Moodys upgrade rating of the Philippines 1 notch up -economy resilient

MOODY'S INVESTORS SERVICE has raised the Philippines' credit rating outlook to positive from stable as the government continues to reduce the fiscal deficit and public debt.

The move sets the stage for a possible upgrade of the Philippines' Ba2 credit rating -- two notches below investment grade -- in the next 12 to 18 months, Moody's Assistant Vice-President Christian de Guzman yesterday said in an e-mail.

The debt watcher is slated to visit the country in June as part of its "regularly scheduled surveillance activities," he added.

Finance Secretary Cesar V. Purisima, in a statement, said: "This is one more step in our march towards investment grade, towards reducing the gap between the market rating and the credit rating, and more importantly towards a more sustainable growth path".

The Aquino administration aims to secure its first-ever investment grade credit rating by 2016 in order to lower its borrowing costs and attract more foreign investors.

According to Moody's, among the key drivers behind the positive outlook were the government's "faster-than-expected" fiscal consolidation and active debt management.

"The government of the Philippines has continued to demonstrate prudence in its fiscal management, as characterized by low budget deficits relative to its rating peers and a steadily declining level of debt relative to GDP (gross domestic product)," it said in a report released yesterday.

The government trimmed its deficit to ₱2.885 billion as of April, just 1% of its P279.1-billion cap for this year. It was also kept at P197.754 billion in 2011, two-thirds of the ₱300-billion ceiling.

Moreover, national government debt fell to only 50.9% of the GDP last year, surpassing the target of 51.7% and the 52.4% posted in 2010.

"Such outcomes are the result of expenditure restraint and improved revenue performance," Moody's noted.

Revenue collections, in particular, have grown faster than the GDP in the past five quarters, solely due to tax administration measures, it added.

"We expect revenue growth to improve further upon the passage of legislation aimed at restructuring excise taxes on alcohol and tobacco products."

Moreover, the Philippines has successfully improved its public debt by lowering borrowing costs, lengthening maturities and reducing foreign currency exposure, Moody's said.

The government successfully concluded a $1.5-billion offer of 25-year global bonds in January, securing interest rates of only 5% -- the lowest ever achieved by an Asian sovereign for bonds with a tenor greater than ten years.

It also repurchased $1.3 billion in high-coupon, foreign-currency bonds last October, cutting borrowing costs by settling the debt papers before their maturity.

Other than an improvement in national finances, Moody's also cited the Bangko Sentral ng Pilipinas (BSP) for its "solid track record of inflation management."

"The sovereign's vulnerability to global financial market shocks has been reduced by the build-up of foreign exchange reserves, resulting in turn from robust current account surpluses and healthy capital inflows in recent years," it added.

The outlook on the BSP's Ba2 credit rating was likewise raised to positive from stable yesterday.

While concerns still remain over the Philippines' large debt stock, it is mitigated by institutional features such as automatic appropriations in the budget for debt servicing, Moody's said.

"In addition, an increasingly large bond sinking fund provides an adequate buffer that guards against near-term liquidity pressures," the credit rater explained.

And as the global economic environment remains uncertain, the Philippine economy is stabilized by remittance inflows which support the balance of payments and spur domestic household consumption, Moody's said.

Overseas Filipino workers remitted a total of $4.842 billion in the first quarter, posting a 5.4% growth year on year against the central bank's 5% projection.

In order to secure a credit rating upgrade, Moody's urged the government to continue the reduction of public debt and pursue reforms to increase revenues. It must also accelerate public spending in areas of the economy that would spur growth.

"These developments should also be accompanied by the continued health of the country's balance of payments and stability of the financial system," it said.

The Philippines, meanwhile, must be wary of macroeconomic instability which could trigger inflation. "A shift away from the focus on good governance" would also be detrimental.

For their part, economic managers hailed the impact of the Aquino administration's campaign of good governance.

"The message we have been trying to send ... is that fiscal performance can improve with good governance," central bank Governor Amando M. Tetangco, Jr. said.

"This positive rating action is therefore welcome and is a sign that Moody's is seeing the fruits of good governance on all fronts: fiscal, monetary and external."

Mr. Purisima added: "The Aquino administration will continue to focus on good governance as the basis for good economics, on fiscal sustainability, on macroeconomic stability and on opening up the country to business and tourism."

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Philippines Chief Justice Renato C. Corona “Guilty of Graft and betrayal of public trust

MANILA — The chief justice of the Philippine Supreme Court, Renato C. Corona, was removed from office on Tuesday after it was disclosed during an impeachment trial that he failed to declare $2.4 million in foreign currency deposits.

Corona is guilty of corruption, paving the way for him to be sacked in the biggest win of President Benigno Aquino's anti-graft crusade.

With the conviction, Chief Justice Renato C. Corona is considered removed from office, but several senators voted for disbarment and other higher punishment.  

Twenty out of 23 senators found Corona guilty of Article II of the impeachment complaint which accused him of not declaring all his assets, including his peso and dollar deposits and real estate properties.

The chief justice was put on trial in January after majority of the House of Representatives decided to elevate their impeachment complaint against Corona to the Senate.

Corona is the first high-ranking official of the Philippines to be removed from office via impeachment, a method that is allowed by the Philippine constitution.

The impeachment trial of the chief justice is the second in the history of the Philippines. But, this is the first time that an impeachment trial was completed and a verdict was handed out.

Former Philippine President Joseph E. Estrada's trial in 2001 was aborted after prosecutors walked out of the impeachment court due to allegations that his allies tried to suppress evidence against him.

In a country where high-ranking public officials are often removed through street protests, and no one had ever been successfully impeached and convicted, the verdict was seen as a victory for the political maturity of the Philippines.

