Show the fine print | Inquirer Opinion | Editorial

Show the fine print

/ 05:08 AM November 14, 2018

Chinese President Xi Jinping is set to visit the Philippines in the next few days, during which he will reportedly sign several agreements with President Duterte, among them a deal on the joint exploration of oil and gas reserves off Palawan, and another on the construction of a southern railway line connecting Manila and Bicol.

These agreements come on the heels of the looming entry of a consortium between state-owned China Telecom and Udenna Corp. owned by Davao-based businessman Dennis Uy, Mr. Duterte’s friend and one of his top campaign donors.


The state visit is days away, but the paucity of information so far on these planned deals with China is glaring, and demands questions.

Foreign Secretary Teodoro Locsin Jr. has denied that a joint exploration deal is up for signing. But Energy Secretary Alfonso Cusi did say that a proposal to explore Service Contract (SC) No. 57, located west of the Calamian Group of Islands in northwest Palawan — within Philippine territory but not part of the disputed area in the South China Sea — may finally move forward with Xi’s visit.


Aside from SC 57, the Philippines has also raised the idea of a joint exploration of Recto Bank in the West Philippine Sea (WPS) under SC 72, which Mr. Duterte said would be a “co-ownership” with China.

Agreeing to such a deal, however, would be unconstitutional, according to Acting Chief Justice Antonio Carpio.

An undated post in China’s Ministry of Foreign Affairs website titled “Set aside dispute and pursue joint development,” he pointed out, asserts that the first element in any joint development is: “The sovereignty of the territories concerned belongs to China.”

“In short, if we accept China’s concept, then we accept China’s sovereignty over the disputed territories. This is a trap. We cannot negotiate based on China’s concept,” Carpio warned.

The P175-billion loan agreement Beijing has dangled for the 639-kilometer PNR South Railways project between Manila and Bicol has also raised concerns, this time for the “debt trap” it poses.

The project is just one of at least 10 financing agreements the Philippines is expected to formalize during Xi’s visit.

Economist Fernando Fajardo of the University of San Carlos in Cebu has called it “the height of fiscal irresponsibility” for Malacañang to borrow from China for the “Build, build, build” program, considering China’s exorbitant interest rates of 2-3 percent compared to Japan’s 0.25-0.75 percent.


The Palace, too, has only vaguely responded to apprehensions that such agreements may end up shutting out Filipino construction firms and Filipino labor from the projects, the jobs going instead to Chinese workers — as has been the experience of other countries.

The Philippines’ neighbors have responded with vigilance to China’s economic expansionism.

In Malaysia, Prime Minister Mahathir Mohamad recently shelved two major Chinese infrastructure projects, saying his country could not afford the risks of such loans.

In Thailand, the demand by Thai engineers for sufficient technology transfer from China in building a high-speed rail line between the two countries substantially delayed the project’s progress.

And Pakistan has called for a review of some Chinese projects after balking at the costs, and seeing how Sri Lanka was forced to lease Beijing a strategic port for 99 years to write off a multibillion debt.

But, in the Philippines, China Telecom may just make it as the country’s third telco, as one-half of Mislatel (Mindanao Islamic Telephone Co. Inc.), the Uy-China Telecom consortium — despite its entry being fraught with national security implications.

Sen. Grace Poe is right to suggest that the Armed Forces of the Philippines and other intelligence agencies should have a say in the matter, given China Telecom’s character as a Beijing-controlled entity.

Such security concerns are not unwarranted. Last month, researchers from the US Naval War College and Tel Aviv University accused China Telecom of internet traffic “misdirection” — carrying out covert surveillance of Western countries and companies by hijacking internet routes and taking them through China first.

If it does gain a foothold in the Philippines, however, China Telecom would have no need for such “misdirection”; its eyes and ears would be plugged directly into the daily life and civic affairs of a country Beijing has continually sought to undermine over the WPS issue.

What’s the fine print on these impending deals with China? The Filipino people in whose name such agreements will be signed have a right to know — before it’s too late.

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TAGS: China Telecom, China-Philippines joint oil exploration, China-Philippines relations, Dennis Uy, Inquirer editorial, Rodrigo Duterte, Udenna Corp., xi jinping
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