Automakers boosting output in the Philippines -Nikkei

Mitsubishi Motors' new pressing plant under construction in the Philippines. Photo: Nikkei Asian Review 

Automakers boosting output in the Philippines

Mitsubishi Motors, Toyota taking advantage of government incentives
The Philippines' auto manufacturing sector is kicking into higher gear as Japan's Mitsubishi Motors prepares to launch a new production line on Friday. An underdeveloped local supply network, however, still detracts from the country's appeal.

The Mitsubishi example

Located in Laguna Province south of the capital Manila, the Mitsubishi plant currently assembles two vehicle models, one of which is the L300 service van. Daily production is 50 units combined. The additional assembly line will add Mirage subcompacts to its repertoire, with a goal of producing 30,000 units a year.
The Japanese automaker is also spending roughly 10 billion yen ($88.1 million) to construct an on-site pressing plant. The facility is due to start up as early as the end of the year. There, Mitsubishi will fabricate roofs, engine hoods, trunks and other large parts that are currently being imported from Thailand. The main plant will eventually procure 50% of its parts locally.

"The steel sheet [for the Mirage] is significantly thinner than the type used for pre-existing vehicle models, which will require advance technological capabilities," explained Yosuke Nishi, first vice president of Mitsubishi Motors Philippines.

Mitsubishi also recognized about 30 outside parts makers as tier-one suppliers. Several, such as Denso, which has manufacturing operations in the Philippines, are fellow Japanese companies. Roughly 10 are local firms, including Manly Plastics and Valerie Products Manufacturing.

The Mitsubishi operation is even attracting other Japanese parts manufacturers to the Philippines. Shizuoka Prefecture-based Usui has established a new production site at a rented warehouse. There, three technicians will perform final bending work on components shipped from Japan.

Subsidizing growth

Last year, the Philippine auto market expanded 25% to 402,461 vehicles -- or quadruple the sales tally of a decade ago. However, imports made up the bulk of that growth, with the share of domestically made autos declining to 26%. In 2010, six members of the Association of Southeast Asian Nations, including the Philippines, all but eliminated reciprocal import tariffs. That opened up the Philippines to a flood of finished vehicles from Thailand and other places.

Looking to erase the resulting trade deficit and boost employment, the Philippines last year rolled out a 27 billion peso ($540 million) government incentive scheme aimed at automakers that build plants onshore. Mitsubishi's two Mirage models and Toyota Motor's Vios sedan have made the cut for the program, which requires a specific level of local procurement.


Toyota assembles the Vios and the Innova minivan in the Philippines, and it will begin manufacturing the new Vios model covered by the incentives in mid-2018. The Japanese car manufacturer is also installing large pressing equipment to make auto body parts in-country instead of importing them from Thailand. In addition, the automaker will procure more parts locally, such as center consoles.

Cost handicaps



But unlike in Thailand, where automakers can procure core components like engines, the number of parts that can be made in the Philippines is limited. It costs roughly 1.7 million yen to produce one vehicle here, a nearly 200,000 yen premium over Thailand, according to the Philippine Department of Trade and Industry. Expenses associated with imported components account for 49% of the total. That ratio is only 7% in Thailand.

Currently, it is more affordable to import finished cars, even when considering transport and labor costs. Mitsubishi and Toyota have committed to onshore production because the cost savings from expanding local procurement, and the roughly 100,000 yen per vehicle in government subsidies, will offset the handicap.

"We are starting to have prospects for Philippine production to cost less" than imports, said Satoru Suzuki, president of Toyota Motor Philippines.

A model for the rest?

Vietnam, another latecomer to auto manufacturing, could learn from the Philippines. As a member of the ASEAN Economic Community, Vietnam's tariffs are due to be abolished next year. That would likely open the floodgates for vehicles assembled in Thailand and other places.

But the Philippines could also turn out to be a cautionary tale. Ford Motor shuttered its production plant in the country, for one. In addition, one condition for receiving government incentives is production of 200,000 vehicles within six years. Over 30,000 units of the Vios were sold last year, but reaching the threshold with Mirages will be no easy task considering that the model's sales were only about 20,000 units. Mitsubishi will expand its network of dealerships from 48 to 70 by 2020.

