OTHER GOV’T DEALS WITH CHINA ALSO MARRED BY BAD LOANS AND CORRUPTION

Aside from the controversial US$330 million ZTE broadband deal, other Chinese loans to the Philippines are similarly marred by corruption and onerous loan agreements.

In January 2007, China agreed to fund a number of infrastructure development projects of the Arroyo administration that cost more than US$1.1 billion (P49.5 billion at P45.50:$1). Four more major infrastructure projects worth at least US$1.7 billion are under negotiation. (See Table) The loan package includes the continuation of the controversial Northrail Project.

In the loan agreement of the Northrail Project, China has the sole authority to determine the payment schedule; the right to impose immediate payments even before the project begins; and it places China’s laws as the governing laws for the agreement and that the Philippine government irrevocably and unconditionally waives its immunity from any suit or judgment arising from the contract.

The loan package also includes US$1 billion in funding for the Laiban Dam Project, which, similar to the Northrail, threatens to displace thousands of indigenous peoples and upland settlers.

According to IBON, the deals signed with China should be opposed, not only because they worsen the country’s indebtedness, but also because they perpetuate the flawed neoliberal framework of economic development that has aggravated the country’s permanent crisis of maldevelopment and widespread poverty.

Table. China-funded infrastructure development projects (in million US dollars)

Approved under the package of Jan.15, 2007 agreements

Project

Agency

Cost

Brief description

Northrail Project Phase I, Section 2

NLRC

673.67

Extension of Northrail from Malolos to Clark covering 48 km.

Main Line South Railway Project Phase 1

PNR

314.80

Rehabilitation and upgrading of the 77.4-km. section of railroad line from Calamba to Lucena City

Non-Intrusive Container Inspection System Project Phase 2

BOC

115.00

Purchase, installation, and operation of 20 mobile X-ray machines

Sub-total

1,103.47

Projects in the pipeline

Laiban Dam Project

MWSS

1,000.00

Construction of a concrete dam, intake structures, hydropower plants, & other structures

Metro Manila Skyway Stages 2 & 3

NDC

633.54

Construction of an elevated expressway to link South Luzon expressway & the North Luzon expressway

Angat Water Utilization & Aqueduct Improvement Project Phase 2

MWSS

63.58

Construction of an 11.5-km. new aqueduct to secure existing raw water supply in Metro Manila

Laoag International Airport Expansion Project

DOTC

Upgrading & modernization of the airport’s various facilities

Sub-total

1,697.12

GRAND TOTAL

2,800.59

Compiled by IBON based on information and data from the Development Information Staff, NEDA


FEAST OR FAMINE? RP-CHINA FARM DEALS AND LOCAL AGRICULTURE

China is looking at the Philippines to meet its domestic food and energy requirements even as the Chinese economy is being restructured into an enormous assembly hub of manufactured goods for the American, Japanese and European markets.

By Arnold Padilla

IBON Features– During Chinese Premier Wen Jiabao’s state visit here last January 2007, the country signed some 18 agreements on the agriculture sector with the Philippines . These efforts form part of Pres. Arroyo’s 2004-2010 Medium-Term Philippine Development Plan agriculture target of additional two million agribusiness lands, which is expected to generate at least 2.8 million additional rural jobs. But while some non-government organizations and civil society groups criticize the concerned government agencies for not consulting the farmers first and for lack of transparency, the more fundamental issue is that the deals would further worsen landlessness, undermine genuine agrarian reform, national food security, and rural development – and these threats are imminent.

At least four of the farm deals involve government’s commitment to provide at least 1.24 million hectares for hybrid corn, hybrid rice, and hybrid sorghum farming, leasing for sugarcane and cassava plantation; demonstration farm for sweet corn, and rice and corn production, agro-tourism, and organic farming. In addition, local bioethanol producers signed four joint venture deals with Chinese partners for domestic bioethanol production that also involve hundreds of thousands of hectares of agricultural lands; and three joint venture deals on aquaculture production.

