After strong statement vs North Korea, US must provide Kim with face-saving out

Giles Hewitt, Agence France-Presse

EOUL - Soaring tensions on the Korean peninsula have seen dire North Korean threats met with an unusually assertive US response that analysts warn could take a familiar game into dangerous territory.

By publicly highlighting its recent deployment of nuclear-capable B-52 and stealth bombers over South Korea, Washington has, at times, almost appeared to be purposefully goading an already apoplectic Pyongyang.

"There certainly seems to be an element of 'let's show we're taking the gloves off this time' about the US stance," said Paul Carroll, program director at the Ploughshares Fund, a US-based security policy think-tank.

And the North has responded in kind, declaring on Saturday that it was now in a "state of war" with South Korea.

Security crises on the Korean peninsula have come and gone over the decades and have tended to follow a similar pattern of white-knuckle brinkmanship that threatens but finally pulls back from catastrophic conflict.

North Korea's founding leader Kim Il-Sung and his son and successor Kim Jong-Il were both considered skilled practitioners of this high-stakes game of who-blinks-first diplomacy.

And they ensured Pyongyang had enough form to lend its threats credibility, having engineered provocations that ranged from blowing up a South Korean civilian airliner in 1987 to shelling a South Korean island in 2010.

The current crisis, with Pyongyang lashing out at a combination of UN sanctions and South Korea-US military exercises, diverges from precedent in terms of the context and the main characters involved.

It follows the two landmark events that triggered the UN sanctions and re-drew the strategic balance on the peninsula: The North's successful long-range rocket launch in December and its third -- and largest -- nuclear test in February.

Both may have emboldened North Korea to overplay its hand, while at the same time prompting Washington to decide there was already too much at stake to consider folding.

"Rhetorical salvoes are one thing, while rocket launches and nuclear tests are quite another," said Carroll.

In addition, both North and South Korea have new, untested leaders with a strong domestic motivation to prove their mettle in any showdown.

Bruce Klingner, a Korea expert at the conservative Heritage Foundation in Washington, believes the danger of "miscalculation" is especially high from North Korea's young supremo Kim Jong-Un.

Kim was not only emboldened by the successful rocket and nuclear tests, but "also by the knowledge that Seoul and Washington have never struck back in any significant way after previous deadly attacks."

This time around, however, South Korea has signalled it would respond with interest, and the message sent by the B-52 and stealth bomber flights is that it has the US firmly in its corner.

Peter Hayes, who heads the Nautilus Institute, an Asia-focused think tank, points out that the B-52 deployment carried a particular -- and potentially dangerous -- resonance.

After a bloody border incident in 1976 left two American soldiers dead, the United States spent weeks sending flights of B-52 bombers up the Korean peninsula, veering off just before they entered the North's air space.

Then US secretary of state Henry Kissinger commented that he had "never seen the North Koreans so scared."

Hayes warned that replaying the B-52 threat could prove to be "strategically stupid" by reviving the North's historic and deep-rooted fear of a US nuclear strike.

"The B-52 deployment also declares loudly and clearly that they have forced the US to play the game of nuclear war with North Korea," Hayes said.

"It tells them it has reached the hallowed status of a nuclear-armed state that matters enough to force a simulated nuclear-military response," he added.

The possible end-game scenarios to the current crisis are numerous, but none point to an obvious path for defusing the situation peacefully.

Most analysts rule out the prospect of a full-scale war on the grounds that North Korea knows it would lose, just as it knows that launching any sort of nuclear strike would be suicidal.

But after threatening everything from an artillery assault to nuclear armageddon, there is also a sense that Kim Jong-Un has pushed himself into a corner and must do something to avoid a damaging loss of face and credibility.

A provocative missile test fired into the sea over Japan is one option with a relatively low risk of further escalation.

Several analysts had originally predicted a limited artillery strike similar to the 2010 shelling of Yeonpyeong island, but the US and South Korean vows of a tough response have called into question just how "limited" such a move would prove to be.

Scott Snyder, a senior fellow for Korea studies with the Council on Foreign Relations, suggested that the United States, having delivered its message loud and clear, should now provide Kim with a way out.

"There is a need for the United States and South Korea to offer some clear diplomatic gestures of reassurance toward the North that can help the North Koreans climb down, calm down, and change course," Snyder said.

With rating upgrade, PH outlook rosy but more needs to be done

by Jose M. Galang

MANILA, Philippines - Depending on how foreign investors will regard the Fitch Ratings move, the upgrade to investment grade credit rating that the Philippines got today could trigger a rise in the resources that the government could use for its myriad development goals.