Furthermore, the government plans to raise taxes on new vehicle starting in 2018, a potential headwind for sales. - JUN ENDO, Nikkei staff writer +Nikkei Asian Review 

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FORBES: The Philippines Should Sue China For $190.08 Billion USD In South China Sea Rent And Damages

This Monday, May 11, 2015, file photo, taken through a glass window of a military plane, shows China’s alleged on-going reclamation of Mischief Reef in the Spratly Islands in the South China Sea. China’s campaign of island building in the South China Sea might soon quadruple the number of airstrips available to the People’s Liberation Army in the highly contested, environmentally delicate, and strategically vital region. (Ritchie B. Tongo/Pool Photo via AP, File)

The Philippines Should Sue China For $177 Billion In South China Sea Rent And Damages

China owes the Philippines and other countries more than $177 billion in rent and damages for China’s South China Sea fiasco. The Permanent Court of Arbitration found on Tuesday that Mischief Reef is a low-water elevation and within Philippines’ exclusive economic zone. This gives the Philippines’ indisputable legal rights to the reef. But since 1995 when China occupied the reef, China irreparably harmed the reef’s delicate marine ecosystem by dredging and building an artificial island there, including a military garrison and air-strip. By my estimate, China owes the Philippines $12.4 billion in rent and damages for Mischief Reef alone. Considering other Chinese island-building, the country owes the Philippines and other claimant countries more than $177 billion. If China doesn’t want to pay, the Philippines can sue in the courts of the U.S. and other countries where China holds property.

Billing Computation is a separate computation provided by the PesoReserve.com

Here is how to calculate what China owes. In 2015, the U.S. paid $1.97 million to the Philippines for 0.58 acres of coral reef destroyed when the USS Guardian went aground. That is a key reference point for environmental claims. Rent is even more costly. In 1988, the Philippines demanded $1.2 billion from the U.S. in rent for 6 military bases — $200 million each per year in 1988 dollars. The U.S. refused and got evicted.

By those metrics, the Philippines could sue China for about $4.6 billion of environmental damages to Mischief Reef in 2016 dollars, plus the requirement to pay $7.8 billion in rent. If China refuses to pay the combined $12.4 billion, the Philippines could seek redress in foreign civil courts to attach China’s offshore assets — of which there are plenty.

But China is liable for much more.  China occupied six additional features in 1988 in the Spratley’s claimed by the Philippines, plus Scarborough Shoal in 2012.

The Philippines did not resist because they justifiably feared violence on the part of China. In 1988, Vietnam claims that China killed 64 Vietnamese soldiers who resisted on Johnson South Reef in the Spratley’s. China disputes the claim, but according to historian and BBC reporter Bill Hayton, “Strangely, a propaganda film released by the Chinese Navy in 2009 to celebrate the navy’s 60th anniversary gives more credence to the Vietnamese version. The video, now available on YouTube, was shot from one of the Chinese ships and shows the Vietnamese force standing knee deep in water as the tide rises over the reef. Huge spouts of water then erupt around the Vietnamese troops as the Chinese ships open fire. Within seconds the thin line of men has completely disappeared and 64 lie dead in the water: the machine guns are Chinese and the victims Vietnamese. The Chinese won the battle of Johnson Reef with a turkey shoot.”

China occupied six features within Philippines’ claim in 1988: Hughes Reef, Johnson South Reef, Gaven Reef, Subi Reef, Fiery Cross Reef, and Cuarteron Reef. China has since dredged and built on all these reefs. Based on Philippines’ 1988 demand for rent from the U.S., each of these six features should yield (in 2016 dollars) about $10.3 billion for 29 years of use — a total of $62 billion.

China occupied Scarborough Shoal in 2012, but has not yet built there. There are no known environmental damages to the shoal, but rent for five years should be about $1.8 billion (inclusive of 2012 and 2016).

By my count, and including the $7.8 billion in rent for Mischief Reef, China owes the Philippines about $71.6 billion in rent for occupation of all 8 China-occupied features in the Philippines’ claimed part of the South China Sea.

In addition, the Court found that China destroyed a total of 48 square miles in the South China Sea through illegal dredging and artificial island building. Based on the $1.97 million paid by the U.S. to the Philippines in 2015 for the grounding of the USS Guardian, an international court could levy a $105 billion fine on China for ecological destruction of all 48 square miles, payable to the Philippines and other claimant states.

Should China refuse to pay, the Philippines and other claimants can bring civil suits in the U.S. and any other locations where China holds substantial assets. The total levy on China for rent on Philippine-claimed features, plus ecological damage to the entire South China Sea, should be about $176.6 billion: double Philippines’ annual GDP, and about a third of China’s GDP. That doesn’t include rent payable to other claimants, which should also be paid.

When China vacates its artificial islands in the South China Sea and pays this fine, plus rent to other claimants and any additional payments to the families of those killed, most attentive citizens will consider justice to have been done. Until then the international ruling in favor of the Philippines, as China has said, is just a sheet of paper. - FORBES

Anders Corr

CONTRIBUTOR

I worked in military intelligence for five years, including on nuclear weapons, terrorism, cyber-security, border security, and counter-insurgency. I covered and visited Asia and Europe, and worked in Afghanistan for one and a half years. I have a Ph.D. in Government from Harvard University, and a B.A. and M.A. in international relations from Yale University (Summa cum laude). My company, Corr Analytics, provides political risk analysis to commercial, non-profit, and media clients, and publishes the Journal of Political Risk. I am editing a series on the South China Sea conflict, and have covered and visited Africa, the Middle East and Latin America.