Remiss in land reform implementation

For the China deals, the Department of Agriculture (DA) has already identified and certified as “available for investment” at least 127,000 hectares covering 32 municipalities in five provinces for the production of sweet sorghum, rice, sugarcane, corn and cassava. Government justifies these arrangements by arguing that Chinese intervention would help improve agricultural productivity and incomes as it targets lands distributed under the Comprehensive Agrarian Reform Program (CARP) but are “unproductive”, as well as alienable and disposable lands and forest lands that remain idle. So-called idle A&D lands are around 4.8 million hectares while idle forest lands that can be used for agricultural purposes are around four million hectares.

But such CARP lands should have been made productive by government as part of a comprehensive and genuine program for development of local agriculture, even without the Chinese deals. Further, if there are 8.8 million hectares of idle A&D and forest lands for production, why does landlessness remain rampant in the country despite numerous attempts at land redistribution dating back to the American colonial period? It should be noted that poverty in the country is most prevalent in the countryside, and a major cause of such poverty is the landlessness of the farmers and peasants.

These points go straight to the heart of the issue of the Chinese deals: that past and present administrations have been remiss in implementing a true agrarian reform program, that CARP is flawed and the deals will only aggravate the problem of widespread landlessness of farmers. Land reconcentration is also highly possible if these deals will be fully implemented because by experience, arrangements wherein farmers are asked to enter into production and marketing tie-ups with agri-business corporations lead not only to farmers losing control of their lands, but losing ownership altogether.

Worsening Food Security

Another major concern about the deals is the possible aggravation of the country’s food security. Since the mid-1990s, the Philippines has completely turned around from being a net food exporter to a net food importer with a yearly food trade deficit of $754.7 million from 1995 to 2005. This shift is because of crop conversion and land use conversion to meet the global demand for high-value crops have compromised domestic food production. The shift to biofuels production is a continuation of this trend and, given the growing demand for bio-fuels, may increase the risk of inadequate and inaccessible food supplies.

China ‘s rapid economic expansion makes it one of the most voracious consumers of fuel in the world and its demand for biofuels is expected to rise in the coming years. But its domesti c p roduction of biofuels is not likely to meet growing demand as it prioritizes its food supply over its need for biofuels.

This means that for its supply, China must increasingly turn to East Asian producers such as Malaysia , Thailand and the Philippines , which recently enacted the Biofuels Act of 2006 to establish the needed policy environment. Thus, China is actively pursuing joint bioethanol production arrangements with Filipino firms and has taken a keen interest in developing lands that could be used to cultivate “energy crops” or crops that can be used as feedstock for biofuels.

This restructuring of domestic agriculture has already taken away all state guarantees and mechanisms to guarantee food security. In the case of the Biofuels Act, for example, there is no provision to prevent corporate growers from converting lands dedicated to food crops to large-scale bioethanol and biodiesel production for export if they find it more profitable than producing crops for domestic food consumption.

Aside from compromising domestic food supplies, the farm deals also further weaken food accessibility in the country. The massive dislocation from the means of production of farmers and fishers means increased poverty for them and their families and will seriously weaken their ability to buy their food needs.

Behind the Deals

The Philippines sees the emergence of China as a key economic force in the East Asian region as an opportunity to boost its domestic economic development. The country wants to tap investments from the Chinese government for much needed capital to finance projects in agriculture, infrastructure and industry. Such projects are seen to create jobs, increase income and enhance economic activity.

China , on the other hand, is pursuing an aggressive campaign to open more export markets to sustain its economic growth, particularly in the wake of its becoming a member of the World Trade Organization (WTO). It is also seeking new sources of food, mineral and fuel resources to feed its booming economy. This is the context of the dramatic increase in bilateral economic agreements between the two countries in recent years.

From only five agreements on trade, investment and finance from 1975 to 2000, the figure jumped to 14 from 2001 to 2007. Agreements on agriculture signed by both countries similarly increased from six to 21 during the same period. All in all, the two countries have forged 89 bilateral agreements on various areas from 1975 to 2007, of which 32 were signed during the January state visit of Chinese Premier Wen.

A closer look at the Chinese economy shows that since it abandoned the socialist construction in the 1970s, transnational corporations from the First World have steadily and increasingly intensified their control and domination not only of its local market but its export-import sector as well. This means that burgeoning manufacturing “giant” China , which in actuality still lacks a First World-type industrial base, is at the mercy of a global market dominated by the industrialized nations.