Chief Justice Corona was impeached by the House of Representatives and was convicted Tuesday (May 29, 2012) by the Senate acting as an impeachment court. He was accused of biased decisions and hiding assets.

"If your client cannot explain, I cannot abstain," said Senator Alan Peter Cayetano, upon voting to convict. "If you did not disclose, we have to depose. If you are not fit, you cannot sit as the C.J. of our Supreme Court."

Chief Justice Corona's impeachment — and the prosecution of former President Gloria Macapagal Arroyo, who appointed him chief justice — have been central to the anti-corruption campaign of President Benigno S. Aquino III. The president's supporters say that if Chief Justice Corona had not been removed, he could be an obstacle to good governance efforts that are linked to the country's recent strong economic performance.

Mr. Corona's supporters say that Mr. Aquino is trying to consolidate power by attacking the judiciary. The chief justice has also alleged that the president favors the impeachment in retaliation for court rulings that mandate the breakup of an Aquino family plantation.

In testimony on Friday, Chief Justice Corona insisted that under his interpretation of the law he was not required to disclose the money. During testimony that was marked by weeping, anecdotes about his family and breaks for medical checkups by nearby doctors, the chief justice debated the legalities of reporting requirements for government officials.

In the Philippines, senior officials are required to file a statement of assets, liabilities and net worth each year to verify that they are not enriching themselves from their government positions. One of the impeachment articles against the chief justice states that he under-declared his assets.

Anti-Corona group vows to keep eye on selection of next chief justice

While they briefly rejoiced over the conviction of their foe, a group who had pushed for the ouster of Chief Justice Renato Corona vowed Tuesday to keep a close eye on the selection of his successor.

Members of the Akbayan group made the vow after holding a rally outside the Senate grounds in Pasay City Tuesday afternoon, radio dzBB's Rodil Vega reported.

The report quoted the Akbayan group as saying the Aquino administration should follow through with its verdict and make sure Corona steps down from office.

It also suggested that the Aquino administration focus next on former President and now Pampanga Rep. Gloria Macapagal-Arroyo, who is under hospital arrest facing several graft cases as well as charges of electoral sabotage.

Members of Akbayan are allied with President Benigno Aquino III, including presidential political adviser Ronald Llamas, Commission on Human Rights head Loretta Ann Rosales, and defeated senatorial bet Theresia Baraquel a.k.a. Risa Hontiveros.

During Tuesday's Senate proceedings, Akbayan members rallied outside the Senate and cheered after Corona's fate was sealed.

The group left peacefully after the trial, the report said.

Public accountability, transparency, and the rule of law won in the Senate impeachment court's decision on Tuesday to find Chief Justice Renato Corona guilty of culpable violation of the Constitution and betrayal of public trust, House prosecutors said.

Accountability

Prosecution team spokesperson Rep. Erin Tañada and Rep. Sonny Angara said the Senate's decision that removes Corona from office marks a new start for the judiciary and will help the Aquino administration's campaign against graft and corruption.

"This is the start of putting our republic back in order for we did not convict a man but rather we saved our institutions from grievous harm of corruption and betrayal of public trust," Tañada said in a press statement.

"We showed our determination towards transparency and good governance with this verdict."

He said the Senate's decision proves that the country is now "politically mature."

Angara said Corona's removal from office is only the beginning in efforts to ensure good governance and restore faith in the judiciary.

Other congressmen who were among the 188 who signed the impeachment complaint against Corona also welcomed the Senate's ruling.

"It is finally over. History has been made with the first-ever impeachment process completed up to its final conclusion. Now, it is time to move on and move forward as a nation, and put this impeachment trial behind us, taking with us the lessons that should be learned from this event," House Assistant Majority Leader Karlo Alexei Nograles said.

Western Samar Rep. Mel Senen Sarmiento, in a press statement, described the Senate's decision as "a day that should be written in history as a victory for all Filipinos, a victory for equality among all citizens - no one is above the law."

"The impeachment process only demonstrated that our democracy is on solid grounds.  It is for all Filipinos, especially those who have less in life and those who are weak. The majesty of the law should always reign in all levels of society and no one could use the law at the expense of justice and the people's will," Sarmiento said.

"This day is a victory for the people.  A triumph of justice, this day will mark the true beginning of reforms in our justice system where each person is equal before the law," Iloilo City Rep. Jerry Trenas said.

"This is our watershed that should definitely strengthen our democratic system,"  Ang Kasangga partylist Rep. Teodorico Haresco said.

Sources: New Your Times, GMA, ABS-CBN, Bangkok Post

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WikiLeaks: China admits 9 dash Historical claim in West Philippines is FABRICATED

Wikileaks: Alongside an armada of paramilitary patrol vessels and fishing boats, China has fired off a barrage of historical records to reinforce its claim over a disputed shoal near the Philippines in the South China Sea.

While this propaganda broadside makes it clear Beijing will take a tough line with Manila as a standoff over Scarborough Shoal continues into a seventh week, the exact legal justification for China's claim and the full extent of the territory affected remain uncertain, according to experts in maritime law.

Like most of its claims to vast expanses of the resource-rich and strategically important South China Sea, Beijing prefers to remain ambiguous about the details, they say.

This allows the ruling Communist Party to demonstrate to an increasingly nationalistic domestic audience that it can defend China's right to control a swathe of ocean territory.

And, it avoids further inflaming tensions with neighbors who are already apprehensive about China's growing military power and territorial ambition.

"This ambiguity serves China's domestic purpose which is to safeguard the government's legitimacy and satisfy domestic public opinion," said Sun Yun, a Washington D.C.-based China foreign policy expert and a former analyst for the International Crisis Group in Beijing.

POTENTIAL FLASHPOINT

Rival claims to territory in the South China Sea are one of the biggest potential flashpoints in the Asia-Pacific region.