The author is a Forbes contributor. The opinions expressed are those of the writer.

I cover international politics, security and political risk.

Follow me on Twitter @anderscorr. If you have any additional information related to this article, contact me at corr@canalyt.com.

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The Philippines and KR big winners from China's slowdown but Fearing Investors for MARCOS Jr bid for 2016 Presidency

The Philippines and South Korea are the big winners from China's slowdown

How panicked were investors last week about China's stock market plunge? Enough to treat the Korean peninsula, a place that was teetering on the brink of war, as a safe haven.

Even as policy makers braced for renewed military confrontation between North and South Korea, the won staged a rally.

It may be time to start counting Korea as a developed nation, rather than an emerging market. 

That's made South Korean assets one of the few bright spots in a dark time for emerging markets. On August 24 alone, investors yanked $2.7 trillion out of developing nations, with Indonesia, Malaysia and Thailand especially hard hit. It matched the violent September 2008 selloff after Lehman Brothers collapsed.

Back then, Korea was battered so hard that pundits were calling it the "next Iceland" and the "Bear Stearns economy". Now, together with the Philippines, it's one of Asia's only refuges from chaos.

It's not hard to explain why many Asian economies are suffering from China's slowdown. Exporters of commodities, who depended on a humming Chinese market, have especially suffered. But why are there such big outliers among battered emerging markets?

Less like lemmings

The answer is that investors are finally basing their decisions less on herd mentality than nuanced, case-by-case analyses.

"Emerging market investors have become a lot savvier," says economist Frederic Neumann of HSBC in Hong Kong.

"Gone are the days where emerging markets were all lumped into one bucket. Today, countries with stronger fundamentals are able to resist the spread of contagion washing over global financial markets."

Along with South Korea and the Philippines, Neumann notes that even some frontier economies, like Vietnam, "have weathered global financial turmoil with apparent ease".

The common link among the success stories is they've got the basics right since Asia's 1997 financial meltdown. They have healthier financial systems, greater transparency, stronger banks, sober national balance sheets, and reasonable current-account deficits.

Malaysia's reckoning, by contrast, is long overdue.

The ringgit is trading near 17-year lows because scandal-plagued Prime Minister Najib Razak cares more about staying in power than modernising the country's unproductive economy.

Meanwhile, Thailand's military junta is undoing much of the progress Bangkok made since the late 1990s in strengthening the rule of law. And for all its gripes that Indonesia is being unfairly lumped in with Asia's laggards, President Joko Widodo's administration is rapidly losing the trust of investors.

While there's still time to win it back, Widodo's first 315 days in office have been a case study in timidity, drift and lost opportunities.

Korea credible

Korea, by contrast, is on the "more credible side of the spectrum," says economist Marc Chandler of Brown Brothers Harriman.

Even though China's downshift and US interest rate hikes will eventually make a dent, the won was Asia's top performer last week. Its 2.7 percent gain almost matched the drop in the Chinese yuan since August 11.

Meanwhile, Korean bond yields are falling. It turns out that the world's central banks had it right last year when they boosted their Korean debt holdings. In 2014, they made up 45.4 percent of the foreign-held portion of Korea Treasury bonds, up from 41.8 percent a year earlier.

It may be time to start counting Korea as a developed nation, rather than an emerging market. Korea still faces many challenges, not least of which are its rogue family-run conglomerates. But its macroeconomic performance deserves the recognition it's receiving from investors.

The same goes for the Philippines. Since 2010, President Benigno Aquino has steadily improved his nation's debt position (winning investment-grade ratings in the process), attacked graft and drawn in waves of foreign-direct investment.

Last month, reporters asked Philippine central bank governor Amando Tetangco if he's worried about the spectre of economic crisis haunting Asia at the moment.

"There's a herd mentality," he said, "but there'll be differentiation."

So far, he's been proven right. The country formerly derided as the "sick man of Asia" has been standing its ground amid market chaos.

Still risks

Risks abound, of course. While South Korea's economic fundamentals are stable – it's growing at a rate of 2.2 percent with a 3.7 percent jobless rate – its high household debt of $458 billion is a concern.

Manila, for its part, faces an uncertain 2016 election, in which Ferdinand Marcos Jr, son of the dictator who ravaged the nation in the 1970s and 1980s, may make a bid for the presidency. History has shown that emerging markets are often just one bad leader away from relapsing into chaos.