China ‘s aggressiveness in forging economic agreements with the Philippines and other Southeast Asian countries is thus not driven simply by its agenda of increasing its influence in East Asia . In the context of the farm deals, for example, China is looking at the Philippines to meet its domestic food and energy requirements even as the Chinese economy is being restructured into an enormous assembly hub of manufactured goods for the American, Japanese and European markets. In other words, China itself, like the Philippines and other underdeveloped countries, is a victim of the distorted concept of development and industrialization imposed by First World countries.

Towards a True Partnership

The country should pursue stronger “South-South” partnerships such as its bilateral relations with China because the potential for a more meaningful cooperation and mutual benefit is greater than its “North-South” relations (i.e. with the US or Japan ). But such partnerships only become meaningful and mutually beneficial if they recognize common issues that beset the countries involved and from such recognition establish a cooperation program that aims to find a shared solution.

In the case of the Philippines and China , their common issue is that global monopoly capitalism has distorted their respective economic growth (although at varying levels given their respective historical development) and the logical solution is to find an alternative model of economic partnership that will truly promote their industrialization. Unfortunately, closer Philippine-China relations is being built not on this premise but to allow the further exploitation of their natural and human resources by First World-based corporations in collaboration with Filipino and Chinese capitalists and landlords.

Ultimately, only the people themselves, through direct action and mobilization, can ensure that any economic agreements that the Arroyo regime enters into in their behalf would genuinely benefit them. Even if the Chinese deals were already clinched, an informed and militant public can still avert the implementation of these agreements. In the case of the farm deals, for example, the Department of Agriculture is still in the process of negotiating with farmers who may be potential “partners” of the Chinese investors in their agribusiness ventures. IBON Features

IBON Foundation, Inc. joins the Research Fair 2007, a showcase of

IBON Foundation, Inc. joins the Research Fair 2007, a showcase of research projects and development initiatives organized by the Philippine Institute for Development Studies.

This year’s theme is: “Enhancing Grassroots Development: A Framework for Local Governance”. The fair will run from 24 to 26 September 2007 at the Salas Hall, NEDA sa Makati Building, 106 Amorsolo Street, Makati
City

The Research Fair is FREE of admission. It will be open at 10 am-5 pm on
September 24 and 9 am-5 pm on September 25-26.

Please visit us Booth #13.

Participating Institutions:

AIM Policy Center
Ateneo Center for Economic Research and Development-Economic Policy
Reform and Advocacy Project
Ateneo School of Government- Center for Social Policy
DLSU- Angelo King Institute
DLSU Yuchengco Center
German Technical Cooperation
IBON Foundation, Inc.
Institute for Labor Studies
League of Cities of the Philippines
League of Municipalities of the Philippines
Local Government Development Foundation
National Economic and Development Authority
National Statistical Coordination Board
Philippine Institute for Development Studies
PIDS-Philippine APEC Study Center Network
Social Weather Stations
University of Asia and the Pacific
UP Center for Integrative and Development Studies
UP National College of Public Administration and Governance
UP Los Baños-Institute of Strategic Planning and Policy Studies, College
of Public Affairs
UP School of Economics- Economic Research Center
UST Social Research Center

INCLUSION OF CONTESTED ‘SINGAPORE ISSUES’ IN JPEPA THREATENS LOCAL BUSINESSES

Developing countries opposed the inclusion of the controversial “ Singapore issues” in the Doha Round of trade talks under the World Trade Organization (WTO) for fear of how these would impact on their local economies. Yet the Philippines has included these issues in the free trade agreement with Japan , threatening local businesses and the country’s freedom to set policies for its national development.

According to IBON research head Sonny Africa, the Japan-Philippines Economic Partnership Agreement (JPEPA) includes provisions on three of four of the “ Singapore issues”: competition, government procurement and investment. The effect of their inclusion is to strengthen the rights of Japanese investors while undermining government’s power to protect local industries.

