Japan Said – WWII Sex Slaves from South Korea, the Philippines, Indonesia, Taiwan, and China ' were 'necessary'

Toru Hashimoto said former comfort women should be offered "kind words"

 Japan WWII 'comfort women' were 'necessary' - Hashimoto

A prominent Japanese politician has described as "necessary" the system by which women were forced to become prostitutes for World War II troops.

Osaka Mayor Toru Hashimoto said on Monday that the "comfort women" gave Japanese soldiers a chance "to rest".

On Tuesday, Japanese ministers tried to distance themselves from his remarks.

Some 200,000 women in territories occupied by Japan during WWII are estimated to have been forced to become sex slaves for troops.

Many of the women came from China and South Korea, but also from the Philippines, Indonesia and Taiwan.

Japan's treatment of its wartime role has been a frequent source of tension with its neighbors, and South Korea expressed "deep disappointment" at Mr. Hashimoto's words.

"There is a worldwide recognition... that the issue of comfort women amounts to a war-time rape committed by Japan during its past imperial period in a serious breach of human rights," a South Korean foreign ministry spokesman told news agency AFP.

Chinese foreign ministry spokesman Hong Lei expressed shock and indignation at the mayor's comments.

"The conscription of sex slaves was a grave crime committed by the Japanese military," he said. "We are shocked and indignant at the Japanese politician's remarks, as they flagrantly challenge historical justice."

Mr. Hashimoto is the co-founder of the nationalist Japanese Restoration Party, which has a small presence in parliament and is not part of the government.

He was the youngest governor in Japanese history before becoming mayor of Osaka, and last year said Japan needed "a dictatorship".

In his latest comments, quoted by Japanese media, he said: "In the circumstances in which bullets are flying like rain and wind, the soldiers are running around at the risk of losing their lives,"

"If you want them to have a rest in such a situation, a comfort women system is necessary. Anyone can understand that."

He acknowledged that the women had been acting "against their will". He also claimed that Japan was not the only country to use the system, though it was responsible for its actions.

He said he backed a 1995 statement by Japan's then-PM Tomiichi Murayama, in which he apologised for war-time actions in Asia.

"It is a result of the tragedy of the war that they became comfort women against their will. The responsibility for the war also lies with Japan. We have to politely offer kind words to [former] comfort women."

'Historic given'

Recent visits to Japan's war-linked Yasukuni shrine sparked protests in South Korea

Recent visits to Japan's war-linked Yasukuni shrine sparked protests in South Korea

On Tuesday Japan's Cabinet Minister Yoshihide Suga declined to comment directly on Mr. Hashimoto's remarks but reiterated the government's existing stance on comfort women.

He said the government felt "pains towards people who experienced hardships that are beyond description".

In 1993, Japan issued an apology for the "immeasurable pain and suffering" inflicted on comfort women. In 1995, it also apologised for its war-time aggression.

Education Minister Hakubun Shimomura also expressed concerns over Mr. Hashimoto's remarks.

"A series of remarks related to our interpretation of (wartime) history have been already misunderstood," he told reporters. "In that sense, Mr. Hashimoto's remark came at a bad time."

Last month, Japanese Prime Minister Shinzo Abe angered China and South Korea when he suggested he may no longer stand by the wording of Japan's 1995 apology, saying the definition of "aggression" was hard to establish.

Japanese ministers later sought to play down his remarks, amid anger across the region.

Japan's neighbors also objected to visits in April by several cabinet members and 170 MPs to Japan's Yasukuni shrine, which honors Japan's war dead, including war criminals.

BBC News

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Philippines bowed to Taiwan and will announce a public Apology for the Shootout in Balintang Channel

Warships presence of Taiwan Republic of China would be doubled for fire drill as enemy inside the Philippine territory particularly in the Balintang Channel, near Babuyan Island if the Philippines will not ask public apology. Map from Google

Philippines says sorry to Taiwan

TAIPEI (UPDATED) - The Philippines on Wednesday apologised to Taiwan over the shooting of a Taiwanese fisherman by coastguards last week that sparked public outrage and tensions between Taipei and Manila.

Taiwan foreign minister David Lin told reporters that "the Philippines has voiced deep regret and apology for the incident" after a closed-door meeting with Antonio Basilio, the de facto Philippine ambassador to Taipei.

The Philippine government will send a special envoy to Taiwan to convey his apologies and condolences to the family of 65-year-old fisherman Hung Shih-cheng, who was shot dead on Thursday, Basilio said.

"Chairman (Amadeo) Perez will repeat his deep regret and apology from the people of the Philippines to the people of Taiwan and the family of Mr. Hung for the grief and suffering from his death," Basilio said.

Perez Jr. is chairman of the Manila Economic and Cultural Office (MECO) that represents the Philippines' interest in Taiwan.

Taiwan had demanded an apology by midnight Tuesday (1600 GMT), saying that otherwise it would conduct a naval drill in waters near the Philippines. It had also threatened to freeze the sending of Philippine workers to the island.

The two sides also agreed to jointly launch an investigation into the incident, that has sparked outrage in Taiwan.

