PHNO-BE: GOVT DOWNPLAYS IMPACT OF CHINA-RP DISPUTE / BLOG WATCH: ANALYSIS

GOVT DOWNPLAYS IMPACT OF CHINA-RP DISPUTE / BLOG WATCH:
ANALYSIS
[PHOTO FROM THE VINCENTON POST- Joint U.S.-Philippines
naval training (US Navy)]
MANILA, MAY 22, 2012 (STANDARD) by Lailany P. Gomez
- The government and the private sectors assured that the tension over the
disputed Scarborough Shoal in the West Philippine Sea will have no significant
impact on the country's tourism industry and trade relation to China.
Board of Investments and Trade Assistant Secretary Felicitas Agoncillo-Reyes
said in an interview that the row between Manila and China had the respective
investments in the two countries.
"Honestly, there's no negative impact. Although, China's investments here are
not that large, I think they are number eight in terms of total direct
investments. In fact, Manila has more investments in China. That is one of the
reasons the Chinese trade department sent an investment advisor. This is the
first time… This is really a sign of friendship, goodwill," Agoncillo-Reyes
said.
Of the country's total foreign direct investments of $850 million in the
first two months of the year, equity capital infusion came mainly from the
United States, Australia, Japan and Kuwait.
The sectors that benefited from these inflows were the manufacturing,
wholesale and retail trade, real estate, financial and insurance services,
mining and quarrying, and information and communication.
Agoncillo-Reyes also noted that China's stringent regulations imposed on
shipment of bananas from the Philippines were bloated by the media.
"It's not as much as the press would say. It's just a question of
regulation," Agoncillo-Reyes said.
University of Asia and the Pacific professor and economist Victor Abola was
optimistic the tension in Scarborough Shoal would have no impact on the
country's tourism and trade sectors.
"Let's face it. At present, the Chinese tourism to the Philippines is still
very small. They will cancel it for a while, that's the growth that we lose. So,
I don't think that is significant," Abola said in an interview.
Data from the Tourism Department showed that visitor arrivals to the
Philippines hit an all-time high of 1.148 million in the first quarter, up 16
percent from 989,501 year-on-year. Chinese arrivals comprised over 8 percent, or
96,455 visitors, making them the fourth-biggest generating markets for the local
tourism industry.
"The potential is that we will lose an X percent, but that's the way it goes.
We just have to prefer for the worse-case scenario," Abola said.
Philippine Travel Agencies Association president Aileen Clemente said there
was no clear assessment of the extent of the cancelation of several Chinese
travel agencies and airline yet.
"The factors include current bookings, forward bookings, if bookings are
considered canceled or suspended. So far, we know four chartered flights per
week and China Southern's reduction of flights are what we are aware of,"
Clemente said in an e-mail.

(Published in the Manila Standard Today newspaper on /2012/May/21)
BLOG WATCH: COMMENTARY FROM THE VINCENTON
POST
RP-China Scarborough Standoff: Reality Check and Economic
Solutions
The Philippine
government needs to prolong its discussions with China while focusing on its
most crucial solution: economy. China is not the problem. Our economy is the
main problem. There can be no strong defense or military without a stable,
strong economy.

[[PHOTO- Free market and constitutional reforms are not
forthcoming under the Yellow regime.]
A lot of people here and abroad have been talking about the possibility of
military conflict between the Philippines and China, which have been embroiled
in a maritime standoff in disputed waters in the South China Sea. China, which
is now considered a military power, has recently denied it is embarking on
military readiness while the Philippine government is determined to resume
diplomatic discussions with Beijing.
Both parties have strong territorial claims to the disputed Scarborough
Shoal. The escalating dispute over the shoal, a tiny rocky outcrop about 180
miles from the Philippines' main island of Luzon, began when Philippine
government sent the Philippine Navy frigate, BRP Gregorio del Pilar, to
investigate and arrest the crew of eight Chinese fishing boats at the shoal 124
nautical miles west of Luzon. However, the arrest did not take place, as two
unarmed China Marine Surveillance vessels appeared and intervened.
Two days later, while the Philippine government replaced the frigate with a
Coast Guard vessel, China government deployed an armed Fishery Law Enforcement
Command (FLEC) ship at the shoal. The assertive Chinese government claims
virtually all of the West Philippine Sea, which is believed to sit atop huge oil
and gas reserves.
A few days ago, an anchor for China's state-run TV station said "that the
Philippines is China's inherent territory, and the Philippines belongs to
Chinese sovereignty", adding "this is an indisputable fact." The Philippines, on
the other hand, claims the shoal falls within its exclusive economic zone. Other
countries that have territorial claims are Taiwan, Brunei, Vietnam and Malaysia.