For example, the provisions on government procurement (Chapter 11, Article 131), the Philippines “recognizes” that it is “important” to “accord national treatment and most-favored-nation treatment to goods, services and suppliers of the other Party with respect to the measures regarding government Procurement.” This could be interpreted as preventing the national government from favoring local suppliers over Japanese ones.

Similarly, in the JPEPA’s provisions on Competition (Chapter 12, Article 135), the Agreement calls on the signatories to “take measures … to promote competition by addressing anti-competitive activities.” Africa said this could be construed for example, as preventing the government from requiring local carmakers to source a certain percentage of their parts from local suppliers, since this may constitute “anti-competitive” activities.

The inclusion of the “Singapore Issues” in the JPEPA prevents the Philippines from using the protectionist trade and investment measures that Japan itself used when it was building up its local economy. Africa said that from the end of the 19th century to as late as the 1980s, the Japanese government heavily protected its car, truck, shipbuilding, and computer and consumer electronics industries. As part of its protectionist measures, for example, the average weighted average tariffs the Japanese government imposed on imported inputs reached as high as 30 to 40 percent.

Japan developed its technology either by requiring technology transfers from American, French and British investors, or was copied using “reverse engineering” of other countries’ technology. In addition, government procurement of goods and services was done strictly with Japanese firms.

Under the JPEPA, the Philippines surrenders its sovereign right to benefit from economic relations with other countries, while surrendering the country and its resources to the needs, demands and profits of Japanese corporations, said Africa. (end)

Parents of rape-slay victim OK DNA test

Girl could still be alive, says cop By Tina Santos, Allison Lopez
Inquirer
Last updated 00:16am (Mla time) 09/19/2007

MANILA, Philippines – The parents of Geraldine Palma, the 7-year-old girl who was kidnapped and raped, yesterday gave authorities the go-signal to exhume their daughter’s body and subject it to a DNA test.

 

“This is to erase doubts that it was not my daughter,” Gerald, the victim’s father, told reporters at the National Bureau of Investigation (NBI) office. “Who would want to see his child dead? Sana nga hindi na lang si Geraldine yon (I wish it were not Geraldine). I wish I was wrong. But I’m 150 percent sure it was her.”

 

“I only hope they do it right away because her body’s already decomposing and the tests will take at least three weeks,” he added.

 

Gerald and his wife went to the NBI after the Manila Police District (MPD), which is also investigating the case, claimed that the body found stuffed inside a suitcase last month in North Harbor, Tondo was not that of their daughter.

 

Chief Insp. Alejandro Yanquiling, head of the MPD homicide division, said he suspected that Geraldine was still alive.

 

He based his suspicion on the records of St. Paul College, where Geraldine was enrolled, showing that the girl was 3 feet, 10 inches tall. The body inside the suitcase measured 4 feet, 2 inches.

 

According to Yanquiling, a mole on the the victim’s back was the Palmas’ only basis for saying that the body was that of their daughter’s.

 

Gerald, meanwhile, admitted that he was hurt by Yanquiling’s statements.

 

“It’s as if he was saying that I don’t know my own child. I know he’s just doing his job. But why only now? He should have said those things earlier. He’s starting the investigation backwards,” he said.

 

Felma, the victim’s mother, confirmed that at first, she had doubts that the body in the suitcase was that of her daughter because “the girl’s nose was flat.”

 

“But it could have been her and the features also looked different because the body was bloated. They had the same build. But it’s fine with me if they have her body dug up so that the truth will come out,” she said.

 

Despite the recent developments in the case, Gerald maintained that what happened was a case of kidnapping.

 

“I still believe it’s still a kidnapping incident unless Marites (Ontog, the girl’s nanny) shows up and reveals what really happened,” he said.

 

Gerald likewise denied rumors that he had his daughter insured.

 

“It’s not true. I’m the one who’s insured and she was one of my beneficiaries. I never thought she’d go first,” he said.

 

Charges have been filed against the five suspects in the Palma rape-slay case, but the city chief prosecutor said it might be dismissed if the body turns out to be someone else’s.

 

Manila Chief Prosecutor Jhosep Lopez said the credibility of the witnesses would suffer if they had identified the girl in the suitcase as Palma.