On Monday, hundreds of angry fishermen burned Philippine flags and hurled eggs at Manila's de facto embassy in Taipei.

"The Philippines has made some positive reactions towards our demand," Lin said when asked if his government would still consider sanctions against Manila, adding that the pledges from the Philippine government would need to be further evaluated.

ABS-CBN News

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Biggest Fleet: 30 Chinese Vessels arrived & occupied Mischief /Panganiban Reef eyeing; PHL to Secure Ayungin Reef in Palawan

Philippine Navy scrambled to Secure closest to Mischief; the Ayungin Reef as China suspected eyeing to invade the island to bargain the United Nation Tribunal for bilateral negotiation .  China's biggest Fleet of 30 Vessels arrived the Philippine territory Saturday which equipped and capable to invade. US moving 1 of its warship. 

Kalayaan fortified amid China threats

The military has fortified its presence in the Philippine-occupied Ayungin Reef in the Kalayaan Island Group and gone on an extensive monitoring of adjacent islands after 30 Chinese vessels from Hainan arrived inside the Philippines' 200-nautical-mile exclusive economic zone.

The Chinese fishing vessels, including two large transport and supply ships, were seen scattered, most of them concentrated on the Chinese-built alleged fishing sanctuary on Mischief Reef or Panganiban Reef on Saturday, a highly placed source said Sunday.

Mischief Reef was occupied by the Chinese Navy in a creeping invasion in 1994, and China has built structures there and laid buoys near the Sabina Shoal, which is 70 miles off Palawan.

The Philippine government has protested China's actions on Mischief Reef, but the Chinese government has ignored it and has even built additional structures that resemble military installations.

The source said the 30 Chinese vessels were near Mischief Reef and almost stationary.

"They may venture into wide-scale fishing around Mischief Reef, but their other objectives are now known," the source said.

He said Philippine Navy vessels remained on alert and on patrol to prevent the Chinese vessels from intruding into Philippine-occupied islands and shoals. He said the government had deployed three Navy vessels to Ayungin Reef to protect it.

With report from the Manila Standard Today

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Taiwan - China Threatens to Halt Filipino Hiring Over Fisherman’s Death

Taiwanese Fishermen shoot dead by Philippine Coast Guard (PCG) found poaching in Balintang Channel, Basco Batanes, the Philippines. Should the Philippines will ask apology for killing the poachers inside the Philippines waters during their operation? This Balintng Channel is not a contested area because this is the Philippine Water within or in the middle of the Philippines Islands and not in any boundaries. China and Taiwan are used to poached and fish inside the Philippines  because the Philippines is a weak country who do not have capability to guard its waters. China and Taiwan were used to abused the Weak Philippines and now demanding for apology for the death of the Taiwanese poachers inside the Philippines Waters. If you are the owner of the house, and you found the thieves inside stealing your assets and attempted to kill you so you fight back and killed the thieves, are you going to ask apology? . Map from Google

Taiwan President Ma Ying-Jeou threatened to recall his representative to the Philippines and freeze labor applications if its neighbor fails to respond within 72 hours to requests for an apology and an investigation into the shooting of a fisherman last week.

Ma issued "four solemn requests" after a Philippines patrol boat shot the fisherman dead on May 9, including compensation, commencement of talks over fishing rights and punishment of the perpetrators, the presidential office said in a statement on its Website last night.

Taiwan fishing vessel Kuang Ta Hsing No. 28 was hit by at least 32 bullets, killing a 65-year-old crew member, 164 nautical miles (304 km) southeast of Taiwan's southern tip in waters north of the Philippines. The Philippine Coast Guard will investigate the incident, its commander, Rear Admiral Rodolfo Isorena, said May 10.

Failure to respond within the time line, which commenced May 12, will result in Taiwan protesting by halting applications by Filipino workers, recalling Taiwan's representative to the Philippines and sending the Philippines' representative back to deal with the case, according to the statement.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net; Bruce Grant at bruceg@bloomberg.net; Dick Schumacher at dschumacher@bloomberg.net

Bloomberg

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Taiwan Republic of China Fishermen rams BFAR Boat in Philippine Water causing Shootout

Philippine Officials said the BFAR MCS 3001 vessel first spotted 4 Taiwanese vessels 164 nautical miles off the southernmost tip of Balintang Channel in Batanes. One of the trawlers tried evasive maneuvers and was about to ram the BFAR boat, causing them to fire at the foreign vessel. 

Shooting at sea: Coast Guard kills Taiwanese fisherman

The Philippine Coast Guard confirmed Friday that a Taiwanese fisherman was killed after the PCG shot at a fishing trawler that tried to ram their boat near Batanes.

The PCG identified the fatality as Hung Shih-Cheng, 65, one of 4 crew members of the Taiwanese fishing vessel "Guang Ta Hsin 28."

Officials said the BFAR MCS 3001 vessel first spotted 4 Taiwanese vessels 164 nautical miles off the southernmost tip of Balintang Channel in Batanes. One of the trawlers tried evasive maneuvers and was about to ram the BFAR boat, causing them to fire at the foreign vessel.