A higher credit rating will most likely bring down the cost of borrowings for the government and eventually for the corporate sector. That will stimulate more economic activity, leading to sustained growth that, depending on how such growth can be made more inclusive, may finally trim the high rate of poverty in this country.

However, the new status could also weaken further the peso proceeds of the huge amounts of remittances—which contributed a large part of the strength in the Philippines' current account position that helped pave the way for the upgrade—although that may not yet spoil the push that the economy has been getting from consumer spending driven by the dollar inflows.

Stability in the monetary and banking sector, achieved over the past few years by the quality of management at the Bangko Sentral ng Pilipinas, was obviously a big factor that ensured the credit rating upgrade that many actually thought would come later this year or early next year yet.

“I thought it’s still Holy Week,” former Director-General of the National Economic and Development Authority Dante Canlas, expressing surprise, said on Wednesday when sought for comment. “Looks like Christmas came early for the Philippines.”

The investment grade upgrade, Canlas said, will lead to lower risk premium on Philippine sovereign debt, easing borrowing costs and debt servicing.

“That will free up budgetary resources for government spending on infrastructure, education and health, where there’s a good deal of unmet needs still,” Canlas said.

How the rating upgrade will further escalate borrowings through bond issuances remains to be seen. Recently a study released by the Asian Development Bank showed local-currency bonds issued by Philippine borrowers surging ahead by 20.5 percent to over P4.1 trillion as of end-2012.

That growth in local-currency bonds was the second fastest last year among Southeast Asian nations, topped only by Vietnam’s 43 percent, according to the Asia Bond Monitor published by ADB.

Nevertheless, interest rates paid by the government on its bond borrowings going down. Coupon rates, for instance, on 20-year bonds last week were around 3.625 percent, according to the Bureau of Treasury. That was favorable for the government which about six months ago was paying 5.75 percent for the same debt papers.

Should we worry that an investment grade upgrade would send the country’s foreign debt level soaring?

Last week, Bangko Sentral said that while total foreign debt amounted to $60.3 billion as of the end of 2012, that level represented 20.3 percent of overall economic output (as measured by Gross National Income).

Measured against gross international reserves of $83.8 billion, there was cover of 9.9 times in the case of short-term obligations, indicating no severe pressure on payments falling due within the year.

The upgrade by Fitch now shifts attention to the two other major international credit rating agencies, Moody’s and Standard & Poor’s. A similar move by these two, according to analysts, would encourage the flow of more foreign direct investment into the country.

In making the upgrade, Fitch noted the Philippines’ “resilient” economy which last year grew by 6.6 percent on the back of strong domestic demand. The growth was achieved despite weakness in the world financial markets, including the economies of the Philippines’ major trading partners.

Investments and exports have continued to account for small portions of recent years’ economic growth. Any major increase in these two sectors’ performance will sharped the sustainability of this economic growth, and perhaps its capacity to also positively affect the ranks of the poor.

Recent sentiments favoring opening up more sectors of the economy to foreign investors, which remain banned in a number of major industries, are already raising interest from overseas.

If new policies are put in place to make the economy more open, siginificant increases in FDI can be expected to follow, especially if governance concerns are also addressed by the government and private sector leaders.

In the past, strong indications of a surge in economic expansion were followed by disappointing policy moves by the political leaders. Whether the country’s politicians are no longer prone to shooting themselves in the foot remains to be seen, especially since elections are just around the corner.

http://www.abs-cbnnews.com/business/03/27/13/rating-upgrade-ph-outlook-rosy-more-needs-be-done

As tensions with Pyongyang rise, US flies nuke-ready B-2 bombers over South Korea

Agence France-Presse

SEOUL - Two nuclear-capable US B-2 stealth bombers flew what the US military described as "deterrence" missions over South Korea on Thursday, in a move sure to further inflame tensions with the North.

The two planes, flying out of Whiteman Air Force base in Missouri, flew the 13,000 mile round-trip in a "single continuous mission," dropping dummy ordnance on a target range in the South, the US military said in a press release.

"This .... demonstrates the United States' ability to conduct long range, precision strikes quickly and at will," the statement said.

The two bombers were participating in an ongoing South Korea-US joint military exercise that has infuriated North Korea and prompted threats from Pyongyang to unleash an "all out war" backed by nuclear weapons.

The use of stealth fighters will further inflame tensions, given that the North was already incensed by the participation of B-52 bombers in the exercise.

