RP-China economic ties still intact despite Aug. 23 crisis

The recent Manila hostage-taking incident never dented the economic ties between China and Philippines, with many mainland companies prepared to take part in the public-private partnership projects of the Aquino administration, a Chinese embassy official in Manila told GMANews.TV over the weekend. The backlash of the botched hostage rescue last Aug. 23 was on the tourism industry of the Philippines, Wu Zhengping, economic and commercial counselor of the Chinese embassy, pointed out. Since the time of the hostage-taking fiasco, Chinese airlines have experienced a “decline of about 20 to 30 percent" of Chinese nationals coming to the Philippines, he said. The Philippines received 146,361 Chinese visitors in August 2009, Department of Tourism records showed. Wu added that the standoff was “only an isolated case that shouldn’t ruin the economic relationship between China and the Philippines." He pointed out that many Chinese companies have already “showed interest" in President Benigno Aquino’s private-public partnership (PPP) projects, saying that they cannot miss the rosy business environment in the Philippines. “[Chinese firms] are only waiting until the Philippine government unveils its PPP projects. They are also waiting for the projects’ policies to determine or decide if they’re economically viable," Wu said. By October, the Aquino administration will roll out its wish list of PPP projects that will target strategic growth areas, Malacañang said last week. Aquino also hinted that the first PPP projects will involve the construction of new toll roads, elevated highways, flood control systems, power plants, and railways — all tourism-related as the country targets to increase tourism arrivals from 3 million a year to 6 million by 2013. Wu said, “The Chinese government and Chinese companies have a very rich experience in developing big-ticket infrastructure projects. And, in the next coming months and years PPP projects will be the main focus of our government and many companies in terms of investment." Trade and investment According to Wu, total Chinese investment in the Philippines totaled $38 million in the first half of the year, up 114 percent from a year earlier. Chinese investments in the country amounted to $50 million last year, he said. “Investments of China in the Philippines have been growing very fast," Wu said, reiterating that there was “no way that [the Aug. 23 incident] could block the relationship" between the two countries. With the economic growth of China — which already surpassed Japan as the second largest economy in the world — “there are a lot of investment opportunities for the Philippines," Wu said. Japan’s second-quarter gross domestic product (GDP) totaled $1.2883 trillion on a nominal dollar basis as against China’s second-quarter GDP of $1.3369 trillion. For the Philippines, this means that the nation can become “more of a tourist destination with certain specialty tourism niches like gambling," said Ricardo Lim, associate dean of the Asian Institute of Management’s W. SyCip Graduate School of Management. “In particular, Taiwanese already frequent casinos in Manila. By extension, mainland Chinese may soon follow here. I imagine we might compete with Macau as an alternate gambling destination, because we have more natural attractions to complement the gambling," he said in a separate interview with GMANews.TV. This could mean that the Philippines would export more agricultural products, minerals, and services to China, said Federico Macaranas, a board of trustee of the Ramon Magsaysay Award Foundation. “China's advances in manufacturing is leaving low-end items to the Association of Southeast Asian Nations, making the Philippines as part of China’s supply chain," added Macaranas, a former executive director of Asian Institute of Management Policy Center. The more prosperous the Chinese are, “the higher their demand for higher class vacations — anything from beaches and resorts in Boracay, Bohol, and Donsol to themed tours such as golf and eco-tours," Lim said. Even more, China would overtake the economy of the US by 2050, according to global financial services firm Morgan Stanley. “This means that Asia will be led, not by one, but by two economic power houses," said Steve Sevidal, who helps manage $800 million at United Coconut Planters Bank, in an e-mail to GMANews.TV. Mining investments By far, China is known to have tremendous competitive advantages in consumer items such as electronics, textiles, plastics, and machinery, among many other goods. Still, China is starting to shift its image toward being a “major mining investor" in the Philippines, according to Wu. “The Philippines is abundant in terms of mining resources. Mining will be an important sector for Chinese companies to seek for potential investments," Wu pointed out, citing that the state-owned China Metallurgical Group Corp. will soon invest in the Philippines. There are “a lot of Chinese mining companies that are now looking at mining investments here. Some are already negotiating with some local companies for joint ventures," Wu said. In mid-2000, Oriental Synergy Mining Corp. and the Macao Quanta Mining Co. Ltd. signed an agreement to invest $4 million in a 10-year project to mine the chromite- rich Dinagat Island in Surigao del Norte. The Philippines expects mining investments to reach $13.5 billion by 2012. The Mines and Geosciences Bureau reporter that $700 million in mining investments were recorded in the first half of the year. According to the General Administration of Customs of China (GACC), bilateral trade between the Philippines and China rose by 52.6 percent to $13.1 billion in the first half from the same period last year. Exports to the Philippines was valued at $5.6 billion, while imports from the Philippines was pegged at $7.5 billion, the GACC noted in the same Jan. June comparable period. Bilateral trade between the two countries totaled $20.5 billion last year, down from $28.6 billion in 2008 in the light of the global financial crisis. Total trade in 2007 was $30.6 billion. The Aug. 23 incident The report of the Incident Investigation and Review Committee (IIRC), which named a number of individuals liable for the tragic outcome of the hostage-taking incident, will first be released to the Chinese government through its embassy in Manila any time soon, according to Presidential Communications Development and Strategic Planning Secretary Ricky Carandang. President Aquino on Friday said he would reveal the steps he would take based on the 83-page report at a press briefing Monday. Justice Secretary Leila de Lima, head of the IIRC, and her team prepared the report last week after five days of marathon hearing which was concluded on Sept. 8. On Aug. 23, dismissed police Senior Inspector Rolando Mendoza hijacked a busload of 21 Hong Kong tourists and three Filipino travel agency staff and a Manila-based Chinese tour guide in Intramuros, Manila. He then commandeered the bus to nearby Quirino Grandstand. Mendoza demanded that he be reinstated into police service and his pending case at the Office of the Ombudsman dismissed. In the 11-hour standoff, Mendoza released nine hostages. But as the evening approached, negotiations bogged down after Mendoza said the Ombudsman's letter vowing to review his case was "garbage." The Philippine government and the police were criticized by the Chinese government as well as the international and local media for the bungled rescue attempt. Hong Kong also demanded a thorough investigation into the incident. —With Sophia Dedace/VS, GMANews.TV