Three crew members on board the Guang Ta Hsin 28 were unharmed.

"They fired at the machinery to disable it... if somebody died, they deserve our sympathy but not an apology," PCG spokesman Commander Armand Balilo told reporters.

PCG Commandant Admiral Rodolfo Isorena has ordered the relief of 11 PCG personnel onboard the vessel during the shooting incident.

Bureau of Fisheries and Aquatic Resources Director Asis Perez said 2 BFAR personnel on board the vessel were also sacked.

Perez said the Taiwanese vessels were already in Philippine territorial waters when they were spotted by the Coast Guard.

Isorena said the PCG fired warning shots at the much larger fishing trawler when it tried to ram their vessel. The Coast Guard then shot at the trawler's engine, causing it to stop.

He said the PCG withdrew its vessel after another ship arrived in the area.

Taiwan's foreign ministry earlier said that a Taiwanese fishing vessel carrying three Taiwanese and one Indonesian crewman was fired upon early Thursday by a "Philippine government boat".

The incident, some 164 nautical miles off the southernmost tip of Taiwan, left one of the Taiwan crewmen dead.

The ministry did not specify what type of government boat allegedly fired upon the vessel.

The Philippines and Taiwan, along with Brunei, China and Malaysia, have conflicting claims to parts of the South China Sea.

China and Taiwan have been ruled separately since the end of a civil war in 1949, although Beijing claims the island. The Philippines has no diplomatic ties with Taiwan but maintains economic and cultural links.

With a report from ABS-CBN News, Noel Alamar, radio dzMM; and Agence France-Presse

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Taiwan Republic of China condemns PHL attack on fishing boat in disputed water, meets PCG chief

File photo of Taiwanese fishing boats. (AFP/Sam Yeh)

Taiwan Republic of China on Thursday demanded an apology from the Philippine government as it condemned the shooting of a Taiwanese fishing boat by a Philippine vessel in the disputed water of South Taiwan and North of Luzon Islands. At least one fisherman was reported dead in the incident.

A report on Taiwan's Central News Agency said Taiwan's Ministry of Foreign Affairs confirmed the shooting came from an "official Philippine ship."

Earlier, Beijing-based Xinhua News Agency reported on its website Xinhua.net that  a Philippine Navy ship fired upon the fishing vessel in seas south of Taiwan.

Quoting the foreign ministry, the CNA report identified the slain fisherman as Hung Shih-cheng, 65, adding the shooting occurred Thursday morning.

It said the Taiwanese boat "Kuang Ta Hsing No. 28" was some 170 nautical miles off the southern coast of Taiwan at the time, and was seriously damaged.

Aside from an apology, Taiwan demanded that the Philippine government identify those responsible and make compensation for the losses.

The CNA report noted there had been past incidents where Taiwanese fishermen operating in the area were arrested and detained by Philippine authorities.

But it said there had been few reports of shooting.

Quoting Taiwan's representative to the Philippines Raymond Wang, who met with Philippine Coast Guard head Rear Admiral Rodolfo Isorena, the Philippines found one of its ships shot the Taiwanese fishing boat.

It said the type of vessel deployed by the Philippines and the weapons used were not immediately known.

A separate report on Taipei Times said the vessel was operating at around 164 nautical miles (304 km) southeast of Oluanpi in Pingtung County.

It quoted the Coast Guard as saying a 2,000-ton ship equipped with an automatic cannon and two 50mm machine guns had been dispatched, which arrived at 7 p.m. Thursday.

The vessel was to accompany the Kuang Ta Hsing No. 28 as it waits for a tow back to port Friday.

The ministry said said it asked Taiwan's representative office in Manila to express concern over the incident, upon learning of the incident from the Coast Guard Administration.

It also said it instructed the representative to ask the Philippine authorities to probe the death of the Taiwanese man.

Also, the ministry said it has expressed concern over the shooting incident to the Philippines' deputy representative to Taiwan, Carlo Aquino Thursday afternoon.

Meanwhile, the ministry said it has conveyed its condolences to Hung's family and offered to provide any necessary assistance.

Other passengers

The CNA report quoted the fishermen's association in Pingtung, southern Taiwan as saying Hung's son, son-in-law and an Indonesian fisherman were also on board when the shooting occurred.

Earlier, the ministry said Taiwan's Coast Guard Administration dispatched a vessel to rescue the Taiwanese fishing boat, which suffered engine failure.

It said the boat in distress were under tow on its way back to Taiwan with the help of two other fishing boats and under the escort of a coast guard vessel.  — ELR

GMA News

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19% up ↑ Philippines now Saskatchewan Canada’ stop source of immigrants

According to the federal census, there are now 68,780 immigrants in Saskatchewan, with almost 27,000 coming to the province between 2006 and 2011. (CBC)

2011 federal census shows big increase in newcomers

Saskatchewan's immigrant surge is being reflected in the latest data from the federal census — with a big wave of people from the Philippines accounting for much of it.

According to the latest set of 2011 data released by Statistics Canada on Wednesday, there are 68,780 Saskatchewan residents who were born in other countries, compared to 48,160 in 2006 when the previous survey was taken.