For now, the relative stability washing over Korea and the Philippines underscores that steady leadership and long-term thinking matter. It also shows that global investors are getting better at identifying those factors in Asia. - Bloomberg / The Sydney Morning Herald

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PHOTOS: Philippines challenges China's Claim of West Philippine Sea at UNCLOS Tribunal in The Hague

Philippines challenges China's Claim of country's exclusive economic zone at UNCLOS Tribunal in The Hague. image: inquirer.net

IN PHOTOS: Philippines challenges China in The Hague

In photos emailed to Rappler, the Permanent Court of Arbitration gives us a glimpse of the closed-door hearings pitting Manila against Beijing

MANILA, Philippines – Behind closed doors, the Philippines recently waged a legal battle against China in The Hague, Netherlands, in a historic case over the disputed West Philippine Sea (South China Sea).

The Philippines on Thursday, July 23, is set to submit a new document to The Hague to bolster its case.

While Manila pursues this, a question remains: What exactly happened during hearings from July 7 to 13?

The Permanent Court of Arbitration (PCA) in The Hague, which serves as the venue for the arbitration proceedings, emailed Rappler high-resolution photos to give us a glimpse of the closed-door hearings.

China claimed the shores of Vietnam, Philippines, Malaysia, Indonesia, Brunei and Japan as their own

The photos show a powerhouse team, led by internationally acclaimed lawyer Paul Reichler, defending the Philippines' case before an equally high-caliber arbitral tribunal in The Hague.

The tribunal said around 60 members joined the Philippine team. (READ: Binay hits Philippine team vs China in The Hague))

Check out these photos from the Permanent Court of Arbitration (PCA) in The Hague.

TOP DIPLOMAT. Philippine Foreign Secretary Albert del Rosario delivers an opening statement. Photo courtesy of PCA

IN SESSION. Early on, the arbitral tribunal in The Hague decides to hold the hearings behind closed doors. Photo courtesy of PCA

TOP GOVERNMENT LAWYER. Philippine Solicitor General Florin Hilbay, who serves as agent for his country, delivers a statement. Photo courtesy of PCA

TEAM OF EXPERTS. The counsel team for the Philippines, including Professor Bernard Oxman, Professor Alan Boyle, and Mr Lawrence Martin, in the closed-door hearings. Photo courtesy of PCA

HISTORIC CASE. The arbitral tribunal in The Hague, Netherlands, listens to the first country that brought China to court over the West Philippine Sea (South China Sea). Photo courtesy of PCA

'GIANT SLAYER.' Internationally acclaimed lawyer Paul Reichler, the Philippines' chief counsel, delivers a statement. Photo courtesy of PCA

REPRESENTING GOVERNMENT. Members of the Philippine delegation, including Justice Secretary Leila de Lima, Supreme Court Senior Associate Justice Antonio Carpio, and Deputy Executive Secretary for Legal Affairs Menardo Guevarra. Photo courtesy of PCA

OBSERVER DELEGATIONS. The tribunal allowed observers from the following countries – Vietnam, Malaysia, Indonesia, Thailand, and Japan – to attend the hearings. Photo courtesy of PCA

HIGH-CALIBER TRIBUNAL. The arbitral tribunal is led by Judge Thomas Mensah (president, C), the first president of the International Tribunal for the Law of the Sea. The high-caliber tribunal also includes the following (L to R): Judge Jean-Pierre Cot, Judge Stanislaw Pawlak, Judge Rüdiger Wolfrum, and Professor Alfred H. A. Soons. Photo courtesy of PCA

TEAM PHILIPPINES. Representing all 3 branches of Philippine government, the Philippine delegation comes in full force in The Hague. Photo courtesy of PCA

The 5-member tribunal said it "now enters its deliberations" on whether it has the right to hear the Philippines' case. It said it expects to rule on this matter "before the end of the year."

The tribunal said it "is conscious of its duty under the Rules of Procedure to conduct proceedings 'to avoid unnecessary delay and expense and to provide a fair and efficient process.'"

Once the tribunal decides it has jurisdiction over the case, the Philippines can already present the meat of its arguments. (READ: EXPLAINER: Philippines' 5 arguments vs China)

The Philippines said it expects a definitive ruling against China by 2016 – Rappler.com

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Japan-Asean Anti-terrorism meet in Cebu; Military Clash with Abu Sayyaf al Qaeda linked kills 11 in Basilan

A platoon of the Philippine Marines marches in this file Photo.  —File Photo by Reuters

Philippine forces clashed with Muslim extremists on a southern island Thursday (July 26, 2012), leaving seven soldiers and four militants dead, the military said.

Elite rangers battled members of the al Qaeda-linked Abu Sayyaf group on the troubled southern island of Basilan, with three soldiers and two insurgents also wounded in the clash.

“Firefight is ongoing as of this report,” the military statement said.

It was the latest in a series of deadly clashes in the heavily-forested island of Basilan, a stronghold of the Abu Sayyaf.