China, the Philippines, Vietnam, Taiwan, Malaysia and Brunei all have territorial claims across a waterway that provides 10 per cent of the global fisheries catch and carries $5 trillion in ship-borne trade. Half the world's shipping tonnage traverses its sea lanes.

The United States, which claims national interests in the South China Sea, recently completed naval exercises with the Philippines near Scarborough Shoal. It is stepping up its military presence in the region as part of a strategic "pivot" towards Asia after more than a decade of wars in Iraq and Afghanistan.

The acrimonious confrontation over Scarborough Shoal, known as Huangyan Island in Chinese, began last month when Beijing ordered its civilian patrol vessels to stop the Philippines arresting Chinese fisherman working in the disputed area.

Beijing and Manila both claim sovereignty over the group of rocks, reefs and small islands about 220 km (132 miles) from the Philippines.

The Philippines says the shoal falls within its 200 nautical mile Exclusive Economic Zone(EEZ), giving it the right to exploit the natural resources in this area.

SONG DYNASTY RECORDS

In a concerted response from Beijing, official government spokesmen, senior diplomats and reports carried by influential state-controlled media outlets have drawn on the histories of earlier dynasties to rebut Manila's claim.

They say the records show China's sailors discovered Scarborough 2,000 years ago and cite extensive records of visits, mapping expeditions and habitation of the shoal from the Song Dynasty (960-1279 AD) right through to the modern period.

To back up these arguments, China has also deployed some of its most advanced paramilitary patrol vessels to the shoal in a calibrated show of strength, for now keeping its increasingly powerful navy at a distance.

A Philippines government spokesman said on Wednesday China had almost 100 Chinese vessels at the shoal, including four government patrol ships. Earlier, Manila demanded that all Chinese vessels leave the area.

China's Foreign Ministry responded on Wednesday that only 20 Chinese fishing boats were in the area, a normal number for this time of the year, and they were operating in accordance with Chinese law.

China disregard that the peoples of the Austronesian language family, more specifically the Malayo-Polynesian branch, were the first to navigate the South China Sea. Their original homelands were Southern China or Taiwan and the island of Luzon in the Philippines. Between 5000-2500 BC, they crossed the South China Sea to populate all over  the Philippines, Indonesia and Malaysia. From Southeast Asia, they crossed the Pacific Ocean to populate Melanesia and Micronesia by 1200 BC, Polynesia by 1000 BC, Easter Island by 300 AD, Hawaii by 400 AD and New Zealand by 800 AD.

They also crossed the Indian Ocean to populate Madagascar by 0-500 AD. The Indo-Pacific maritime space, including the South China Sea, was their historic water. Since the Austronesian peoples (ancestors of the Filipinos, Indonesians and Malaysians) were the first to navigate the South China Sea, they were the first to discover the islands in the area and to fish in the associated waters.

Though they did not invent writing to record their discovery, it would be ludicrous to deny their discovery of the islands so close to the Philippines and Indonesia in light of the fact that they were able to discover the various islands in the vast Pacific Ocean. By the way, they have been displaced or reduced to aboriginal minority status in their original homelands.

CHINA ADMIT - FABRICATE NINE-DASH LINE HISTORICAL CLAIM (But must save Face)

Maritime lawyers note Beijing routinely outlines the scope of its claims with reference to the so-called nine-dashed line that takes in about 90 percent of the 3.5 million square kilometer West Philippines Sea (South China Sea) on Chinese maps.

This vague boundary was first officially published on a map by China's Nationalist government in 1947 and has been included in subsequent maps issued under Communist rule.

While Beijing has no difficulty in producing historical evidence to support its territorial links to many islands and reefs, less material is available to show how it arrived at the nine-dashed line.

In a September, 2008 U.S. diplomatic cable published by WikiLeaks, the U.S. Embassy in Beijing reported that a senior Chinese government maritime law expert, Yin Wenqiang, had "admitted" he was unaware of the historical basis for the nine dashes.

In a March, 2008 cable, the embassy reported that a senior Chinese diplomat, Zheng Zhenhua, had handed over a written statement when asked about the scope of this boundary.

"The dotted line of the South China Sea indicates the sovereignty of China over the islands in the South China Sea since ancient times and demonstrates the long-standing claims and jurisdiction practice over the waters of the South China Sea," the statement said, the embassy reported.

Scarborough Shoal falls within the nine-dashed line, as do the Paracel and Spratly Islands, the two most important disputed island groups in the South China Sea.

LAW OF THE SEA TREATY

China insists it has sovereignty over both these groups but it has yet to specify how much of the rest of the territory within the nine-dashed line it intends to claim.

One reason suggested for this lack of clarity is that China, like all of the other claimants except Taiwan, is a signatory to the 1982 United Nations Convention on the Law of the Sea (UNCLOS).

If Beijing defined its claim to conform with the provisions of this treaty, it would almost certainly reduce the scope of Chinese territory and expose the government to criticism from vocal nationalists.

Alternatively, if Beijing was to maximize the extent of its claim to include all or most of the territory within the nine-dashed line, it would be difficult to justify under international law and antagonize its neighbors.

"Neither choice leads to a promising prospect," said Sun. "Therefore sticking to the existing path is the most rational."

This means that China is likely to remain vague, experts say, particularly during the current period of heightened political sensitivity ahead of a leadership transition scheduled for later this year.

TRADITIONAL FISHING GROUNDS

However, this lack of clarity doesn't mean China's claims over South China Sea territory have less merit than other claimants, experts say.

In the case of Scarborough shoal, Beijing says the land is Chinese territory and the waters surrounding the shoal have been China's traditional fishing grounds for generations.

"This geographic proximity argument the Philippines is using is not necessarily good in international law," says Sam Bateman, a maritime security researcher at Singapore's Nanyang Technological University.