In other words, more than 39 per cent of Saskatchewan's immigrants arrived between 2006 to 2011.

Thanks to the surge, 6.8 per cent of Saskatchewan's population is foreign-born, compared to 5.5 per cent in 2006.

Immigrants still represent a smaller proportion of the population in Saskatchewan compared to the rest of Canada (20.6 per cent), but it's a big jump compared with previous censuses.

The rise of Saskatchewan's Filipino population arguably represents the most dramatic change in the report.

In 2006, people from the Philippines accounted for 2,455 of Saskatchewan's visible minority immigrants.

In 2011, the figure had jumped to 12,775 — a 420 per cent increase.

For the first time ever, the Philippines have become Saskatchewan's most important source of newcomers, replacing the United Kingdom (7,370).

Tagalog, spoken in the Philippines, has become the most common non-official language spoken by immigrants at home.

In recent years, the provincial government has been involved in recruiting skilled workers from the Philippines, particularly in the health care field.

Meanwhile, Saskatchewan's aboriginal population to continues to grow and now accounts for 15.6 per cent of the total.

That compares with about 14.8 per cent of the population in 2006.

CBC News

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Rapes: IT BPO - Manila displaced New Delhi; Cebu displaced Dublin, Ireland in the 2012

Philippines is the World leader for Business English Index in 2012 over USA, Canada, United Kingdom and Australia. 

Software developer pushes for Philippine tech talent

SAN FRANCISCO – As the overall performance of the Philippines inches up higher, more businesses are considering the Philippines as the first-option for their software development outsourcing initiatives–and not just for call centers, reported the chief executive of a Philippines-based software development firm.

"Call centers are still our top money makers but we're not encouraging them," explained Exist Global, Inc. CEO Jerry Rapes at the recent "Tech Innovation" greet and meet at the Philippine Consulate here.

Exist Global, Inc., an outsourced software development company in the North American and European market, provides architecture and design consulting, application development, independent quality assurance, application maintenance and technical support services.

"The Philippines has plenty of technical talent," he continued. "English-proficient and amazingly collaborative individuals not just in Manila, but also in IT hubs such as Cebu, (former US Air Force Base) Clark, (former US Naval Base) Subic and Davao."

Other least known Philippine IT-BPO hubs include Sta. Rosa City, Laguna, Bacolod, Iloilo and emerging Baguio City.

Philippine Trade Commissioner Michael Alfred Ignacio echoed Rapes' sentiment. "The Philippines used to be known as the Dark Horse of Asia. Now, not to be in the Philippines is to make a competitive risk."

Rapes made the numbers talk: "According to (the globalization advisory firm) Tholon, Manila displaced New Delhi, and Cebu displaced Dublin, Ireland in the 2012 Top 100 Global Outsourcing Destinations."

"Software services outsourced to the Philippines were posted at $1.5 billion, a 50 percent growth last year. There was also a 10 percent increase in the employment of Philippine IT professionals of about 55,000. And the IT-BPO revenue was at an all-time high of $13 billion– an 18 per cent growth, employing more than 780,000 in the Philippines last year."

Top in business English

Rapes revealed that (cloud-based English literacy provider) Global English Corporation ranked the Philippines number one in the world for Business English proficiency. "Some countries turn to the Philippines to learn (Business) English. There are six direct flights from Korea to Cebu," he added.

When language is not a barrier, negotiation is always "sweet." Rapes declared, "Some (outsourcing provider) countries nickel and dime you. But in the Philippines, they just charge you one fee. No extras for bandwidth and other details."

The Philippines has an annual average of 500,000 graduates every year, Rapes reported, some 200,000 them in medical/health sciences ("for your tele-medicine and transcription needs"). An estimated 180,000 are in engineering/IT related courses ("the IT courses in the Philippines are a little different in that they are apps heavy"). Almost 120,000 are in business courses. This sets the Philippines apart for scalability. "You will find your niche and the technology you want in the Philippines," Rapes claimed.

One admitted problem is the high churn (turnover) rate, or staff retention. Rapes said the Philippines needed more middle managers to retain growth momentum. "The churn rate is almost 75 percent a year. It drives up hiring expenses. You are in a place where you could come back from lunch with a new hire. There's no at will employment in the Philippines, and it's very hard to lay-off people."

Still, Rapes said, "the Full Time Engineering (FTE) revenue or bill per year for engineers in the Philippines is from $8,000 to $9,000, compared with $40,000 in India."

Incentives to tech investors

Rapes was in the council that put together the US-Philippine Business Support and Delivery last year, to bring jobs and project to the Philippines.  Among the results of this are the added benefits that the Philippine Economic Trade Zone Authority (PEZA) provides to foreign technology investors.

Aside from cutting out the bureaucratic red tape, PEZA grants foreign investors exemption from corporate income tax for four to eight years. After that expires, a five percent gross income tax can be opted instead of taxes.

Also granted are exemptions from duties on imported capital equipment, raw materials, supplies and even spare parts. Exemptions also include wharf dues and export taxes. There's a 50 percent total cost reduction on manpower training. And permanent resident status is given to foreign investors and their immediate family members.