"The B-2 bomber is an important element of America's enduring and robust extended deterrence capability in the Asia-Pacific region," the US statement said.

In a telephone call with his South Korean counterpart Thursday, US Defense Secretary Chuck Hagel had stressed that all US military capability would be extended to the South, including "the nuclear umbrella, conventional strike means and missile defence."

North Korea's full war declaration statement

Reuters

The moves of the U.S. imperialists to violate the sovereignty of the DPRK and encroach upon its supreme interests have entered an extremely grave phase. Under this situation, the dear respected Marshal Kim Jong Un, brilliant commander of Mt. Paektu, convened an urgent operation meeting on the performance of duty of the Strategic Rocket Force of the Korean People's Army for firepower strike and finally examined and ratified a plan for firepower strike.

The important decision made by him is the declaration of a do-or-die battle to provide an epochal occasion for putting an end to the history of the long-standing showdown with the U.S. and opening a new era. It is also a last warning of justice served to the U.S., south Korean group and other anti-reunification hostile forces. The decision reflects the strong will of the army and people of the DPRK to annihilate the enemies.

Now the heroic service personnel and all other people of the DPRK are full of surging anger at the U.S. imperialists' reckless war provocation moves, and the strong will to turn out as one in the death-defying battle with the enemies and achieve a final victory of the great war for national reunification true to the important decision made by Kim Jong Un.

The Supreme Command of the KPA in its previous statement solemnly declared at home and abroad the will of the army and people of the DPRK to take decisive military counteraction to defend the sovereignty of the country and the dignity of its supreme leadership as regards the war moves of the U.S. and south Korean puppets that have reached the most extreme phase.

Not content with letting B-52 make sorties into the sky over south Korea in succession despite the repeated warnings of the DPRK, the U.S. made B-2A stealth strategic bomber and other ultra-modern strategic strike means fly from the U.S. mainland to south Korea to stage a bombing drill targeting the DPRK. This is an unpardonable and heinous provocation and an open challenge.

By taking advantage of the U.S. reckless campaign for a nuclear war against the DPRK, the south Korean puppets vociferated about "preemptive attack" and "strong counteraction" and even "strike at the commanding forces", openly revealing the attempt to destroy monuments symbolic of the dignity of the DPRK's supreme leadership.

This clearly shows that the U.S. brigandish ambition for aggression and the puppets' attempt to invade the DPRK have gone beyond the limit and their threats have entered the reckless phase of an actual war from the phase of threat and blackmail.

The prevailing grim situation more clearly proves that the Supreme Command of the KPA was just when it made the judgment and decision to decisively settle accounts with the U.S. imperialists and south Korean puppets by dint of the arms of Songun, because time when words could work has passed.

Now they are openly claiming that the B-2A stealth strategic bombers' drill of dropping nuclear bombs was "not to irritate the north" but "the defensive one". The U.S. also says the drill is "to defend the interests of its ally". However, it is nothing but a lame pretext to cover up its aggressive nature, evade the denunciation at home and abroad and escape from the DPRK's retaliatory blows.

The era when the U.S. resorted to the policy of strength by brandishing nuclear weapons has gone.

It is the resolute answer of the DPRK and its steadfast stand to counter the nuclear blackmail of the U.S. imperialists with merciless nuclear attack and their war of aggression with just all-out war.

They should clearly know that in the era of Marshal Kim Jong Un, the greatest-ever commander, all things are different from what they used to be in the past.

The hostile forces will clearly realize the iron will, matchless grit and extraordinary mettle of the brilliant commander of Mt. Paektu that the earth cannot exist without Songun Korea.

Time has come to stage a do-or-die final battle.

The government, political parties and organizations of the DPRK solemnly declare as follows reflecting the final decision made by Kim Jong Un at the operation meeting of the KPA Supreme Command and the unanimous will of all service personnel and people of the DPRK who are waiting for a final order from him.

1.From this moment, the north-south relations will be put at the state of war and all the issues arousing between the north and the south will be dealt with according to the wartime regulations.

The state of neither peace nor war has ended on the Korean Peninsula.

Now that the revolutionary armed forces of the DPRK have entered into an actual military action, the inter-Korean relations have naturally entered the state of war. Accordingly, the DPRK will immediately punish any slightest provocation hurting its dignity and sovereignty with resolute and merciless physical actions without any prior notice.

2. If the U.S. and the south Korean puppet group perpetrate a military provocation for igniting a war against the DPRK in any area including the five islands in the West Sea of Korea or in the area along the Military Demarcation Line, it will not be limited to a local war, but develop into an all-out war, a nuclear war.