The mounting tensions between the two countries quickly spilled over into the
virtual world, as Chinese hackers started defacing a number of Philippine
websites, particularly government and media websites. An alleged group of
Filipino hackers called #OccupyPhilippine reportedly retaliated by hacking
Chinese government sites, which they posted on their Facebook page.
As expected, this territorial dispute gradually turned into an 'economic cold
war', as China reportedly held 150 containers loaded with Cavendish banana at
its three ports.
Reports said that Chinese authorities suddenly tightened inspection rules
after discovering that bananas shipped by Mindanao growers showed signs of
disease found to be associated only with coconut.
The Chinese government also issued a travel advisory for its nationals ahead
of the planned protests by Filipinos at Chinese embassies worldwide.
This led to calls from a number of Filipino politicians and groups to boycott
Chinese products being shipped to the Philippines. We all know that cheap
Chinese products dominate the Philippine retail markets.
In protest of China's growing economic war on the Philippines, several
leaders in the House of Representatives have been considering proposals on
whether or not China-made products will be taxed heavily or banned altogether.
Calls to boycott, ban, or tax Chinese products can have negative implications on
the Philippine market and economy.
Taxing Chinese products will certainly hurt the Filipino poor who buy cheap
goods. This move might increase government revenue, but it will certainly punish
millions of wage-earning Filipinos. Government-imposed ban on Chinese goods is
also not a practical option, as thousands of workers could be severely affected.

It is important to understand that there is no officially declared war
between the Philippines and China. I believe our government is justified to
officially ban all kinds of Chinese products only if there exists an ongoing
military conflict against China. However, our government may restrict certain
Chinese products for actual security and health reasons. It may also issue a
travel advisory for Filipino nationals planning to visit China for existential
security reasons.
However, private boycott is certainly the only proper, logical option
left. Private boycott, as opposed to government-imposed boycott, is always a
proper action or option because it involves personal choices, decisions,
assessments, biases, or even idelogical dogma.
This can be done through personal/individual boycott and group or collective
boycott. Private boycott, in this case, can be influenced or motivated by
various factors or reasons, such as ideology, patriotism, emotionalism, or
personal choices or biases.
But the question is: Is it possible to boycott all Chinese products when
nearly all kinds of consumer goods, whether personal or electronics, are being
manufactured in China?
For instance, China is the biggest producer of electronic parts and equipment
(computers, cellular phones, camera, gadgets, etc.).
Apple and other giant computer and electronics companies have manufacturing
and production units in China.
Also, this most populous empire maintains a monopoly on rare earth metals
that are essential in the production and manufacturing of a wide variety of
electronic technologies including lithium car batteries, solar panels, wind
turbines, flat-screen television, compact fluorescent light bulbs,
petroleum-to-gasoline catalytic cracking, and military defense components such
as missile guidance systems.
This is why I find the proposal to tax or ban Chinese products by some of our
lawmakers utterly outrageous and irrational.
We can can boycott certain Chinese products for personal reasons. This is
what many people do. I know a lot of people who boycott McDonalds and other
Western goods for ideological reasons.
Unsurprisingly all of them are either hardcore leftists or closet leftists.
Yet they smoke Marlboro and some of them go to Starbucks to take a sip of
deliciously made capitalistic frappuccino or ice-blended coffee.
For me, my main motivation is purely intellectual and ideological. I cannot
buy and support counterfeit or fake products manufactured in China because these
are in breach of intellectual property rights.
We have to understand that our ongoing dispute with China is not purely
territorial; it is also economic. However, if not handled properly it could
ignite a 'cold war' or an arms race.
The Philippine government's handling of this Scarborough issue is
very disappointing from the very beginning.
Whether or not China is guilty of provocation by allowing or deliberately
sending fishermen to that disputed area, the Philippine authorities should have
acted with due care and caution.
Consider the following assessment by a purportedly impartial observer.
Carlyle A. Thayer, an emeritus professor at the University of New South
Wales, published an article
in ChinaFocus.com in which she detailed "at least three major implications
that go beyond a fisheries jurisdiction dispute." These three implications are
as follows:







First, the standoff at Scarborough Shoal exposes
the Philippines' lack of capacity to enforce its sovereignty over its EEZ and
thus undermines the credibility of official Philippines statements that it "will
secure our sovereignty."