PEZA has reportedly 137 economic zones in the Philippines with a reputation for a four-day turn-around time for electronics. Also, it is a 24/7 "non-stop shop." Rapes said, "It is one of the few government agencies I know where zone Director General Lilia De Lima will sign documents in front of you." Rapes added that Subic, Clark and the Board of Investments all grant the same benefits as PEZA.

Rapes believes that the Philippines is seeing its growing share of techno-alphas for several reasons.

"Successful US-based Filipino entrepreneurs like Dado Banatao; (Exist Global, Inc. co-founder and CEO of the world's leading cloud provider, Morphlab) Winston Damarillo;  (Founder of the largest and fastest growing service provider to find care givers, Care.com) Sheila Marcelo and others have decided to come to the Philippines to share their experiences and mentor our young entrepreneurs. "

The Philippines' IT sector can learn from being exposed to Silicon Valley, Rapessaid. "Our returning entrepreneurs have started the initiative of sharing this innovation mind set. We just need to be focused and consistent because it's a long term initiative."

The collaboration among government, industry and academe has been enhanced in the Philippines, creating the right ecosystem, business model, infrastructure and supply of talent. "The Philippines is currently in a perfect position to grab international recognition due to its sound business environment and performance."

And don't forget the fun factor. Rapes said, "We always keep our relentlessly happy psyche no matter if bad weather hits us or if projects hit a snag. I know there are hard-working engineers everywhere, but Filipinos have the most cheerful spirits of them all."

INQUIRER Technology

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Does The Philippines Deserve Its Investment Grade?

Over the past decade the Philippines' sovereign credit rating oscillated between "negative" and "stable", reflecting concern about the ability of the government to collect sufficient tax revenue, manage its budget, and sustain a high rate of GDP growth. Three years ago, President Aquino embarked on a long overdue path to correct what had become endemic deficiencies in the Philippine economy. Over the past 10 weeks, the country has been rewarded for its efforts, with Fitch, the Japan Credit Rating Agency, and S&P all categorizing the Philippines as "investment" grade. Does it really deserve that designation?

Moody's retains its rating at a notch below investment grade, but will undoubtedly follow the others in due course, reflecting a rising chorus of voices in the investment community expressing confidence in the country's future. The external position of the Philippine economy -- its current account balance, external payments position, and foreign exchange reserves -- has been solid under President Aquino's fiscal management. The public deficit (2 percent of GDP) and debt-to-GDP ratio continue to fall, inflation remains at 3 percent, and the country's GDP in 2012 grew at 6.6 percent -- higher than Indonesia (6.2 percent) and Malaysia (6 percent), and not far behind Asia's perpetual economic leader, China (7.6 percent). Year to date, the Philippine peso and stock market (ranked fifth best globally) are among the best performers in the world.

Clearly, much of the credit must go to the president, and his willingness to tackle some long simmering issues. Since taking office in 2010, President Aquino managed to pass the 'sin tax' law covering such items as alcohol and cigarettes, increased tax collection rates, and successfully impeached the now former Supreme Court chief justice of former President Arroyo, on grounds of undeclared wealth. Because of Aquino's "straight path" platform, the Philippines ranked 105th (out of 174) in Transparency International's Corruptions Perceptions Index in 2012, on par with such countries as Algeria and Mexico. When he assumed power, the country was ranked 134th, on par with countries such as Nigeria and Zimbabwe. Clearly, the country is making good progress in that regard.

But what progress has been made in terms of simply doing business in the Philippines? Despite its newly minted investment grade credentials, the World Bank's 2013 'Doing Business' indicators continue to give the Philippines a low grade. Out of 185 countries in its index, the Philippines ranks just 138th, sandwiched between Ecuador and Ukraine. In six of the ten categories, the country ranks in the lowest third, and particularly poorly in terms of both starting a business and resolving insolvency (at 161st and 165th, respectively). Also, the Philippine rankings actually fell in seven of the 10 categories since last year. This stands in stark contrast to what is implied by its investment grade ranking.

Beyond the ease in doing business, regulatory risk remains a challenge, and the country's judiciary remains notoriously corrupt. While the political risk associated with attempted coups over the past several decades has notably diminished in recent years, election-related killings and violence remain a problem. And the country's rising level of net foreign direct investment remains a fraction of that of its neighbors, or other investment grade countries throughout the world. Given all this, what explains the relative haste with which the three ratings agencies upgraded the Philippines?

Apart from perhaps wanting to maintain a sense of consistency, given that Indonesia was also recently upgraded to investment grade by Fitch and Moody's -- even though its currency has not performed as well and it incurred its first current account deficit in 15 years last year -- one explanation might be a tendency to overemphasize a country's external profile while under-emphasizing development indices such as the inclusivity of economic growth, per capita development across social strata, the Gini coefficient, and absolute poverty.

