-private partnership infrastructure projects that have been planned must get under way to achieve the growth we forecast for 2012.”

Undervalued Real Estate in the Philippines

Foreign investors looking to invest in real estate-related businesses have ranked Manila as their last choice among various key cities in the Asia-Pacific.

According to the Emerging Trends in Real Estate Asia Pacific 2011 survey conducted by the Urban Land Institute (ULI), global real estate investors gave Manila a score of 4.56 points out of a possible 9, placing the city a few points below “fair” and somewhere within the realms of “abysmal.”

Topping the survey was Singapore with a score of 5.96 points, followed by Shanghai with 5.87, Mumbai with 5.79, and Hong Kong with 5.70.

In an interview with the Inquirer, ULI global trustee and South Asia chairman Simon Treacy said the Philippines, in general, was suffering from a negative image, prompting investors in publicly listed real estate firms to bypass the country when deciding on where to allocate their funds.

“Manila is at the bottom of the pack because the Philippines hasn’t gone to the next level. The country’s image hasn’t really improved. Even with the new administration, there’s still a negative perception of the country,” Treacy said.

“The Philippines rarely ranks when it comes to investment allocations. Since the Philippines doesn’t get a lot of airplay, its real estate prospects become undervalued. Marketing is very important, on a national level, because not a lot of real estate investors look to the Philippines when deciding where to put their capital,.”

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China warns India on South China Sea exploration projects

China strongly opposed to India engaging in oil and gas exploration projects in the disputed South China Sea, and warned Indian companies from entering into any agreements with Vietnam head of External Affairs Minister S.M. Krishna's visit to Hanoi this week.

“Our consistent position is that we are opposed to any country engaging in oil and gas exploration and development activities in waters under China's jurisdiction,” Foreign Ministry spokesperson Jiang Yu said, in reply to a question on reports that the Oil and Natural Gas Corporation (ONGC) Videsh Limited was considering exploration projects in two blocks that Vietnam claims.

While Ms. Jiang said she was not aware of reports of Indian involvement in any projects, she stressed China enjoyed “indisputable sovereignty” over the South China Sea and its islands.

“We hope foreign countries will not get involved in the dispute,” she said, without directly referring to India. “For countries outside the region, we hope they will respect and support countries in the region to solve this dispute through bilateral channels.”

China and Vietnam are among at least ten countries that hold competing claims over the South China Sea and the islands located in its waters. In June, tensions flared between China and Vietnam over the Spratly and Paracel Islands, following clashes between Chinese and Vietnamese boats.

External Affairs Minister Mr. Krishna will hold talks in Hanoi later this week. Among the issues slated for discussion, according to media reports, is an agreement for oil and gas exploration, in two blocks over which Vietnam claims sovereignty, by ONGC Videsh.

China had reportedly voiced its objections to India about the projects, saying that any projects would be “illegal” as China claims the sea's waters. India, however, is likely to go ahead with the projects in the two blocks, which Vietnam says it holds rights to under the United Nations Convention on the Law of the Sea.

Ms. Jiang said the UN convention of 1982 “did not give any country the right to expand their own exclusive economic zone and continental shelf to other countries' territories.” The convention, she said, did not negate “a country's right formed in history that has been consistently claimed.”

Disputes between China, Vietnam and other countries that hold claims to the South China Sea have flared in recent months. While China's neighbours have blamed an increasingly assertive Chinese navy for stirring tensions, with recent clashes with both Vietnam and the Philippines, Chinese officials have pointed the finger at the United States for fanning the flames with its renewing of military alliances in the region and its “return” to East Asia.

Ahead of Mr. Krishna's visit, India has also stressed its strong support for the “freedom of navigation in international waters, including in the South China Sea”, after the INS Airavat, on a recent goodwill visit to Vietnam, was asked by a Chinese vessel, on radio, to leave “Chinese waters.”

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US Military Analysis On China

The Pentagon annual report to the US Congress “Military and Security Developments Involving the People’s Republic of China, 2011” released to the public in August this year is a lesson how meticulously the Americans study China. Of course, more sensitive issues are not discussed in the open report, but there are pointers that need to be picked up by India and other Asian countries and reflect on them actively on a larger canvas.