"If China can demonstrate sovereignty, its claim is as good as the Philippines'."

Under the provisions of UNCLOS, a nation with sovereignty over an island can claim a surrounding 12-nautical mile territorial sea.

UNCLOS defines an island as a natural land feature that remains above water at high tide. If the island is inhabitable, it is also entitled to an EEZ and possibly a continental shelf.

JOINT EXPLOITATION

However, Beijing has not claimed a territorial sea or an EEZ from any of the features of Scarborough Shoal.

Most maritime experts doubt China will agree to have any claims over the South China Sea heard by the United Nation's International Tribunal on the Law of the Sea (ITLOS), the body set up to rule on disputes.

Beijing's policy is to negotiate on the joint exploitation of natural resources in contested areas but rival claimants are reluctant to accept this formula because it could be seen as recognition of China's sovereignty.

Beijing is also increasingly wary about the Obama administration's military "pivot" to Asia designed to counter China's growing power," security experts say.

They suggest Vietnam and the Philippines have already shown greater willingness to challenge China since the U.S. signaled a renewed interest in the region.

"They think they have the U.S. on side," said Bateman.

Sources: REUTERS and Eurasia Review

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WORLD BANK: cites Philippines economic Growth continues even trying times

QUEZON CITY, MAY 26 (PIA) -- The World Bank (WB) cited the Philippine economy's growth amid challenges that the country is facing in the first and second quarter of the year.

"Amidst weakening markets for exports, the best prospects for the Philippines to maintain high growth rates, create more jobs, and reduce poverty are through greater investments in productivity-enhancing infrastructure and further economic integration with its trading partners," WB said in its latest East Asia and Pacific Economic Update released early this week.

The report entitled "Capturing New Sources of Growth" projects that 2012 annual growth in the East Asia and the Pacific region will moderate to 7.6 percent with slower expansion in China pulling down the regional aggregate.

Excluding China, growth will increase to 5.2 percent as Thailand returns to normal levels of production. Commodity exporters, which experienced a boom in 2011, may be vulnerable in the event of a faster than anticipated slowdown in China, which could trigger an unexpected drop in commodity prices.

In 2011, East Asia and the Pacific Region grew by 8.2 percent (4.3 percent excluding China), a sharp decline from the nearly 10 percent growth rate recorded in 2010 (7.0 percent excluding China).

In the same year, growth was about 2 percentage points higher than the developing country average world-wide, and poverty continues to fall.

"The number of people living on less than US$ 2 a day is expected to decrease in 2012 by 24 million. Overall, the number of people living in poverty has been cut in half in the last decade in East Asia and Pacific," said Pamela Cox, World Bank East Asia and Pacific Regional Vice President.

The slowdown in 2011 was largely due to lower than expected growth in manufacturing exports as well as supply disruptions in the wake of the earthquake and tsunami in Japan, and severe flooding in Thailand. Domestic demand and investment were generally strong, aided by loosening of monetary policy in some countries.

The EU, along with the US and Japan, accounts for more than 40 percent of the region's exports, and European banks provide one-third of trade and project finance in Asia.

As external demand is likely to remain weak, countries in developing East Asia and Pacific need to rely less on exports and more on domestic demand to maintain high growth. Already, many countries are moving in this direction, but there is further scope for rebalancing.

"Some countries will need to stimulate household consumption. In others, enhanced investment, particularly in infrastructure, offers the potential to sustain growth provided this does not exacerbate domestic demand pressures," said Bryce Quillin, World Bank Economist and lead author of the report.

"With a changing financial sector in the aftermath of the financial crisis, new ways to finance higher levels of infrastructure investment need to be developed. Governments would need to focus on accelerating the preparation of infrastructure projects" Quillin added.(WB/RJB/JRCA-PIA-NCR)

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Malacañang Palace Appoint Sonia Brady - A New Diplomat for China

Malacañang Palace: During one of the Philippines' worst diplomatic crises in recent history, a tense stand-off with Asian superpower China, talks have been hobbled by the lack of an ambassador in Beijing.

President Benigno Aquino III has finally appointed one, career diplomat Sonia Brady, a China veteran who had already been ambassador there from 2006-2010, as well as a young consul  in the 1970s.

She is also a former ambassador to Myanmar and Thailand.

Aquino's previous appointee, businessman and family friend Domingo Lee, was not approved by Congress' Commission on Appointments because some lawmakers had questioned his qualifications.

Aquino wanted "someone who is already familiar with the politics and the culture of that country. That person can hit the ground running," said spokeswoman Abigail Valte of Brady.

However Brady cannot assume her post until Congress approves her appointment, Valte said.

Valte added that Brady would have concurrent jurisdiction over North Korea and Mongolia. North Korea is considered by many countries as one of the most unpredictable states in the world. It attempted a rocket launch in April that was suspected to be a weapons test, but the launch failed.

Brady's appointment has come as tensions are high between the Philippines and China because of the stand-off at Panatag Shoal, a crisis that has entered its seventh week.

The crisis was triggered last April when Philippine military forces spotted Chinese fishermen gathering marine species but were blocked by Chinese vessels from making arrests.

Valte said Brady is no stranger to Beijing, having been ambassador there from April 2006 to January 2010. She said Brady was in China for President Aquino's state visit to China in 2011, and briefed Aquino and his delegation.

Brady has a master of arts in international relations from the University of Southern California and a foreign service degree from the University of the Philippines, Valte added.

"So isang career diplomat si Sonia Brady (So we can say Brady is a career diplomat)," she said.