Recently, the Philippine National Statistical Coordination Board reported that despite the series of consecutive credit rating upgrades made by various agencies over the past three years, poverty levels in the Philippines remain unchanged. As of 2012, about 22 percent of Filipino households were considered poor by absolute standards, compared to 23 percent in 2009. A 2008 Asian Development Bank study stated that the Philippines has the largest number of higher education institutions in Southeast Asia, and the number of examinees in professional licensure exams continues to rise, yet passing rates continue to drop. In addition, the Philippine underemployment rate increased from 19 percent in 2011 to 22.7 percent in 2012. In other words, some important, under-appreciated indicators are going in the wrong direction.

The Aquino administration has been quick to focus on how long the "trickle down" process can take, but it did not dispute the findings of the report. To date, President Aquino's technocrats are struggling to reconcile high credit scores, on one hand, and inclusive growth, on the other. So far, there has been no adequate reason cited -- other than Kuznet's inverted-U curve (circa the 1950s), where income inequality should eventually decrease, but only after sustained growth in the long term. On that basis, the Philippines must have high sustained growth for many decades to make a real difference in the absolute poverty rate.

So this appears to be a "Tale of Two Countries" -- one with significantly improving economic indicators and an activist president determined to smash through some of the unfortunate legacies of the Post-Marcos era, and the other -- an unbroken legacy of poverty, regulatory ineffectiveness, and judicial corruption. The ratings agencies appear to have focused primarily on the former, presumably under the assumption that it will take time to address the latter.

Much will depend on what happens after President Aquino leaves office in three years time. Will his reformist legacy continue, or will the country slide back into its old ways? At least three ratings agencies appear to be saying that there is a better chance that meaningful reform will continue in the longer-term. Clearly, the Philippines has a great deal of untapped potential. Nouriel Roubini, a perennial pessimist, forecasted that should the Philippines continue to defy the global recession, and if it were to consistently register GDP growth rates between 7 percent and 9 percent annually, as one HSBC study claimed, the Philippine economy may be among the largest economies by 2050. This assumes an uninterrupted path to nirvana, however, which is rather unlikely to occur, particularly given the vicissitudes of the global economy and the plethora of challenges facing the Philippines.

More likely is that the country will encounter its share of obstacles along the way, some of which will be externally derived, but many of which will undoubtedly be self-imposed. To truly deserve its investment grade rating, the Philippines needs to achieve much outside the realm of economic indicators. Being rated, as it is, one notch above junk status, it wouldn't take much for the country to fall back below an investment grade rating. Rather than beating its chest too much about what it has just achieved it, the government would be wise to focus on how best to avoid losing it.

Edsel Tupaz is owner of Tupaz and Associates and a professor of international and comparative law, based in Manila, Philippines. He is a graduate of Harvard Law School and Ateneo Law School. Daniel Wagner is CEO of Country Risk Solutions, a cross-border risk management consulting firm based in Connecticut (USA), and author of the book "Managing Country Risk."

The Huffington Post

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The Grim Reality Behind the Philippines' Economic Growth

Skyrise buildings are seen amidst a residential district near Manila's Makati financial district on May 3, 2013. (Erik De Castro/Reuters)

The country is being heralded as the new Asian success story, but only an elite few reap the rewards.

In a neighborhood of so-called "Asian tigers," the Philippines has quietly emerged as the region's newest economic darling. At 6.6 percent, the Filipino economy's current GDP growth rate is the second highest in Asia, behind only China's. That growth is projected to continue over the next few years, in part because Filipinos are in a "sweet spot" demographically: the Philippines has the youngest population in East Asia, which translates into lower costs to support a younger workforce and less economic drag from retirees. Last month, Fitch Ratings (one of the world's three major credit rating firms) upgraded the Philippines to a "BBB-" with a stable outlook -- the first time the Philippines has ever received investment-grade status and a huge vote of confidence in the Filipino economy. And last year, the World Economic Forum moved the Philippines up ten points to the top half of its global competitiveness ranking for the first time in its history. These economic improvements are in part due to President Benigno Aquino, whose steps to increase transparency and address corruption sparked renewed international confidence in the Filipino economy even during the global slowdown.

"The Philippines is no longer the sick man of East Asia, but the rising tiger," announced World Bank Country Director Motoo Konishi during the Philippines Development Forum in Davao City in February.

But that economic growth only looks great on paper. The slums of Manila and Cebu are as bleak as they always were, and on the ground, average Filipinos aren't feeling so optimistic. The economic boom appears to have only benefited a tiny minority of elite families; meanwhile, a huge segment of citizens remain vulnerable to poverty, malnutrition, and other grim development indicators that belie the country's apparent growth. Despite the stated goal of President Aquino's Philippine Development Plan to oversee a period of "inclusive growth," income inequality in the Philippines continues to stand out.

In 2012, Forbes Asia announced that the collective wealth of the 40 richest Filipino families grew $13 billion during the 2010-2011 year, to $47.4 billion--an increase of 37.9 percent. Filipino economist Cielito Habito calculated that the increased wealth of those families was equivalent in value to a staggering 76.5 percent of the country's overall increase in GDP at the time. This income disparity was far and away the highest in Asia: Habito found that the income of Thailand's 40 richest families increased by only 25 percent of the national income growth during that period, while that ratio was even lower in Malaysia and Japan, at 3.7 percent and 2.8 percent, respectively. (And although critics have pointed out that the remarkable wealth increase of the Philippines' so-called ".01 percent" is partially due to the performance of the Filipino stock market, the growth of the Philippine Composite Index during that period would not account for such a dramatic disparity from neighboring countries.) Even relative to its regional neighbors, the Philippines' income inequality and unbalanced concentrations of wealth are extreme.

