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Friday, March 22, 2013

Rating Agencies 'Behind the Curve' on Philippines - the fastest growing economies in ASEAN

One of Southeast Asia's fastest growing economies - the Philippines - got a ratings upgrade last year, but its finance secretary Cesar Purisima told CNBC the agencies were still "behind the curve" and the Philippines deserved a higher credit rating.

All three agencies Fitch, Moody's Investors Service and Standard & Poor's have kept the Philippines at one notch below the coveted investment grade. The latter two agencies upgraded the rating to that level only last year.

"The market rates are two notches above investment grade already, so we're borrowing at a much cheaper cost than our credit rating. So I think they [the credit rating agencies] are way behind the curve," said Cesar Purisima.

The Southeast Asian economy has benefitted from strong growth in recent years. It grew by 6.6 percent in 2012 and the government is targeting similar growth in 2013.

Answering a question on why the Philippines was "obsessively" pursuing a credit ratings upgrade Purisima said: "No it is not obsessive. It's just making sure that they recognize what is the proper rating of the Philippines."

The finance secretary also said he was planning to develop the local bond market by trying to encourage more corporates to borrow from the market rather than from banks.

"Economies have cycles. And in a down cycle if the majority of borrowing is through banks, then you risk creating problems in the banking system. But if you have a big share in the bond market then it is just asset prices," he said.

Purisima said Philippines' turnaround has been fueled by a transformation in the quality of governance.

"Good governance equals good economics. Basically that is what held back the Philippines in the past - bad governance," he said.

However, unemployment levels remain a sticking point for the growing economy. The Philippines' unemployment rate increased to 7.1 percent in the final quarter of 2012 from 6.8 percent in the third quarter.

The government is directing resources into the tourism, agriculture, business process outsourcing (BPO) and infrastructure sectors to create more jobs, said Purisima.

CNBC News

Thursday, March 21, 2013

Chinese ship intrudes into Kalayaan Islands - Palawan March 2013

Construction materials unloaded on islet

Military sources said on Wednesday that a Chinese "landing ship" was seen intruding and unloading construction materials in one of the islets of the Kalayaan Island Group in Palawan.

The presence of the Chinese ship was confirmed by local fishermen, who described the vessel as "large" and bearing "Chinese markings."

The military said China's latest provocative action could worsen the territorial dispute between the Philippines and China, which started in April when Chinese maritime officials prevented Philippine authorities from arresting Chinese fishermen caught poaching in Bajo de Masinloc, also known as Panatag Shoal.

The intrusion happened while the country's navy ships were deployed in Southern Mindanao to serve as blocking force against Muslim fighters who had planned to reinforce the members of the "Royal Army," an armed group led by Raja Mudah Agbimuddin Kiram, brother of Sulu Sultan Jamalul Kiram.

The Sultanates' forces were being hunted by Malaysian forces for several days now after the standoff in Sabah.

"These intrusions were monitored during the night and these vessels believed to be Chinese were unloading construction materials on the island that we owned because it is part of the KIG," said a source, who spoke in condition of anonymity because he was not authorized to speak on the matter.

A separate source said the BRP Gregorio del Pilar rushed early this week to Pagasa Island to check on the report and conduct sovereignty patrols in the area.

The four-decade old ship, formerly a Hamilton-class high-endurance cutter, was so far the most modern patrol vessel which the Navy acquired for almost P500 million in 2011 from the United States Coast Guard.

Pagasa is the center of political power of the KIG led by Mayor Eugenio Bito-non. The island-barangay has an airstrip and a military garrison.

It is composed of seven islets and two reefs that straddle the oil-rich Spratly Islands in the West Philippine Sea (South China Sea).. Since Beijing established Sansha City in June last year supposedly to "administer" the three major islands in the West Philippine Sea (South China Sea), the Chinese had been building several "permanent" structures in the disputed territories to stake their claim, aside from conducting patrols on the waters to prevent "foreign" ships from passing by their territorial waters.

Recently, in its aim to resolve the issue peacefully, Manila brought its case before international arbitration.  It invited Beijing to participate, but Chinese officials declined and stood firm on its position that it owned virtually the entire West Philippine Sea based on its nine-dash claim.

The Chinese intrusion in the KIG also came at a time when the outspoken commander of the Western Commander (Westcom), Lt. Gen. Juancho Sabban, was set to retire on April 1.

Sabban, a general of the Marine Corps, has been vocal in exposing and denouncing such intrusions and even suggested concrete steps on how to effectively monitor and prevent intrusions by foreign vessels into Philippine maritime territory.

Reports said that another general of the Marine Corps, incumbent Commandant Maj. Gen. Rustico Guerrero, would replace Sabban.

The report also came out at a time when US Deputy Secretary of Defense Ashton Carter was visiting the Department of National Defense and the Armed Forces of the Philippines.

The Defense Department refused to go into details on the meeting between Carter and DND Secretary Voltaire Gazmin except to say that the visit could signal a more "frequent and energized consultations with the US Defense Department in the coming months to boost the defense cooperation between the Philippines and the US."

"This was discussed during the call of US Deputy Secretary of Defense Dr. Ashton Carter to Defense Secretary Voltaire Gazmin during his visit here in the Philippines Tuesday morning.  Secretary Gazmin and Dr. Carter also talked about the central role of the Philippines in the region and how to promote and enhance the existing peace and stability, the US support to the AFP's capability upgrade, as well as the training of AFP personnel. Dr. Carter also explained that the rebalancing of US forces is a broad engagement geared towards the promotion of economic stability in the region," the DND said.

Carter serves as Undersecretary of Defense for Acquisition, Technology and Logistics from 2009 to 2011 under the administration of President Barrack Obama. He is a national security expert with a doctorate degree in theoretical physics from the University of Oxford.

Since China became more aggressive in pressing its claim on the islands against smaller claimant-nations over the, the US government has refocused its strategy in the Asia Pacific Region.

Manila Standard Today

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