It may be noted that India as a target of China is appearing increasingly in these reports. The current report, while taking note of improved India-China relations in trade and some confidence building aspects as well as military relations, also has words of caution for India. It briefly talks about China’s concerns over India’s rising economic, political and military powers, and steps taken to improve regional deterrence which include replacement of liquid fuelled CSS-3 Intermediate Range Ballistic Missiles (IRBMs) with more advanced solid fuelled CSS-5 Medium Range Ballistic Missiles (MRBM) covering India; investment of road and infrastructure development along the India-China border; plans to move airborne troops into the region and other developments. Of course, it is known that the PLA is conducting high altitude training of its troops including para-dropping in the high mountains of Tibet. It is also known that China has established missile silos along the Tibet railway line to ensure that short and medium range missiles can be quickly transported to Lhasa and from there on to borders with India. The Qinghai-Lhasa railway made a test run last year with full military cargo. The paper fell short of mentioning this.

The section on the “South China Sea”, though not specifically mentioning India, have clear ingredients which may be read together with the India section especially in the context of the recent incident in July when the Chinese navy warned INS Airavat to leave the South China Sea claiming the warship was in China’s territorial waters.

The South China Sea is a critical Sea Lane of Communications (SLOC) for India to execute its interest basically economic, cultural and political, in South East Asia and East Asia. The warning to INS Airavat was a Chinese test to see how far it can push the envelope to make at least some pliable countries including India to individually accept China’s claim of sovereignty over the this sea. In this context, the report also notes China’s increasing use of fishing vessels for military purposes. The use of such vessels against Japan and the Philippines in this space of last one year, and the recent sighting of another such vessel fully equipped with monitoring equipment just outside Indian waters is of concern. This particular Chinese vessel was reported to have slipped into the Colombo port according to a Sri Lankan media story, though denied rather mildly by the Sri Lankan army. This raises questions for Indian security. Has Sri Lanka been finally persuaded by China to become a covert military partner against India? China’s all round ingress into Sri Lanka is now quite evident. Reports have emerged about China bribing Sri Lankan President Rajapaksa and his son to promote Chinese interests in the country. Additionally, using fishing vessels covertly for military purposes can be very dangerous if a collision takes place with an Indian naval vessel.

Not new though, the Pentagon paper links the East China Sea to the South China Sea Chinese strategy to indicate the regional tensions that could escalate. According to estimates, the East China Sea holds approximately 7 trillion cubic feet of natural gas and 100 billion barrels of oil. The South China Sea, though not surveyed in detail contains equally substantive quantity of gas and oil. China has already demonstrated military intention with Japan (East China Sea) and with the Philippines and Vietnam in the South China Sea and its determination to bring these maritime areas under its full sovereignty. A recent Chinese official mouthpiece article (People’s Daily, August 30) warned the new Japanese Prime Minister Yoshihiko Noda, that Japan show enough respect for China’s national sovereignty, territorial integrity and core interest. The message was that the disputed islands in East China Sea under Japan’s control were Chinese sovereign territory. Similar is the case in the South China Sea.

If the two seas are looked at compositely, the enormity of their impact on the world at large can only be imagined. Till recent years these two seas were taken for granted as free international waterways, but China’s assertive claims on them from 2008 backed by a hugely growing military, stands to change the entire paradigm of Asia.

China’s strategy and forceful demands must be juxtaposed with its military development including area denial/access denial new armaments which have been comprehensively dealt with in the Pentagon report. East China Sea and the South China Sea are, in China’s strategic perception, would be contours of China’s sovereign territory from which to make further power projection overseas.

From India’s perspective, it would be essential to articulate its position in the Indian Ocean and the rim region and South Asia, as well on South China and East China Seas uncompromisable economic life lines.

Indian military planners would certainly be aware of China’s expanding maritime periphery which has everything to do with its great power status which in turn is dependent on its sustainable economic development which again in turn can be buoyed mainly by oil and raw material sources abroad. The main resource bases being in the Middle East and Africa, the Chinese navy would eventually want to secure the Indian Ocean with potential for conflict with India. Till now most of the free Sea Lanes of Communication (SLOCs) including in the Gulf were kept open by the USA. With America’s economic power in decline and domestic pressures to disengage militarily from abroad, it will seek partners to do the job. And China, which covets all, is not an ideal partner.

The Pentagon paper reminds us of the debate among the Chinese navy community of role in the “distant seas” and the need for bases overseas. In the near future, the PLA Navy (PLAN) is unlikely seek bases in the distant seas. They will need a much more expanded navy for that. But the PLAN and the Chinese leadership are certainly working towards that. Such facilities are there for the asking in Pakistan. The Sri Lankan government under President Mahinda Rajapaksa can work with China if the price is right. Beijing is making efforts in Bangladesh and Myanmar in different ways, but it will depend on India’s diplomacy if the Chinese are successful or not. Here comes issue of India’s Sea power and determined statement to protect its sea of interest, without acrimony.