Meanwhile, overall national poverty statistics remain bleak: 32 percent of children under age five suffer from moderate to severe stunting due to malnutrition, according to UNICEF, and roughly 60 percent of Filipinos die without ever having seen a healthcare professional. In 2009, annual reports found that 26.5 percent of Filipinos lived on less than $1 a day -- a poverty rate that was roughly the same level as Haiti's. And a new report from the National Statistical Coordination Board for the first half of 2012 found no statistical improvement in national poverty levels since 2006. Even as construction cranes top Manila skyscrapers and the emerging beach town of El Nido unveils plans for its newest five-star resort, tens of millions of Filipinos continue to live in poverty. And according to Louie Montemar, a political science professor at Manila's De La Salle University, little is being done to destabilize the Philippines' oligarchical dominance of the elite.

"There's some sense to the argument that we've never had a real democracy because only a few have controlled economic power," he said in an interview with Agence France-Presse. "The country dances to the tune of the tiny elite."

Many observers blame the inequality on widespread corruption in local government, which makes it difficult or impossible for many Filipinos to launch small businesses. (In 2012, Transparency International, a non-governmental organization that monitors and reports a comparative listing of corruption worldwide, gave the Philippines a rank of 105 out of 176, tied with Mali and Algeria, among others.) Low levels of investment also suppress business growth: the Philippines' investment-to-GDP ratio currently stands at 19.7 percent. By comparison, the investment rate is 33 percent in Indonesia, 27 percent in Thailand, and 24 percent in Malaysia.

For the select few Filipinos who live in beach towns and other popular tourism areas, however, the recent influx of foreign tourists to the previously overlooked country has meant new business opportunities. Celso Serran, 38, a rickshaw driver in the growing tourist town of El Nido, said that the economic impact of tourism has had a significant impact on his income. "Today, a driver can reasonably expect to make 500 Philippine Pesos ($12.16) per day," said Serran. "Before the tourists started coming, he might make 200 PHP ($4.86) on a good day."

For some, the tourism industry is so clearly the only option that it even pulls them away from their hometowns towards more tourist-friendly cities. Dorina Genturo, 20, moved from Puerto Princesa, the capital of Palawan, to El Nido for the better job opportunities there. "There are definitely a lot more jobs in tourism, in hotels and tour companies," she said. "But it's not like this in other towns."

Meanwhile, other huge sectors of Filipino industry (such as banking, telecommunications, and property development) are almost entirely monopolized by a few elite political families, most of whom have been in power since the Spanish colonial era. And despite wide-reaching government reforms from the 1980s, those industries remain effective oligarchies or cartels that vastly outperform small businesses. According to a paper released by the Philippine Institute for Development Studies, small and medium enterprises (SMEs) account for roughly 99 percent of Filipino firms. However, those SMEs only account for 35 percent of national output--a sharp contrast with Japan and Korea, where the same ratio of SMEs accounts for roughly half of total output. This translates into far fewer high-paying jobs on the local level for Filipino employees and exacerbates the huge income disparity across the country.

"Is the economy growing here?" said Josefa Ramirez, 31, who earns roughly 123 pesos ($3) a day selling bottles of water and soda from a cart in Manila. "I didn't know that. For me, things feel the same as they always did."

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Along with Fitch and S&P, Philippines gets 3rd investment grade from Japan's JCRA

Japan's official debt watcher has upgraded the country to investment grade, a statement said on Tuesday (May 7, 2013).

Japan Credit Rating Agency Ltd. revised its credit rating for the Philippines to BBB- from BB+, up one notch. The rating has a stable outlook.

The upgrade followed similar actions from major credit raters, Fitch Ratings and Standard & Poor's Ratings Services (S&P). Fitch raised the country's sovereign rating last March, while S&P did it last week.

In its statement, JCRA noted of the country's "robust economic growth" achieved against the backdrop of "sound fiscal management."

In particular, the Philippines is projected to grow "around six percent in the years to come" buoyed mainly by large remittances from overseas Filipino workers (OFW), which are driving domestic demand.

"Its current account remains in surplus backed by OFW remittances and business process outsourcing revenues," the agency said.

This, in effect, will further strengthen the country's external position through accumulation of foreign reserves that will "enhance our resilience to external shocks."

The balance of payments- which summarizes all inflows and outflows in a particular economy- hit a surplus of $1.535 billion as of the first quarter, central bank data show.

It is expected to widen to $3 billion by year-end, driven by remittances projected to grow by an average of five percent this year.

As of February, cash remittances are already up seven percent to $3.363 billion, figures showed.

"The country's financial system remained sound," JCRA said.