It is self-evident that any military conflict on the Korean Peninsula is bound to lead to an all-out war, a nuclear war now that even U.S. nuclear strategic bombers in its military bases in the Pacific including Hawaii and Guam and in its mainland are flying into the sky above south Korea to participate in the madcap DPRK-targeted nuclear war moves.

The first strike of the revolutionary armed forces of the DPRK will blow up the U.S. bases for aggression in its mainland and in the Pacific operational theatres including Hawaii and Guam and reduce not only its military bases in south Korea but the puppets' ruling institutions including Chongwadae and puppet army's bases to ashes at once, to say nothing of the aggressors and the provokers.

3. The DPRK will never miss the golden chance to win a final victory in a great war for national reunification.

This war will not be a three day-war but it will be a blitz war through which the KPA will occupy all areas of south Korea including Jeju Island at one strike, not giving the U.S. and the puppet warmongers time to come to their senses, and a three-dimensional war to be fought in the air, land and seas and on the front line and in the rear.

This sacred war of justice will be a nation-wide, all-people resistance involving all Koreans in the north and the south and overseas in which the traitors to the nation including heinous confrontation maniacs, warmongers and human scum will be mercilessly swept away.

No force on earth can break the will of the service personnel and people of the DPRK all out in the just great war for national reunification and of all other Koreans and overpower their might.

Holding in high esteem the peerlessly great men of Mt. Paektu, the Korean people will give vent to the pent-up grudge and realize their cherished desire and thus bring a bright day of national reunification and build the best power on this land without fail. (via KCNA)

Rating upgrade won't automatically lead to FDI flows, businessmen caution

By: InterAksyon.com

MANILA - The business community on Wednesday welcomed the Philippines' upgrade from Fitch Ratings, but reminded the government that foreign direct investments (FDI) -- the kind that creates jobs -- won't be forthcoming if constraints to doing business in the country remain.

Early this afternoon, Fitch Ratings announced that it raised the country's credit score to investment grade, the first of three major international debt watchers to bestow their seal of good fiscal housekeeping on the Philippines.

"There will be more FDIs from institutional investors who are restricted from investing in countries below investment grade. The rating is a recognition of the stable fiscal policies and programs of the government," Employers Confederation of the Philippines (ECOP) president Edgardo G. Lacson told InterAksyon.com.

European Chamber of Commerce of the Philippines (ECCP) executive vice president Henry J. Schumacher is less sanguine.

"It's great and I congratulate the government for having achieved it. But not having investment grade was not the reason for extremely low foreign direct investments. Those reasons need to be addressed to achieve productive investments leading to job generation and inclusive growth," he said, referring to infrastructure bottlenecks and red tape in government.

The Aquino administration's infrastructure showcase -- the Public-Private Partnership (PPP) Program -- has failed to accelerate, bogged down by slow preparatory work on the part of government as well as investor concerns on bidding rules.

The Light Rail Transit Line 1 (LRT1) Cavite Expansion Project is a case in point, as the timetable has been moved back thrice, with the Department of Transportation and Communications (DOTC) blaming the delay on queries from potential bidders.

The Mactan Cebu International Airport passenger terminal project also has been slow to start, as government had to change bidding rules to accommodate wider investor interest.

"[T]he upgrade significantly improves the climate for financial investments, but for brick and mortar FDI, market size and competitive production costs are more critical factors than financial ratings," said American Chamber of Commerce of the Philippines (AmCham) senior adviser John D. Forbes.

Benjamin Diokno, economics professor at the University of the Philippines, said the investment grade rating is "good news."

"The upgrade has long been anticipated. In fact, it has already been reflected in the bond market," he said, referring to the record low rates of Treasury bills and bonds.

He agreed that the upgrade won't lead to a surge in FDIs for the Philippines. "FDI inflows depend on a different set of variables such as cost of doing business, state of public infrastructure including existence of sufficient, affordable and reliable power supply, policy consistency and credibility."

"Moreover, some restrictive provisions in the Constitution may continue to deter foreign investors from making long-term commitments to the Philippines," Diokno said.

With reports from Ben Arnold O. De Vera and Darwin G. Amojelar

http://www.interaksyon.com/business/58117/rating-upgrade-wont-automatically-lead-to-fdi-flows-businessmen-caution

Did tobacco firms meddle in Tagaytay's smoking ban?

Cher Jimenez, InterAksyon.com

MANILA, Philippines - Health advocates suspect that tobacco lobby may be involved in the junking of Tagaytay City's smoke-free ordinance that bans smoking, including the use of electronic cigarettes, in all public areas.