Some other aspects like “Active Defense”, “Three Warfare’s” and sophisticated intelligence collection dealt in these paper (commented in earlier SAAG Papers by this writer) reminds us also of unstated threats India faces.

China’s professed military doctrine of “Counter attack” only if China is attacked is delusive. India is a victim of this deceptive strategy. Attack against India (1962), the Soviet Union (1969) and Vietnam (1979) were described as “Self-Defense Counter Attacks” by the Chinese. That is, it translates to the doctrine of “Forward Defense”-attack if it is perceived that the enemy may be planning an attack or deal it a psychological blow before it can even think of really challenging China. The 2011 paper finally acknowledged that the doctrine of “Active Defense” or “Forward Defense” does not mean a passive position of reacting following an attack, but an attack well outside its borders at a time of its choosing to debilitate a potential enemy even before an enemy has planned an attack. This can be applied to China’s official stance “no first use” of nuclear weapons.

There is an imperative need to understand and counter the “Three Warfare’s” strategy being mainly employed by the People’s Liberation Army (PLA) with assistance from other state media. Psychological warfare uses action to deter and demoralize the enemy including the civilian population through demonstrative action. Media warfare involves writings/media propaganda that even uses friendly international support apart from forcing the mindset of the target. For example, the daily Pakistan Observer, controlled by Pakistan’s ISI is an able supporter of China’s policies especially those connected with India. Legal warfare involves the various convoluted arguments used by China selectively using parts of international law, historical records (equally concocted), and diplomatic interactions. None of these should be new to India.

Information warfare and intelligence collection is the more recent challenge for India. Indian government entities have been subjected to Chinese internet attacks. The Huawei technologies, China’s biggest information technology company along with ZTE are known to closely connect with the country’s security and intelligence apparatus. It is not only military technology that China is seeking. High technology have dual use applications, and India’s information technology of world class levels. Technology transfer from China, joint ventures with Chinese companies and other such collaborations give a wide window to place “assassin mace” weapons – switches and gates which transfer information to China, and placement of software which can be activated when required to neutralize the brain center of communications.

Of course, India’s private sector, where the IT brain is located, are interested in profit from China deals. National Security is way down in their priority. They may also ask themselves why they have failed to enter China’s IT entities which deal with the government, communication hubs or the military. There are issues which a democratic country like India finds difficult to deal with, but the USA and some western countries which are equally democratic and capitalist are fighting their private sector to keep out Chinese incursions. The Pentagon report gives three examples of Chinese embedded espionage, and efforts to keep the Huawei out is the current battle.

Putting aside the foregoing for a moment, it would be essential to examine the Pentagon report on China’s military in India’s context. When such reports mention a country or a region it conveys its concerns. As usual, this particular report mainly focused on Taiwan’s security and US-China military relations. These are primary concerns as is the security of Japan and freedom and neutrality of East China and South China Seas.

The gradual inclusion of India in such reports convey the US sees India as a possible partner in keeping these international SLOCs free of Chinese control and domination. If the US wants India to be one of its frontline states to contain China, there would be a problem. The US has its own arithmetic with China. Front line states are the first to be sacrificed in such relationship.

India’s capacity in “Mind-warfare” is abysmally poor. There is nothing to compare with China’s “Three warfare’s”-psychological, media and legal. The US does it beautifully taking the media and think tanks into confidence. In India, the authorities try to keep these entities at a distance. “Mind-warfare’s” is indispensible in today’s world.

India is a non-aligned country and has an independent foreign policy. But non-alignment is no longer a passive concept, and independent foreign policy does not mean non-responsive to enlist support in case it is required against aggression. This has been done in the past. It is for the US to appreciate India’s position, a country that shares a 4000 Kilometers border with China. Beijing on its part must understand that 1962 is old history. At the same time, India must demonstrate that its frugality in public statements is not a sign of weakness. In terms of security, China has emerged as India first and main priority. Beyond a point, nothing can be said with certainty. The 1.2 billion Indians also have a say.

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₱5 Billion Armament Budget to Secure West Philippines Oil and Gas Field Approved by President Aquino

President Benigno Aquino III has approved the release of ₱4.9 Billion from the Malampaya fund to strengthen the defenses of natural gas exploration in northern Palawan, National Treasurer Roberto Tan said Wednesday (September 14, 2011).