"Philippine banks remained well capitalized with their average capital adequacy ratio kept high at 19 percent as of end-September 2012 as against the 10-percent regulatory standard set by the Bangko Sentral ng Pilipinas (BSP)," it added.

In addition, the government's balance sheet has remained in check, with the budget deficit at just 2.3 percent of economic output last year, lower than the 2.6-percent target.

Debts have also been managed well, JCRA said, pointing to successful efforts of lengthening debt payment terms and focus on borrowing in pesos to reduce foreign exchange exposure.

"The increase in the excise tax in tobacco and alcohol in 2013 may help expand revenues in the years ahead," it explained.

Moving forward, the Aquino administration should set its sights in improving the country's infrastructure by further "strengthening its tax base" to fund investment projects.

The BSP, for its part, should encourage further "deepening and diversification" of the financial markets to better utilize capital flows, JCRA explained.

"As the uncertainty persists over the prospects of the global economy, especially the European economy, JCRA will closely monitor its future developments and their possible impact to the Philippine economy," the agency said.

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Philippines vs Indonesia: Which is 'better' in Economic and Investment Aspects?

Which is winning the battle between the two rising economic stars?

It's been a close battle between Asia's two rising economic stars -- Philippines and Indonesia.

At first, Indonesia was edging ahead with its two investment grade status from Fitch Ratings in December 2011 and Moody's in January 2012.

But slowly and surely, the Philippines has crept up from behind, achieving its first investment grade rating from Fitch Ratings on March 27, and now its second from Standard and Poor's on May 2.

Philippines and Indonesia both have two investment grades from different credit rating agencies. Graphic by Matthew Hebrona/Rappler

Both countries, which are considered Asia's new tigers have been demonstrating strong economic growth against a sluggish global economy, almost catching up with Asia's other economic powerhouses, China and India.

So the tallies are even, but which one is really winning?

GDP growth

In terms of GDP growth, the Philippines has emerged a winner with a 2012 GDP faster rate of 6.6%.

Indonesia, on the other hand, saw its economy slow down after the government failed to reduce subsidies, which drained the government's finances, hurting the rupiah, resulting in lower foreign investor confidence. Indonesia grew at 6.23%.

On Monday May 6, Indonesia reported a first quarter 2013 growth of 6.02%, the slowest pace in more than two years. The Philippines is due to announce their first quarter results on May 30.

In the 3rd quarter of 2012, the Philippines recorded a growth of 7.1%, replacing Indonesia as the second-fastest in Asia next to China's 7.7% and the fastest in Southeast Asia. Indonesia, which dropped down to 3rd position, registered a growth of 6.2%.

The year 2012 saw a turning of tables for the Philippines. In 2011, the Philippines expansion of 3.9% was well below Indonesia's growth rate of 6.5% in 2011.

Aquino vs Bambang Yudhoyono

The promises of Presidents Susilo Bambang Yudhoyono in Indonesia and Benigno Aquino III in the Philippines to fight corruption, lower budget deficits, and bring in investment has won them both upgrades from Fitch Ratings and Moody's Investors Service in the past year.

Philippine President Aquino, who is halfway through a 6-year term, has been successful in increasing state spending and managing the budget deficit, while seeking more than $17 billion of infrastructure investments to spur growths.

The country's budget deficit has been brought down to 2% of gross domestic product (GDP) by 2012 from 3.9% when he took office in 2010. Aquino has also increased tax collections, passed the controversial sin tax law amendments, and ousted former Chief Justice Renato Corona in 2012 for illegally concealing his wealth.

Indonesian President Bambang Yudhoyono, who is in his final year in office, failed in 2012 to cut fuel subsidies, which have drained the government finances. This means the government has to find more funds to allocate to infrastructure spending.

According to the World Bank, the President Yudhoyono has said that his government is weighing the pros and cons of raising fuel prices or choosing another method that would more effectively target the subsidies at poorer consumers in a nation where almost one in 5 people lives on less than $1.25 a day.

Foreign investments

In this arena, Indonesia has the lead. The country has been attracting the second biggest chunk of foreign direct investments - $19.2 billion in 2012 - flowing into Southeast Asia, next to Singapore's $54 billion.

The Philippines on the other hand has remained a laggard, capturing only $1.5 billion in 2012.

Corruption Perceptions

The Philippines has the lead and is now seen as less corrupt than Indonesia. The Transparency International's Corruption Perceptions Index has boosted the Philippines' ranking to 105th place in 2012 from 139th in 2009, a year before Aquino became president.

Indonesia on the other hand was ranked 118th last year, slipping from 111th three years earlier.

As both rising stars diverge in their economic growth, it remains to be seen who will emerge the clear winner.

Investment destinations

To fund managers, however, both investment destinations remain attractive, and some don't even have to choose between the two.

Amid the economic woes, belt-tightening measures, gloomy outlook and credit rating downgrades in the west, most investment funds on the lookout for solid growth are eastward-bound.

A global fund manager told Rappler that the competition for investors' attention is not between Indonesia and the Philippines, but against other emerging economies in other regions, like Eastern Europe and South America. - with research from Ramon Calzado and Lean Santos

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