 

“It’s already with the court so it’s up to the court to decide. We based it on the evidence of the police identifying the corpse as that of Geraldine Palma’s … But I think they (accused) can file a motion to quash the information or a motion to dismiss. The court might dismiss it because there’s no case to speak of if that is not Palma’s body,” he said.

 

Ramil Diorico, Raffy Nepa, Renato “Rick-Rick” Bohol, Joey Igos and alleged mastermind Henry “Hemlet” Tesado had been charged with rape with homicide at the Manila Regional Trial Court. They were tagged by their supposed cohorts, Rosdam Mesias and Domingo Agnote, who turned state witnesses, and a certain “Berta.”

 

Lopez added that it was up to the judge to decide whether or not to dismiss the charges.

 

“If the witness can prove that the suspects committed a crime against the victim even though the girl found in the suitcase was not Palma, we will continue the case but amend the information,” he said.

IBON TO WTO HEAD LAMY: AID SHOULDN’T BE USED TO PROMOTE TRADE

Development aid should not be used to promote the developed countries’ ‘free trade’ agenda, independent think-tank IBON Foundation said today, as World Trade Organization (WTO) Director-General Pascal Lamy arrives in Manila to kick off an Asian Development Bank conference on Mobilizing Aid for Trade (AfT).

The WTO defines AfT as ‘donor funds’ channeled to finance trade-related technical assistance and infrastructure, plus aid used to develop productive (supply-side) capacity.

According to IBON research head Sonny Africa, development aid could be of assistance to resource-starved underdeveloped countries such as the Philippines . But this can only happen if aid is divorced from the ‘free trade’ economic agenda of rich donor countries and decisions over where it is channelled and how it is implemented are placed under the control of local shareholders.

Lamy’s intention of promoting aid for trade only affirms how the WTO dangles development instruments like aid to Third World countries such as the Philippines to force open their economies further.

Mike Arroyo is mystery man

Mike Arroyo is mystery man

‘He tried to bully me to back off NBN-ZTE deal’

By Dona Pazzibugan, Gil C. Cabacungan Jr.
Inquirer
Last updated 04:03am (Mla time) 09/19/2007

View the NBN contract and related documents

 

MANILA, Philippines — Businessman Jose “Joey” de Venecia III Tuesday named Jose Miguel “Mike” Arroyo as the “mystery man” who supported the controversial $329-million broadband deal with China, thrust his finger inches away from his face and barked at him to “back off” from the deal.

 

On live television, De Venecia demonstrated at a Senate inquiry how the husband of President Gloria Macapagal-Arroyo supposedly tried to browbeat him during a meeting at a golf clubhouse attended by Commission on Elections Chair Benjamin Abalos Sr., the alleged broker of the China project.

 

“He asked me to back off [from the National Broadband Network project],” De Venecia, head of a rival firm, told the senators, recounting the meeting at the Wack Wack Golf and Country Club in Mandaluyong City in mid-March.

 

De Venecia is the founder of Amsterdam Holdings Inc. (AHI), which lost the contract for the NBN project to ZTE Corp.

 

De Venecia also recounted how Abalos, in a separate meeting with officials of China’s ZTE Corp., which he attended, allegedly demanded advance commissions and claimed Ms Arroyo and his father, Speaker Jose de Venecia Jr., were expecting the money.

 

The younger De Venecia said he was shocked by Abalos’ attempt to drag the names of Ms Arroyo and of his father, and he pulled Abalos aside “to warn him against the gratuitous namedropping.” But when the meeting resumed, he said Abalos continued with his demands.

 

Heavy heart

 

In his opening statement, De Venecia said: “It is with a heavy heart that I cannot deny that it was First Gentleman Mike Arroyo at the reconciliatory meeting.”

 

“I do, however, want to make clear that it was his presence alone that I observed and I have no other indication of his participation in the NBN project or the deal with ZTE,” he said.

 

The Senate and House of Representatives are investigating the ZTE contract amid calls that it be rescinded because it was allegedly overpriced by $130 million and attended by corruption. Two economists claimed that the NBN project was unnecessary because the private sector already had two broadband networks.