Valte said Brady's other career highlights included:

- Ambassador to Thailand 2002 to 2003

- Ambassador to Myanmar 1995 to 1999

- Deputy Chief of Mission to Indonesia 1994 to 95

- Deputy Chief of Mission to Thailand 1992 to 94

- Third Secretary and Vice Consul, Second Secretary and Consul of the Philippine Embassy in Beijing from 1976 to 1978

- Undersecretary for Policy July 2003 to 2006

- Assistant Secretary to the Office of the Secretary for policy and coordination

- Director of the Office of the Asia-Pacific

- Assistant at the office of policy affairs

Last May 10, Aquino appointed Domingo Lee as a special envoy to China assigned to promote tourism for just six months, essentially giving up the effort to have him approved by the Commission on Appointments.

Aquino also appointed Cesar Zalamea, current chairman and chief executive officer of Focus Range International Limited, as a special envoy to advance Philippine economic interests in China by "pursuing initiatives aimed at increasing Chinese investments in the Philippines."

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USA Voice - China sea claims exceed UNCLOS limit

WASHINGTON — Secretary of State Hillary Rodham Clinton says the United States' failure to approve the UN Convention on the Law of the Sea has weakened its advocacy for allies in the disputed South China Sea.

She said China's claims in those waters exceeded what was permitted by the convention. She was speaking at a hearing Wednesday of the Senate Committee on Foreign Relations, where she and top military leaders offered an impassioned plea for the US to join the pact.

To China's chagrin, the Obama administration has asserted since 2010 that although the US is not itself a claimant state in the South China Sea, it has an interest              in the peaceful resolution of the disputes and in the freedom of navigation in waters that carry a large chunk of global trade  Clinton said the US supported the countries "being threatened" by China's claims.

"As a non-party, we cede the legal high ground to China. We put ourselves on the defensive," she said.

"We are not as strong an advocate for our friends and allies in the region as I would like us to be, and I don't think that's any place for the world's preeminent maritime power to find ourselves."

China is among the more than 160 nations that are party to the convention. Its expansive claims in the South China Sea are disputed by Brunei, Malaysia, Taiwan, Vietnam and the Philippines, a US treaty ally.

The convention was concluded in 1982 and has been in force since 1994.

Republican opposition has stalled US approval for years, although the military says it still acts in accordance with the pact's principles.

Despite considerable bipartisan support and the backing of pro-business groups, Democrat committee chairman Senator John Kerry acknowledged the difficulty in moving the treaty, especially in an election year in the United States. Several Republican lawmakers voiced opposition to the convention on Wednesday.

The chairman of the Joint Chiefs of Staff, Army Gen. Martin Dempsey, said US endorsement would strengthen US security interests as it would provide clarity in definition of navigational rights and maritime zones—at a time of growing competition for resources.

"And from that clarity comes stability. And as we now begin to re-balance our security interests into the Pacific, this becomes very important," Dempsey said.

Democrat Senator Barbara Boxer criticized Beijing's claims in the South China Sea.

She produced a map to show the claims extended far beyond China's own 200-mile exclusive economic zone and amounted to a "significant territorial grab that comes very close to the land borders of countries in the region."

She referred to the standoff at the Scarborough Shoal that began last month when the Philippine Navy accused Chinese fishermen of poaching within its exclusive zone.

The Philippines accused China on Wednesday of sending more government and fishing vessels to the uninhabited, horseshoe-shaped shoal. Manila says China has a total of 96 ships, fishing boats and dinghies there, while the Philippines has two.

China denied the accusation.

Chinese foreign ministry official Hong Lei said there were only about 20 Chinese fishing boats operating in the contested area, roughly unchanged as in previous years, according to a report by the Chinese newspaper People's Daily.

Hong said China's strengthened controls in the Huangyan Island (Scarborough Shoal) waters was in response to the provocative actions of the Philippines, adding that their fishing boats were operating lawfully and in accordance with China's fishing moratorium orders.

Read more in Manila Standards

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Philippines MAPECON pioneers in hydrogen economy - Fuel Inaugurated

HYDROGEN economy is a long way to go. Many countries, like the United States, expect to be able to commercialize hydrogen not earlier than 2030.

Web sources said hydrogen economy is a system of delivering energy using hydrogen. The term "hydrogen economy" was coined by John Bockris in a speech he delivered in 1970 at General Motors Technical Center.

Hydrogen advocates promote it as a potential fuel for motive power (including cars and boats) and the energy needs of buildings and portable electronics.

Free hydrogen does not occur naturally in quantity, and thus must be generated from some other energy source by steam reformation of natural gas or another method. Hydrogen is, thus, an energy carrier (like a battery), not a primary energy source (like coal), the web sources said.

"This is where our technological innovation comes in. We're able to tame the hydrogen into a very good usable form that it can replace the LPG [liquefied petroleum gas]," Gonzalo Catan Jr., Mapecon Green Charcoal Philippines (MGCP) founder and executive vice president, said, referring to his patented industrial hydrogen gassifier invention.

In time with the recent Earth Day celebration, MGCP inaugurated its Industrial Hydrogen Reactor in its 4-hectare processing plant in Alaminos, Laguna.

The first of its kind in the country, the industrial hydrogen gassifier produces the low-sulfur hydrogenated-diesel fuel called JCEL, or Jesus Christ the Exalted Lord.

How is the green hydrogen liquid fuel JCEL produced?

It is made by hydrogenating or applying green hydrogen gas with catalytic botanical oily enzymes into ordinary diesel fuel. The green hydrogen is produced through the biomass patented-charcoal technology inside a hydrogen reactor.

Through the aid of catalytic enzymes, the green charcoal provides the energy needed to separate the hydrogen from water and uses the oxygen for combustion in the reactor.

The result is the Mapecon green JCEL fuel, a better diesel alternative for its manifold advantages, such as 50-percent reduction in tail-pipe emissions, 5-percent lower price per liter, 20-percent increase in mileage, and good lubrication properties even of the lower sulfur content.