The group was founded in the 1990s with seed money from al Qaeda leader Osama bin Laden.

Cebu meet tackles Japan-Asean cooperation to fight terrorism

A $4.1 billion fund is being proposed for anti-terrorism cooperation between Japan and Southeast Asian nations.

“There should be mutual cooperation in the area of combating terrorism.” said Tomatsu Shinotsuka of the Japanese Foreign Ministry during the 7th Asean-Japan counter-terrorism dialogue at the Marco Polo Plaza Hotel yesterday.

The dialogue will give the members of the Association of Southeast Asian Nations (Asean) and Japan, a major economic player in the region a chance to discuss the substantive progress, achievement and implementation of useful projects in fighting counter-terrorism.

“Terrorism is a common threat not only in Asia but also to the world as a whole.” said Shinotsuka.

“There should be speed of cooperation and mutual trust. We will take up various aspects of cooperation between Japan and the Asean,” Shinotsuka added.

Undersectary Nabil Tan said the anti-terrorism cooperation between the Association of Southeast Asian Nations (Asean) and Japan will be boosted by the $4.1 billion Japan-Asean Integration Fund (JAIF).

Tan said the counter-terrorism dialogue is a global undertaking aimed at fostering closer collaboration and exchange of information among the ten ASEAN member states – Brunei, Cambodia, Indonesia, Lao, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

Executive Secretary Pacquito Ochoa, Jr. who also chairs the Philippine Anti-Terrorism Council, said border security is necessary to ensure safety in the country. Ochoa said this is on top of the country’s anti-terrorism policy.

“Effective law enforcement, strong institutional mechanisms and addressing social problems like poverty and education form the core of the country’s three-point agenda to fight counter-terrorism,” Ochoa said.

For the institutional mechanisms, Ochoa said the amendments of the Anti-Money Laundering Act (AMLA) and the Human Security Act is important for it to prevent and suppress terrorist financing and to put in check terrorism activities in the country.

Abu Sayyaf in Southern Philippines, and Qaeda link groups Jemaah Islamiyah of Indonesia operating in Malaysia and Southern Thailand remains a threat in the troubled area of the ASEAN region.

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Philippines & China Send Warship to Disputed Seas

The tensions is fueled again for China vs. Japan, Taiwan, Philippines, South Korea, Vietnam and ASEAN Nation

Breaking News: The Philippines has relaunched an U.S. Coast Guard Hamilton Cutter Class as its biggest and most modern warship to guard potentially oil-rich waters that are at the center of a dispute with China.

President Benigno Aquino III witnessed the commissioning of the 3,390-ton Philippine navy frigate BRP Gregorio del Pilar in an austere ceremony Wednesday (December 14, 2011)  that he said symbolized his country's struggle to modernize its underfunded military despite many obstacles.

Aquino said the Philippines cannot guard its territorial waters and islands "with dilapidated vessels and old and faulty equipment."

The newly repainted warship can carry a surveillance helicopter and is mounted with anti-aircraft guns. The navy says it will be deployed near contested waters in the South China Sea.

China sends patrol ship to disputed waters

China has sent its largest patrol ship to the East China Sea to guard the country's territorial rights, state media said Wednesday (December 14, 2011), in a move likely to fuel tensions over the disputed waters.

China has repeatedly locked horns with its neighbors Japan and Taiwan over a group of uninhabited islands -- called Senkaku in Japan and Diaoyu in Chinese -- which Beijing claims are in its territorial waters.

Japan and Taiwan also claim sovereignty over the area, which is believed to be rich in oil and gas.

The 3,000-tonne Haijian 50 began its maiden voyage on Tuesday, the Global Times reported, citing the head of the East China Sea branch of the country's marine law enforcement agency.

The vessel will visit Rixiang Rock, Suyan Rock and the offshore oil and gas fields of Chunxiao and Pinghu, as well as China-Japan joint development zones, Liu Zhendong was quoted saying.

The Chinese-made vessel is equipped with the country's "most advanced marine technology and is capable of accommodating China's Z9A helicopters", the report said.

It will conduct joint patrols with the Haijian 66, a 1,350-tonne ship deployed in March.

Disputes over the East China Sea and South China Sea have intensified recently, with Chinese President Hu Jintao earlier this month urging the navy to prepare for military combat and a US campaign to assert itself as a Pacific power.

Several Asian nations have competing claims over parts of the South China Sea, believed to encompass huge oil and gas reserves, while China claims it all.

Separately, Beijing and Seoul are involved in a dispute over the Yellow Sea, where a South Korean coastguard was stabbed to death by a Chinese fisherman this week.