 

Last week, the Supreme Court ordered a temporary stop to the NBN contract, which was signed in April in Boao, China, by Communications Secretary Leandro Mendoza and ZTE vice president Yu Yong in ceremonies witnessed by President Arroyo.

 

Reconciliatory meeting

 

The young De Venecia was referring to the “reconciliatory meeting” in a function room of Wack Wack, where De Venecia said Arroyo tried to bully him to get him to withdraw AHI’s unsolicited proposal for the NBN project.

 

“Sinindak niya po ako (He threatened me),” he said in reply to Sen. Francis Pangilinan’s question.

 

Pangilinan said the act of the President’s husband, who left the country for Hong Kong on the eve of the Senate inquiry, was more like a “pangduduro (browbeating).”

 

The “reconciliation” meeting was called by Mendoza to patch up differences between De Venecia and Abalos, who allegedly brokered the ZTE deal in exchange for a kickback.

 

Golf buddies

 

“I believe Abalos and the First Gentleman and Mendoza are very close friends. They play a lot of golf. They’re buddies,” he said.

 

Other persons at the meeting, according to De Venecia, were Abalos’ chief of staff Jimmy Paz, Abalos security staffer Quirino de la Torre, Ruben Reyes and Leo San Miguel. (De Venecia apologized to Edgar Dula Torres, a retired police official, whom he had mistakenly identified as being part of Abalos’ group when he was actually referring to De la Torre).

 

Heavier person

 

“My impression is that Chairman Abalos had asked him (Arroyo) to convince me to withdraw [my bid]. It’s like in a fight where you will ask a heavier person to back you up,” De Venecia said.

 

De Venecia said Mendoza spoke first: “Joey (De Venecia), the chairman is here. The First Gentleman is here.”

 

Abalos supposedly told him: “Joey, I forgive you for your sins.”

 

(Abalos was apparently referring to De Venecia’s claim that the Comelec chair had gotten mad at him for telling ZTE officials that he [Abalos] wanted an advance commission.)

 

De Venecia said he did not reply and asked instead if Abalos’ proposal for “cooperation” between ZTE and his own firm, Amsterdam Holdings Inc., was still on.

 

Before Abalos could reply, Arroyo cut De Venecia off and told him to “back off.”

 

“Back off is, iwanan mo na itong proyekto (leave this project). Huwag na akong sumali dahil may ibang kasali diyan (I shouldn’t join the project because someone else was already involved),” De Venecia told the senators.

 

After being told to back off, De Venecia said he tried to explain to Arroyo the advantages of AHI’s proposal.

 

“But he (Arroyo) refused to listen. He went to the other side of the room. He just stood up and left,” the businessman said.

 

“I ended up talking to nobody,” De Venecia said.

 

Waiter

 

Sen. Jinggoy Estrada said one of the waiters at Wack Wack witnessed the meeting. De Venecia, however, could not recall the exact date but that it was held about middle of last March.

 

When questioned, De Venecia recalled that both Arroyo and Mendoza were in white barong Tagalog while Abalos came in a “very nice” polo barong with the Comelec pin.

 

De Venecia said earlier in March that he came across Mendoza at his father’s home.

 

“You know Joey, your proposal is difficult because the old man [Abalos] is mad at you,” he quoted Mendoza as telling him.

 

De Venecia told the Senate inquiry that the ZTE contract was overpriced by at least $130 million.

 

He said he was offered $10 million to join the Chinese firm in the deal while on a visit to China last December.

 

“It was there that I found out that the ZTE proposal was, as early as then, overpriced by … $130 million” ostensibly to accommodate kickbacks, he said.

 

After he refused to form a partnership with ZTE, De Venecia said Abalos threatened him and Star columnist Jarius Bondoc, who had written about the deal.

 

“It was also him (Abalos) that threatened to have Jarius Bondoc and I killed for informing the public of his wrongdoing,” De Venecia told the senators.

 

Sen. Francis Escudero pointed out that both De Venecia and Arroyo were liable for violation of the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019) because relatives of the president, vice president, Senate president and House Speaker up to the 4th degree of consanguinity are barred from involvement in government contracts.