The fund to be released this month, will be disbursed to the Armed Forces of the Philippines (AFP) for the purchased of New smaller patrol vessel, 4 radar Station, Tanks, and modern assault rifles and ammunitions. The AFP was tasked to acquire and deploy a support fleet of ships smaller than the Hamilton class BRP Gregorio del Pilar.

As early as last March, the Philippine military sent an aircraft to the disputed Recto Bank ( Reed Bank) near Palawan following reports that Chinese patrol boats were trying to harass a Filipino oil exploration team there.

Lt. Gen. Juancho Sabban, chief of the AFP Western Mindanao Command, said the Chinese were claiming the exploration team from the Department of Energy was in Chinese territory where in fact the Recto Bank is just in the backyard of the Philippines, within 200 Nautical Miles Exclusive Economic Zone, while china is within thousands of Kilometers.

BRP Gregorio del Pilar, the Philippine Navy's largest and newly acquired ship, is a symbol of the Philippines' "seriousness" in fortifying the protectors of the country's maritime resources.

The Gregorio del Pilar, however, is less than half the size of China's first aircraft carrier that is expected to go on sea trials by the end of September. The Philippines' largest ship is 367 feet long, compared to China's Shi Lang that measures 1,000 feet.

₱100 Billion Malampaya "Commingled" Fund Missing?

The National Treasurer also disclosed Wednesday at the joint congressional oversight committee hearing on the comprehensive tax reform package that the Malampaya fund, with a remaining balance of ₱99.45 Billion, exists as a "commingled" special account in the government's general fund.

He said the Malampaya collections from 2002 to August 2011 totaled ₱121.97 Billion, of which ₱21.645 Billion was disbursed partly to pay for the Hamilton class ship which the Philippines bought from the United States of America.

During the hearing, Senator Ralph Recto made an issue out of the "commingled" status of the Malampaya fund and said that the fund was missing. Recto argued that the fund cannot be used for any purpose other than those for which it was created.

In a July 5 statement, Budget Secretary Florencio Abad explained the Malampaya fund was "…not actual cash but an accounting of revenue inflows and expenditure items charged against the Fund since revenues were remitted to the government from the Malampaya Natural Gas Project since it started in 2002."

The Malampaya special account is known at the Department of Budget and Management as Fund 151 and is managed by the Bureau of Treasury and the Energy Department.

Abad also said back in July that the Aquino administration had charged ₱2.87 Billion to the Malampaya account for "necessary energy-related" expenditures:

·        ₱2 Billion for fuel requirements of the National Power Corporation-Small Power Utilities Group (NPC-SPUG), to avert a power shortage in off-grid areas

·        ₱450 million for the Pantawid Pasada program as direct support to jeepney and tricycle drivers affected by the recent spate of oil price hikes and

·        ₱423 million for the purchase of the USS Hamilton cutter marine vessel to strengthen the security perimeter of the Malampaya Natural Gas Project.

Abad claimed that during the Arroyo administration only ₱250 million out of the ₱19.64 billion drawn from the fund was spent on an energy-related project that provided electricity to 211 villages in 2006

"The rest of the 98.73 percent or ₱19.39 billion was released for non-energy related projects," Abad noted and broke it down as follows:

·        In 2006, ₱1 billion for the Armed Forces Modernization Fund (What AFP modernization happened in 2006?)

·        In 2008, ₱4 billion for the Department of Agriculture

·        In 2009, a total of ₱14.39 billion to various agencies, including ₱7.07 billion for the Department of Public Works and Highways, ₱2.14 billion for the Philippine National Police, ₱1.82 billion for the Agriculture Department, ₱1.4 billion for the National Housing Authority, and ₱900 million for the Department of Agrarian Reform.

National Treasurer Tan said the ₱4.9 billion for the security build-up in northern Palawan will likely be raised through borrowings and then credited to Fund 151.

Budget Secretary Abad in a statement September 7 described how government will disburse the money for Malampaya defenses.

"The amount is divided between the capability requirements of the Philippine Navy and Philippine Air Force. Of this amount, ₱2.65 billion will fund base support and logistic system, coast watch requirements; and the acquisition of a high-endurance cutter sea vessel and three helicopters of the Philippine Navy."

"Meanwhile, the Air Force will be using ₱2.30 billion to purchase three helicopters and develop a base-hangar," Abad said.

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