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Japan lawmaker eyes Military base on China-claimed islands

Nobuteru Ishihara (pictured in 2008), sometimes seen as a future prime minister if his Liberal Democratic Party returns to power, on Monday said that Japan should look more broadly at stepping up defense spending in the face of a rising China, during his visit to the United States

Japan should consider building a military base on islands disputed with China to counter Beijing's rising assertiveness, a leader of Japan's opposition said on a visit to the United States.

Nobuteru Ishihara, sometimes seen as a future prime minister if his Liberal Democratic Party returns to power, on Monday said that Japan should also look more broadly at stepping up defense spending in the face of a rising China.

Asia's two largest economic powers dispute control of a set of uninhabited islands -- known as the Senkaku in Japanese and the Diaoyu in Chinese - where Japan's arrest last year of a Chinese fishing captain led to a standoff.

Ishihara, secretary general of the conservative opposition party, said that Japan should move "quickly" to put the islands under public control. Tokyo considers most of the area to be privately owned by Japanese citizens.

"Following this change, a port should be developed where fishing boats may take refuge," Ishihara said at the Hudson Institute, a Washington think-tank.

"I further believe that we must seriously begin contemplating the establishment of a permanent post for the Self-Defense Force in this area," he said, referring to officially pacifist Japan's armed forces.

Japan said in 2008 that it reached an agreement with China for joint development of potentially lucrative gas fields near the disputed islands. But the deal has gone nowhere, with China saying its stance has not changed.

Prime Minister Yoshihiko Noda's Democratic Party of Japan - which swept out the long-ruling Liberal Democrats in a 2009 election -- has mostly sought smooth ties with China, which says its growing military spending is for peaceful purposes.

Noda asked Chinese President Hu Jintao for movement ahead on the 2008 deal during talks last month on the sidelines of an Asia-Pacific summit in Hawaii, although Japanese officials said Hu was non-committal.

But Ishihara said that China has become "assertive, one may even say aggressive," in recent years and pointed to its actions in separate maritime disputes with the Philippines, Vietnam and other Southeast Asian nations.

"Emboldened by its new economic weight and growing military might, China's proclamations of its 'peaceful rise' appear more and more at odds with the emerging reality," Ishihara said.

Ishihara, 54, is the son of Tokyo Governor Shintaro Ishihara, an outspoken nationalist who has often caused controversy by urging Japan to develop nuclear weapons and to be less dependent on its alliance with the United States.

The younger Ishihara distanced himself from his father's positions, calling for close ties with Washington and saying that his party's current leadership has not discussed seeking nuclear weapons.

Ishihara, however, said that Japan should consider boosting its overall defense budget which has long been equivalent to one percent or less of the economy.

Ishihara, leading a delegation from his party, was in Washington partly to ease concerns over the opposition's stance on the Trans-Pacific Partnership, a proposed Pacific Rim trade pact championed by President Barack Obama.

Noda announced last month that Japan would enter talks but has faced strong opposition from farmers worried over foreign competition and threats of a censure motion by the Liberal Democrats, who consider the countryside a key political base.

Ishihara said that discussions on the Trans-Pacific Partnership were "at the starting line" and that Japan's government must do all it can to address public concerns and ensure food security.

"We would like to understand what the US wants to get out of the TPP. If it's an effective tool to establish a free trade zone for the Pacific that benefits both the US and Japan, that would be reason to pursue it," he said.

"But if we cannot identify enough merit for Japan and the US, then maybe we should pursue another way to establish a free trade zone," he said.

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New Philippine military Chief will prioritize on Spratlys protection

 

Philippines' President Benigno Aquino III (L) and newly installed Chief of the Armed Forces of the Philippines Lieutenant General Jessie Dellosa salute during the Armed Forces of the Philippines Change of Command ceremony at Camp Aguinaldo in Quezon City, Metro Manila December 12, 2011. The Philippine Catholic Church and military, the two most powerful institutions in the country that have helped topple two previous leaders, installed new heads on Monday as acrimony over investigations into another former president intensified. REUTERS/ Cheryl Ravelo (PHILIPPINES - Tags: POLITICS MILITARY)

MANILA, Philippines (AP) - A battle-scarred general took leadership of the underfunded Philippine military Monday, vowing to bolster his country's external defense so it could adequately respond to "untoward incidents" amid territorial disputes in the South China Sea.

The 125,000-member Philippine military, one of Asia's weakest, has been struggling to modernize its dilapidated air force and navy and train its forces due to a lack of funds. President Benigno Aquino III recently said he would seek modern fighter jets from longtime ally Washington when he visits next year.

Army Lt. Gen. Jessie Dellosa, who took over the military leadership in austere ceremonies led by Aquino on Monday, said recent developments in the South China Sea - obviously referring to renewed territorial spats in the potentially oil-rich region  have made upgrading external defenses inevitable for the Philippines.