Such a multimillion-peso-worth hydrogen reactor investment is a "working progress," according to Catan. He said they are now able to produce about 3,900 liters of hydrogen fuel (JCEL) a day in their processing plant for their own consumption. MGCP maintains five 10-wheeler trucks that travel about 2,000 kilometers per trip and six service vehicles that run on JCEL.

"We never stop in perfecting this technology," he said. "But more or less, we can now mass produce it."

MGCP is planning to set up another hydrogen reactor to increase its daily production to 10,000 liters. What's more, it aims to build two more reactors for prospective hotel and shipping clients that need 1,000 liters a day.

MGCP is negotiating with institutions who want to have a franchise of its green-charcoal hydrogen gas that can provide them up to 15 percent savings compared to the price of LPG they use. Catan cited the experience of Aristocrat Restaurant, MGCP's first partner-institution, which now saves 15 percent a month in its fuel consumption.

Seeing the big potential of hydrogen in the Philippines, the company is keen on expanding its pioneering hydrogen gas business.

Catan said, "For as long as the quality can be maintained, and there are people who like to use it, then why not [expand it]? But I would like to have a gradual expansion."

The MGCP plan has received support not only from the private sector, but from the government as well.

Alaminos, Laguna, Mayor Eladio Magampon, who graced the recent inauguration rites, said they are proud that the first industrialized green-hydrogen reactor is in their province.

"I know that this will solve the problem of identity crisis of Alaminos [which has been wrongly] identified as Alaminos, Pangasinan, [in Ilocos region] [which is] known for the Hundred Islands. Maybe we will become a new Alaminos with this hydrogen-reactor plant. We'll be known as Alaminos, the [home of the] first hydrogen-reactor plant," he said.

For its part, the Department of Environment and Natural Resources (DENR) appreciated the private-sector initiative to help the country save billions of dollars used in importing fuel.

"So we, at the DENR, support this kind of technology. We consider this a 'triple bottom-line technology' for its environment, economic and social impacts. We congratulate Mapecon for pioneering this kind of technology in the Philippines," said Environment Assistant Secretary Marlo Mendoza.

In Photo: The country's first industrial hydrogen reactor was recently unveiled in Mapecon Green Charcoal Philippines Inc.'s (MGCPI) processing plant in Alaminos, Laguna. Attending the plant's inaugural rites are (from left) Bert Guerrero, chairman of Earthday Network Philippines; Environment Assistant Secretary Marlo Mendoza, also the National Greening Program coordinator; Mayor Eladio Magampon of Alaminos, Laguna; inventor Gonzalo O. Catan Jr., MGCPI founder and executive vice president; and Nancy Russell-Catan, vice president for administration and finance of Mapecon Philippines Inc. (Alysa Salen)

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9 Valid Arguments of China’s Claim in the name of South China Sea

 

By Huan Tran

The South China Sea in Southeast Asia is bordered by 7 countries: China, Taiwan, the Philippines, Brunei, Indonesia, Malaysia and Vietnam. The name of that water, like others such as Gulf of Mexico, Indian Ocean, Arabian Sea, Persian Gulf, Gulf of Thailand, Philippines Sea, East China Sea and Sea of Japan, do not imply any notion of sovereignty because they were invented for convenience by European explorers.

In the South China Sea; which the Philippines called it West Philippines Sea, there are three islands groups – Paracel islands, Spratly islands and Scarborough shoal – which are not permanently inhabited because the islands are small and do not have dependable fresh water. Some man-made objects have been found on some of them, indicating transient human presence, because since prehistory, fishermen, merchants and pirates from various countries built temporary shelter on them. Because those islands cannot support permanent human habitation, various national governments in the area recently had to build superstructures on, as on Okinotori (a Japanese islet in the Pacific Ocean), to support human habitation.

China claimed sovereignty over 90% of the water and all the islands in the South China Sea by drawing a nine-dash line covering 90% of that sea, prompting her neighbors to protest that her claim contradicts international law, specifically the 1982 United Nations Convention on the Law of the Sea (UNCLOS).

UNCLOS gave a coastal nation or an inhabited island an exclusive economic zone (EEZ) of 200 Nautical Miles from the baseline (shoreline at low tide) in which the coastal nation or the inhabited island has the exclusive right to exploit natural resources. China's nine-dash claim extends beyond her EEZ, biting into the EEZs of her neighbors. Also, UNCLOS said that rocks on the sea that cannot support human habitation and do not have economic life of their own cannot have EEZ. By UNCLOS definition, the South China Sea islands cannot have EEZ because they cannot support permanent human habitation on their own. Only China argued that they have EEZs, a hypocritical argument because in the dispute about Okinotori, China had argued that Okinotori cannot have EEZ because Okinotori cannot support human habitation on its own. As the Paracel islands lie halfway between China and Vietnam while Spratly islands and Scarborough shoal lie within the EEZs of China's neighbors, China argued that those islands have EEZs simultaneously with claiming sovereignty over all the islands in order to maximize China's EEZ at the expense of her neighbors.

China justified her exaggerated claim on the South China Sea by arguing that ancient Chinese texts mentioned certain islands in the South China Sea, proving that Chinese people were the first to navigate that sea and the first to discover the islands in the area, that China was the first country to exercise jurisdiction over the islands and that the South China Sea was China's historic water. China further argued that in 1947, when China published a map of that sea with an eleven-dash line (predecessor of the nine-dash line), nobody protested, proving that the world had accepted China's claim. However, close examination shows that China's arguments are baseless.

9 Valid Arguments of China's in Claim South China Sea

FIRST: In 1947, the world did not react to the map of the South China Sea with the eleven-dash line because the world ignored that map. That map carried as much legal weight as the traditional Chinese political thought which said that the world (All-under-heaven) is under the authority of Chinese emperors. Can China argue that the world had accepted China's sovereignty over the world because nobody protested when the Chinese emperors declared that the world is under their authority?