China is building up the size of its civilian
maritime enforcement fleets and it is only a matter of time before China either
dominates the fishing grounds off the west coast of the Philippines or a clash
occurs between Chinese and Philippines vessels.

Second, the Scarborough Shoal incident has
provoked a domestic outcry in the Philippines that is largely critical of the
role its ally, the United States. Philippine Senators and Congressmen have
berated the US for its inaction. So far the US has only released a statement
urging "all parties to exercise full restraint and seek a diplomatic
resolution." Filipino elites have also been critical of the Association of
Southeast Asian Nations (ASEAN) for not providing political
support.

The domestic reaction in the Philippines reveals
unrealistic expectations about its Mutual Defense Treaty with the United States.
This treaty provides for consultations in the event "the territorial integrity,
political independence or security of either of the Parties is threatened by
external armed attack in the Pacific." So far China has scrupulously avoided
using force.
Third, from April 16-27, the Philippines and the
United States commenced their 28th Balikatan (Shoulder-to-Shoulder) combined and
joint military exercise. This was planned long before the Scarborough Shoal
incident.

Balikatan involves two phases of simultaneous multiple
exercises. The first phase focuses on humanitarian and civic assistance in
Palawan, while the second phase involves field training exercises in Luzon and
Palawan. None of the Balikatan exercises will take place outside the
Philippines' territorial waters including an exercise to defend and retake an
oil rig captured by terrorists.
[PHOTO -Chinese goods are sold in Divisoria]
I strongly agree with the assessment that the Philippines showed its
incapacity to enforce its sovereignty over its exclusive economic zone.
As already stated, China might have been trying to provoke the Philippines
into starting a diplomatic, or even military, conflict. But we have to
understand our capability, both militarily and economically.
In regard to military and economic capability, the indisputable facts are as
follows:

The Philippines is militarily inferior to China;
The Philippines is also economically inferior to China;
The main economic weapon– or the source of military fuel– of China is its
attractive labor market that pumps up its centrally planned market economy;

These facts show that we cannot possibly win an arms race against China.
However, this does not mean that we should bow down to China and simply
surrender our territorial claims. There are possible options and solutions.
First, the Philippine government needs to prolong its discussions with
China while focusing on its most crucial solution: economy. China is not the
problem.
Our economy is the main problem. There can be no strong defense or military
without a stable, strong economy. The second (strong economy) is the cause,
while the first (strong military) is the effect.
We cannot reverse, or twist, the law of causality. Yes, this law certainly
applies to politics, economics, or even military issues. It is universal; it
applies anywhere, anytime.
The most important question that will guide our leaders in their quest for
economy prosperity and stability (if ever they considered this solution) is:
What is the primary source of wealth?
Practical economics tells us that the real source of wealth is not the
government, but the private sector, and that wealth-creation is only possible
under a system in which private individuals are free to produce, to trade, to
employ, and to contract.
The freer the economy, the more people will participate in wealth-creation.
Free economy means both local and foreign participants are free to do business,
to trade, and to practice their professions. This is how all developed countries
built their economies.
This is the history of the United States of America, the economic and
military superpower built by immigrants. This is the history of Germany, Japan,
Canada, Great Britain, South Korea, Hong Kong, Singapore, and even China.
China, for instance, did not become economically prosperous by keeping its
Maoist past.
In 2001, China quickly transformed its closed economy into a market-socialist
model by joining the World Trade Organization. As a new TWO member, China was
compelled to open its economy to foreign investors and to protect property
rights and intellectual property rights. In just ten years since its WTO
membership, China became the fastest growing economy.
China's fast-rising economy is the very reason why it was able to expand its
military. In fact, China is even more economically free than the Philippines in
terms of foreign participation.
Foreigners are allowed to own 100% equity in land and business in China. By
contrast, the Philippines limits foreign investors' participation, and totally
bars foreign professionals from practicing their respective professions in the
country.
Second, the Philippines needs economic freedom. It needs to institute
radical free market reforms. However, this cannot be done without revising the
1987 Constitution, which mandates protectionism and economic
interventionism.
The primary goals of this economic solution are as follows: 1) to grow the
economy by attracting local and foreign participation; 2) to attract the
brilliant minds to become part of our team; 3) to ensure long-term economic
growth. This solution was deftly implemented by Singapore under the leadership
of Lee Kuan Yew.
This economic solution offers a huge advantage to the Philippines because it
is freer compared with China in terms of political freedom.
Both statistics and reports show that China is about to lose its
millionaires, professionals and intellectuals in the next few years.
A
survey published last year found that 60% of about 960,000 wealthy Chinese
citizens with assets over 10 million yuan ($1.6 million) were either
contemplating on leaving the country or taking steps to do so.
The top destinations are the U.S., Canada, Singapore and Europe. Many great
leaders understand the importance of having a great number of professionals,
inventors, scientists, and intellectuals in economic development and in building
a socially and economically stable nation.
However, this solution would remain futile without concrete actions, which
include:

Elimination of certain taxes or lowering tax rates. Taxes that can be
eliminated are income tax, estate tax, capital gains tax, property tax,
community tax, and corporate income tax. The government may focus on consumption
tax as its source of revenue. However, the elimination of taxes should be done
in a gradual, cautious manner.
Lower government spending
Privatization. It is time to privatize all government-owned and controlled
corporations.
Legalize gambling and lottery. Allow both foreign and local entrepreneurs to
run gambling and lottery businesses. Let them compete with each other.
Allow 100% foreign ownership of land and business.
Allow foreign professionals to practice their profession here. Allow
foreigners to put up schools, media, public utilities, etc.
Allow foreign investors to put up power companies and compete with
Filipino-owned power utilities.
Decontrol or deregulate by repealing economic regulations and restrictions.
Allow private insurers and social security companies to compete with SSS and
GSIS.
Abolish certain government departments and agencies like DepEd, CHED, DSWD,
DOH, national housing authority, NFA, DPWH, etc. But this should be done
gradually.
Abolish certain welfare programs like PhilHealth, government loan programs,
subsidies, etc.
More focus on our judiciary or court system, police, and military.

The main purpose of these concrete actions is to make the people independent.
Welfare programs and services only make the people dependent on the government.
With strong and healthy economy, the people will have more employment and
business opportunities and they no longer need to rely on government freebies
and services. The only proper role of government is to protect individual
rights.
Third, the Philippine government may then focus on vital issues, such
as the country's legal system, the police force, and the military or national
defense. With stable economy and independent citizenry, the government could
then pay more attention to its primary functions: 1) court system to settle
legal disputes, 2) police force to deal with criminals, and 3) and military to
handle internal and external threats like civil war or invasion.
China may be a giant bully, but nothing is impossible under a free market
system.
The best real-world model is Israel, which unfortunately is not a complete
representative of free market system. The best thing about Israel is that it is
more economically free compared with the Philippines, it embraces foreign
professionals and investors, and it can afford to focus more on national defense
because of its stable, strong economy.
According to CIA
World Factbook, Israel recorded an unemployment rate of 5.6%, with $235.1
billion GDP, making it the 52nd wealthiest country in the world. Despite its
relatively small population, Israel's military is considered one of the
strongest in the world.
Currently, China is the third biggest economy in the world, with GDP of
$11.29 trillion in 2011.
This figure alone shows that we're nothing compared with China. However, with
free market solutions and reforms, we may be able to uplift our economic status
in a matter of years. It is possible. Israel, which has been in conflict with
the entire Arab world for decades, did it.
In fact, China did it 12 years ago. There's no reason that this country
cannot do it. Again, the problem is not China; it is our economy and the very
people who incompetently run this already bankrupt nation.
ABOUT THE
The Vincenton
Post
This site is owned by Froilan Vincent (his chosen name). The
blogger's real name is Froilan Vincent D. Bersamina.
The Vincenton Post is formerly called Ideological Soup.
This transition is not merely lexical; it is primarily intellectual and
philosophical.
This blog is dedicated to the promotion of individualism, laissez faire
capitalism, and the philosophy of Objectivism in the Philippines, a country
which is a product of history.
In order to have a definite national direction, a nation must have a rational
intellectual leadership. This country must be guided by a rational individualist
philosophy whose metaphysics is objective reality, whose epistemology is reason,
whose politics is capitalism, and whose ethics is self-interest.
Without a rational culture, education system and 'national consciousness'
that are hinged on the concept of individualism, this nation cannot achieve a
"new renaissance."
This blog banners the value of Honesty, Objectivity and Integrity.

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Chief News Editor: Sol Jose Vanzi
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