"It compels us to look into our maritime security deeply," Dellosa said in his speech. "Development of navy and air force bases and facilities to efficiently respond to untoward incidents is something we can no longer ignore."

Dellosa formerly was an army combat officer and was wounded twice while battling Muslim guerrillas and al-Qaida-linked militants in the southern Philippines. He also led an elite unit that helped Aquino's mother, the late pro-democracy Philippine leader Corazon Aquino, subdue coup attempts.

Filipino soldiers march in honor of new Philippine Forces Chief Lt. Gen. Jessie Dellosa during the turnover-of-command ceremony Monday Dec. 12, 2011 at the Armed Forces headquarters at suburban Quezon city, northeastern Manila, Philippines. Gen. Dellosa is the 43rd armed forces chief in the history of the Philippine military. (AP Photo/Bullit Marquez)

Dellosa replaced Gen. Eduardo Oban Jr., who focused on battling graft and corruption in the military during his stint. Dellosa said he would also wage "an all-out-war" against military corruption.

Already spread thinly while dealing with raging Muslim and communist insurgencies, the military began to focus on external defense especially after Filipino officials accused Chinese government vessels of repeatedly intruding into Philippine-claimed territories in and near the South China Sea's disputed Spratly Islands in the first half of the year.

Philippine and Vietnamese authorities also accused Chinese vessels of trying to sabotage oil explorations within their territorial waters, an allegation Beijing has denied.

China, the Philippines and Vietnam, along with Taiwan, Malaysia and Brunei claim the South China Sea and its cluster of islands, islets, reefs and coral outcrops partly or in its entirety. The region is believed to be sitting atop vast deposits of oil and natural gas and also straddle busy sealanes.

The South China Sea has long been regarded as Asia's next flashpoint for conflict.

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Chinese Illegal poaching After the Philippines then Korea

A body of a South Korean coast guard officer is carried by his colleagues at a hospital

SEOUL, South Korea (AP) — A Chinese fishing boat captain stabbed two South Korean coast guard officers Monday, killing one and injuring the other, after his boat was stopped for illegally fishing in South Korean waters, officials said.

The Chinese captain pulled an unidentified weapon after officers from two coast guard ships boarded the fishing boat over suspicions that it was illegally operating in Yellow Sea waters rich in blue crabs, anchovies and croaker, coast guard spokesman Kim Dong-jin said.

A South Korean officer stabbed in the side was taken by helicopter to a hospital in the port city of Incheon but later died, Kim said. Also brought to the hospital were an officer stabbed in the abdomen, who was to undergo surgery, and the Chinese captain, who had minor injuries from the fight, he said.

South Korea's Foreign Ministry summoned China's ambassador in Seoul later Monday and lodged a strong protest over the fight.

2 weeks past, Chinese illegal fishermen captured in the Philippines for illegally poaching endangered sea green turtle and now detained in Palawan. The same incident happened year past and with court charges on progress when they pouched sea green turtle with the tag of the University of the Philippines in the West Philippines Sea near the Spratly Islands.

Last week in South Korea, Foreign Ministry officials said they asked the ambassador to make efforts to prevent illegal Chinese fishing from undermining bilateral ties.

Also last week, South Korean authorities raised fines levied on foreign fishing vessels caught operating in Seoul's self-declared exclusive economic zone, an apparent reflection of Seoul's impatience with a rising number of Chinese boats found fishing in the waters.

"Eradicating Chinese boats' illegal fishing in our waters is a most urgent task to safeguard our fishermen and fisheries resources," South Korea's Yonhap news agency said in a recent editorial. "The government should mobilize every possible means and continue the crackdown on illegal fishing."

Besides the captain, eight other Chinese fishermen on the boat were arrested and taken to Incheon, the coast guard said in a statement.

The coast guard says it has seized about 470 Chinese ships for illegal fishing in the Yellow Sea so far this year, up from 370 last year. The coast guard usually releases the ships after a fine is paid, though violence occasionally occurs.

Chinese fishing fleets have been going farther afield to feed growing domestic demand for seafood.

In 2008, one South Korean coast guard officer was killed and six others injured in a fight with Chinese fishermen in South Korean waters.

Last year, a collision between a Chinese fishing boat and Japanese coast guard vessels led to a diplomatic spat between the countries over disputed islands in the East China Sea.

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China’s President Hu urges navy to prepare for combat - Drill oil in Spratlys begin

Chinese President Hu Jintao urging his Military to prepare for a war

Chinese President Hu Jintao on Tuesday (December 6, 2011) urged the Chinese navy to prepare for military combat, amid growing regional tensions over maritime disputes and a US campaign to assert itself as a Pacific power.

The navy should "accelerate its transformation and modernization in a sturdy way, and make extended preparations for military combat in order to make greater contributions to safeguard national security," he said.