SECOND: Countries that had historical border with the Arctic Ocean formed the Arctic Council to divide the Arctic natural resources according to the rules of UNCLOS. China never had any historical border with the Arctic Ocean, yet China asked to join the Arctic Council in order to have a share of Arctic natural resources, arguing that the Arctic Ocean is a "common heritage for all of humankind". If the Arctic Ocean is a "common heritage for all of humankind", then the South China Sea is a common heritage for all the peoples who live on its shores, not only for China.

THIRD: Peoples of the Austronesian language family, more specifically the Malayo-Polynesian branch, were the first to navigate the South China Sea. Their original homelands were Southern China or Taiwan. Between 5000-2500 BC, they crossed the South China Sea to populate the Philippines, Indonesia and Malaysia. From Southeast Asia, they crossed the Pacific Ocean to populate Melanesia and Micronesia by 1200 BC, Polynesia by 1000 BC, Easter Island by 300 AD, Hawaii by 400 AD and New Zealand by 800 AD.

They also crossed the Indian Ocean to populate Madagascar by 0-500 AD. The Indo-Pacific maritime space, including the South China Sea, was their historic water. Since the Austronesian peoples (ancestors of the Filipinos, Indonesians and Malaysians) were the first to navigate the South China Sea, they were the first to discover the islands in the area and to fish in the associated waters.

Though they did not invent writing to record their discovery, it would be ludicrous to deny their discovery of the islands so close to the Philippines and Indonesia in light of the fact that they were able to discover the various islands in the vast Pacific Ocean. By the way, they have been displaced or reduced to aboriginal minority status in their original homelands.

International Waterway – South China Sea (West Philippines Sea)

FOURTH: The South China Sea has always been an international waterway since prehistory. Indian traders navigated that sea early in prehistory, introducing Indian philosophies to Southeast Asia, leading to the formation of many Indianised states on Islands Southeast Asia in ancient time.

One of those states was Srivijaya, located on Indonesia in the 7th century and exercised prominent maritime activities in the South China Sea.

During ancient time, the influence of Chinese civilization on Southeast Asia was limited to Vietnam whereas the influence of Indian civilization was dominant throughout Islands Southeast Asia, indicating Indian traders were very active in the South China Sea.

Persian and Arab traders also navigated that sea, introducing Islam to Indonesia and the Philippines. The Arabs even settled in Guangzhou during the 7th century. A 7th-century Chinese monk, I-Tsing, went pilgrimage to India by embarking at Guangzhou on a Persian ship, stopped over at Srivijaya before continued onto India.

FIFTH: Even if Chinese people were the first to navigate the South China Sea (not true), China cannot claim sovereignty over the water that is used by many other countries. The Philippines, Indonesia and Malaysia do not claim sovereignty over the South China Sea, the Indian Ocean and the Pacific Ocean even though their Austronesian ancestors were the first to navigate those waters. Norway does not claim sovereignty over the Norwegian Sea even though the Norsemen (Vikings) were the first to navigate that water to populate Iceland and Greenland in the 9th century. Portugal does not claim sovereignty over the water off the West African coast, the water around the Cape of Good Hope and the Indian Ocean even though Portuguese under Bartolomeu Diaz and Vasco da Gama were the first to navigate those waters in 1488 and 1498. Spain does not claim sovereignty over the Atlantic Ocean, the Magellan Strait and the Pacific Ocean even though Spaniards under Christopher Columbus and Ferdinand Magellan were the first to navigate those waters in 1492 and 1521. Russia does not claim sovereignty over the Bering Sea even though Russians under Vitus Bering were the first to navigate that water in 1741.

Ancient China's text on South China Sea

SIXTH: Ancient Chinese texts which mention the South China Sea islands do not describe discovery of the islands but only describe general knowledge about the islands, knowledge shared among the fishermen, merchants and pirates from various countries who navigated that sea since prehistory. Chinese writers were the first to write about the South China Sea islands because China invented writing earlier, not because Chinese people were the first to navigate that sea or the first to discover the islands. This principle is illustrated by the Sea of Japan and the Black Sea.

Japan first appeared in written records in 57 AD in China's Book of the Later Han as followed: "Across the sea from Lelang were the people of Wa". Lelang was a Han Empire's military outpost in Korea and Wa referred to Japan. The sea between Lelang and Wa is now known as Sea of Japan. Chinese writers were the first to write about Japan and Sea of Japan because China invented writing early, not because Chinese people were the first to navigate the Sea of Japan or the first to discover Japan. Korean and Japanese peoples lived by the Sea of Japan since prehistory and sailed into that sea to fish and to trade with each other, and knew about the existence of each other since prehistory, long before Chinese writers wrote about Japan and Sea of Japan.

The Black Sea first appeared in written records in 5th century BC in the writing of the Greek poet Pindar as "Pontos Axeinos". By the 5th century BC, the Greeks had established many colonies by the Black Sea. Greek writers were the first to write about the Black Sea because Greece invented writing early, not because Greeks were the first to discover or the first to navigate the Black Sea. There were other peoples who lived by the Black Sea alongside with the Greeks and had sailed into that water to fish and to trade since prehistory, even though they did not invent writing to write about that. The Black Sea, like the South China Sea, is a common heritage for all the peoples who live on its shores.

SEVENTH: Ancient Chinese texts which mention the South China Sea islands mention those islands as foreign lands, not as China's territories, and do not describe which activities the authority of ancient China exercised on the islands. Therefore, there is no proof of China's jurisdiction over the islands. In the case of Scarborough shoal, China argued that Kublai Khan's officials were the first to map out and to establish jurisdiction over those islands in 1279. However, Kublai Khan was the Great Khan of the Mongol Empire who conquered China. If any country can inherit Scarborough shoal from Kublai Khan, it is Mongolia, not China.