Addressing the powerful Central Military Commission, Hu said: "Our work must closely encircle the main theme of national defense and military building."

His comments, which were posted in a statement on a government website, come as the United States and Beijing's neighbors have expressed concerns over its naval ambitions, particularly in the West Philippines Sea (South China Sea).

Several Asian nations have competing claims over parts of the West Philippines Sea (South China Sea), believed to encompass huge oil and gas reserves, while China claims it all. One-third of global seaborne trade passes through the region.

Vietnam and the Philippines have accused Chinese forces of increasing aggression there.

In a translation of Hu's comments, the official Xinhua news agency quoted the president as saying China's navy should "make extended preparations for warfare."

The Pentagon however downplayed Hu's speech, saying that Beijing had the right to develop its military, although it should do so transparently.

"They have a right to develop military capabilities and to plan, just as we do," said Pentagon spokesman George Little, but he added, "We have repeatedly called for transparency from the Chinese and that's part of the relationship we're continuing to build with the Chinese military."

"Nobody's looking for a scrap here," insisted another spokesman, Admiral John Kirby.

"Certainly we wouldn't begrudge any other nation the opportunity, the right to develop naval forces to be ready.

"Our naval forces are ready and they'll stay ready."

State Department spokesman Mark Toner said: "We want to see stronger military-to-military ties with China and we want to see greater transparency. That helps answer questions we might have about Chinese intentions."

Hu's announcement comes in the wake of trips to Asia by several senior US officials, including President Barack Obama, Defense Secretary Leon Panetta and Secretary of State Hillary Clinton.

US undersecretary of defense Michelle Flournoy is due to meet in Beijing with her Chinese counterparts on Wednesday for military-to-military talks.

Chinese Premier Wen Jiabao last month warned against interference by "external forces" in regional territorial disputes including those in the West Philippines Sea (South China Sea).

And China said late last month it would conduct naval exercises in the Pacific Ocean, after Obama, who has dubbed himself America's first Pacific president, said the US would deploy up to 2,500 Marines to Australia.

China's People's Liberation Army, the largest military in the world, is primarily a land force, but its navy is playing an increasingly important role as Beijing grows more assertive about its territorial claims.

Earlier this year, the Pentagon warned that Beijing was increasingly focused on its naval power and had invested in high-tech weaponry that would extend its reach in the Pacific and beyond.

China's first aircraft carrier began its second sea trial last week after undergoing refurbishments and testing, the government said.

The 300-meter (990-foot) ship, a refitted former Soviet carrier, underwent five days of trials in August that sparked international concern about China's widening naval reach.

Beijing only confirmed this year that it was revamping the old Soviet ship and has repeatedly insisted that the carrier poses no threat to its neighbors and will be used mainly for training and research purposes.

But the August sea trials were met with concern from regional powers including Japan and the United States, which called on Beijing to explain why it needs an aircraft carrier.

China, which publicly announced around 50 separate naval exercises in the seas off its coast over the past two years — usually after the event — says its military is only focused on defending the country's territory.

China's will start drilling for Oil in Spratlys December 2011 or January 2012

China is targeting to drill for oil in the Spratlys near the main island of Palawan Province, Philippines

Chinese offshore oil and gas specialist CNOOC Ltd will drill its first deepsea exploration well in a northern area of the West Philippines Sea (South China Sea) in coming weeks, a company official told Reuters news.

The china's president Hu urging for preparation for combat might be in line with their oil exploration in the Spratlys which might result to sparks opposition between claimant countries more particularly the Philippines, Vietnam, Brunei, Malaysia and Indonesia.

Although missing an earlier schedule by nearly half a year, the wildcat, an exploration well drilled in an unproven area, marks the beginning of the company's long-planned foray into the geologically challenging deep waters offshore China.

"981 will start drilling late this month or in January," said a company official, referring to the country's first and only homemade deepsea rig Offshore Oil 981, which is designed to operate at a water depth of 3,000 metres and to drill up to 10,000 metres.

Hong Kong-listed CNOOC and international partners including Canada's Husky Energy Inc and U.S. Company Chevron Corp will step up exploration of the deepsea waters in the South China Sea in coming years, with the first major production from the Liwan gas project operated by Husky.

The companies would mostly drill in the northern part of the West Philippines Sea (South China Sea), industry officials and analysts have said, staying away from politically sensitive waters to the south to avoid territorial rows with neighbors such as Vietnam and the Philippines.

The CNOOC official did not say where the first well would be drilled, but over recent years the offshore major had carried out seismic work in the Qiongdongnan basin and the Pearl River Mouth Basin and identified "big oil and gas structures", Chinese geologists said.

Husky Energy, which struck the sole major deep-sea discovery offshore China in 2006, said in September that its Liwan gas project would begin production in 2014, with daily output to reach 500 million cubic feet in 2015.

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