In 1279, Kublai Khan's officials neither "discovered" nor "established jurisdiction" over Scarborough shoal because that place was already the historic water and traditional fishing ground of Filipino fishermen, descendants of the Austronesian sailors who navigated the South China Sea and populated the Philippines in 5000-2500 BC. Scarborough shoal was known as "bajio de Masinloc", meaning shoal of Masinloc, in a Spanish-made map of the Philippines in 1734. Masinloc is not a Spanish word and is the name of a municipality on the Philippines' main island, confirming that Filipino fishermen had been to and had named the islands after their own tongue for centuries.

EIGHT: Official maps of the Yuan Dynasty and Ching Dynasty, including but not limited to Da Qing Zhi Sheng Quan Tu (published in 1862) and Huang Chao Yi Tong Yu Di Zen Du (published in 1894), show that the southernmost extent of China ends at Hainan islands (see below).

FINALLY: (9^th) The Chinese empire originated on the Yellow river basin and eventually conquered many lands and peoples, including Tibet and Sinkiang, which is why China is a multiethnic, multi-languages country. At the time when China allegedly discovered the South China Sea islands, China's border on the mainland was not what it is today; Tibet and Sinkiang were independent countries of the Tibetans and the Uyghurs, respectively. The Tibetans and the Uyghurs are demanding self-determination. Three dozens Tibetan monks have burned themselves to death to draw attention of humanity to the sufferings of their people under China's rule. If China is serious about its historical claim, it should return to its historical border on the mainland, return Tibet and Sinkiang to the Tibetans and the Uyghurs, respectively.

China knows that her arguments for claiming sovereignty over the South China Sea and all the islands in that water are baseless, which is why China refused the Philippines' invitation to submit the dispute to an international court.

Source: Eurasia Review

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Advance Technology investments sought & World Class Quality Products in the Philippines

Philippines needs to invest heavily on developing technology, following the models of such countries as India, Korea, Japan and the United States, among others, a prominent engineer and entrepreneur said.

Philippine Development Corp. (PhilDev) Chairman Diosdado Banatao, in a recent interview, pointed out that India, instead of being hobbled by its large population, used its human capital to build a strong capability in software development.

Cebu, he said, ought to push for more training so it could build a "technology-based ecosystem" that can create new applications or solutions to solve problems.

This way, he said, the country can slowly transform from a buyer into a major player in the global market.

"We are limited in our own markets. But, we have the ability to be part of the global market because we have way more people than Japan and Korea," said Banatao, the managing partner of Tallwood Ventures.

He pointed out that what made countries like Korea, Japan, US, Germany and France succeed is that they have built a strong capability and produced technologies that were embedded into their products.

"Imagine that 90 percent of the value goes back to the product creator, and if this is ploughed back to its local economy through investments on research and development to create more products, this alone will have a huge impact on the lives of the people as well as the economy in general," Banatao explained.

High risk, high reward

Eric Manlunas, co-founder and managing partner of Siemer Ventures, advised companies to invest on early-stage firms given the high liquidity in the market today.

"We need to promote angel investing here, for our start-ups to take off," he said.

Banatao added investors should start looking at technology development as an investment, aside from pouring all their money into real estate and shopping among others, to build a community of venture capitalists (VCs).

However, he admitted that some investors in the Philippines fear the fact that success rate among VC-supported ventures is low.

"This involves huge risks, but high returns. But VCs should be there to lead and mentor start-ups," said Banatao.

Aside from the lack of financial capital to build a community of VCs, the other challenges include a shortage of experienced technology entrepreneurs and managers, of scientists and engineers, and insufficient access to a global network of experts.

PhilDev trustee Winston Damarillo said everyone needs to participate—industry players, academe and government—to address all these concerns, considering that the Philippines is among the Next 11 emerging markets.

"We need everyone's involvement so we can turn the brilliant ideas of our people into money-earning products and services, which could further economic growth," said Damarillo, also the founder Developers Connect (DevCon) Philippines and software companies Morphlabs and Exist.

The next 11 markets are Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, South Korea, the Philippines, Turkey and Vietnam.

Making Local Products Globally Competitive

SMALL and Medium Enterprises (SMEs) play a major role in socio-economic development, through their creation of jobs and business opportunities, use of indigenous resources, dollar earnings, and linkages with other industries. With the growing demand for local products abroad, SMEs have begun to adopt a more aggressive campaign to promote their products and search for new markets.

This accounts for the popularity of trade fairs and expositions being held in Metro Manila and the provinces. Entrepreneurs see them as venues to introduce products and services, and the public patronize them for innovative and affordable items.

SMEs comprise 99.6 percent of the country's 80,000 business enterprises, mostly in export, and employ 63 percent of the labor force. While most jobs can be found in Metro Manila, SMEs also provide employment in economic zones and science parks nationwide. The government supports SMEs as the backbone of the Philippine economy. Small enterprise is business with capital and total assets of above R3 to R15 million, while medium enterprise has a capital and total assets of over R15 million to R100 million.

Republic Act 6977 the "Magna Carta for Micro, Small and Medium Enterprises (MSMEs) of 1991," was a landmark legislation for MSMEs. Two other laws –RA 9178, the Barangay Micro Business Enterprises Act of 2002, and RA 9501, the Magna Carta for Micro, Small, and Medium Enterprises of 2008 – provided incentives to barangay-based micro businesses and expanded the SME sector to include microenterprises.

As more community-based enterprises continue to innovate and tap more markets here and abroad, the government and private sector assist them in product development, introduction of new technologies and marketing strategies to improve operations, increase productivity and reduce production costs. 

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