The ordinance, approved by Tagaytay’s City Council, did not get the nod of the Cavite Provincial Board, which says that the local decree cannot be implemented because it went beyond what is prescribed by Republic Act 9211 or the Tobacco Regulation Act of 2003.

“We cannot rule out the tobacco industry’s role in any watered-down smoke-free ordinance including its crafting, passage, implementation, and enforcement. There is big business to protect in every smoke-free ordinance that goes out there,” said the Framework Convention on Tobacco Control Alliance Philippines (FCAP) in a statement.

The Tagaytay ordinance, unanimously approved by its City Council in June 2012 while Congress was in the heat of the sin tax debate, was junked by the Cavite Provincial Board alleging that it was an “invalid local legislation” because it purportedly went beyond the provisions of RA 9211 in terms of how the national law defines “public places.”

Tagaytay is a recipient of the Presidential Health Care Award and is known as a child- and health-friendly city having been awarded as the most health conscious LGU in the country in 2008 and in 2010. In approving the local decree, its policy-making board recognized that there exists an “irreconcilable conflict” between tobacco firms’ interest and public health.

The ordinance bans smoking in all public places within the city and prohibits the sale, distribution, and advertisement of tobacco products including e-cigarettes, which is getting popular among smokers.

FCAP is questioning why Tagaytay’s ordinance was rejected by Cavite ’s Sangguninang Panlalawigan when it approved a similar local decree by the municipality of Carmona in December 2011.

“Oddly enough, the Carmona Municipal Ordinance which bore definitions lifted from the Framework Convention on Tobacco Control (FCTC) in reference to fully and partially enclosed areas and public places, was passed unopposed and escaped the scrutiny of the Sangguniang Panlalawigan,” said FCAP.

The group encouraged local governments to adhere to the FCTC, which was ratified by the Philippines in 2005 and should have been fully implemented by 2010. It also reminded LGU officials to observe a Civil Service Commission circular prohibiting tobacco industry interference in government offices.  

“If we are going to believe Cavite ’s Sangguniang Panlalawigan that Tagaytay’s ordinance went beyond RA 9211, then how come we have other LGUs like Albay that approved a smoke-free ordinance which was clearly broader than the national law? The fact remains that the Philippines was a signatory to the FCTC and it is obligated to adhere in good faith to the treaty’s provisions,” said FCAP.

The FCAP added that under the FCTC, an LGU may enact an ordinance that has greater restrictions than RA 9211 if such legislation is deemed responsive to the needs of the local government and its constituents. One sample of this is the ban on e-cigarettes that Tagaytay City wishes to implement.

According to the World Health Organization (WHO), e-cigarettes contain harmful chemicals such as acetic acid, acetone, isoprene, formaldehyde, and acetaldehyde that are dangerous for non-smokers when inhaled. While not as polluting as a conventional tobacco product, e-cigarettes produce certain levels of cancer-causing substances in the air that non-smokers breathe, said the WHO.

Why Fitch promoted Philippines to 'investment grade'

By: InterAksyon.com

The following statement was released by Fitch Ratings on Wednesday, as it upgraded the Philippines to investment grade:

Fitch Ratings upgraded the Philippines' Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'BBB-' from 'BB+'. The Long-Term Local-Currency IDR has been upgraded to 'BBB' from 'BBB-'. The Outlooks on both ratings are Stable.

The agency has also upgraded the Country Ceiling to 'BBB' from 'BBB-' and the Short-Term Foreign-Currency IDR to 'F3' from 'B'.

Key Rating Drivers
The upgrade of Philippines' sovereign ratings reflects the following factors:

• The Philippines' sovereign external balance sheet is considered strong relative to 'A' range peers, let alone 'BB' and 'BBB' category medians. A persistent current account surplus (CAS), underpinned by remittance inflows, has led to the emergence of a net external creditor position worth 12% of GDP by end-2012, up from 6% at end-2010. Remittance inflows were worth 8% of GDP in 2012 and proved resilient even through the shock of the global financial crisis. Fitch expects a rising import bill stemming from strong domestic demand to lead to a narrower CAS and to stabilise the net external creditor position at a strong level through to 2014.
• The Philippine economy has been resilient, expanding 6.6% in 2012 amid a weak global economic backdrop. Strong domestic demand drove this outturn. Fitch expects GDP growth of 5.5% in 2013. The Philippines has experienced stronger and less volatile growth than its 'BBB' peers over the past five years.
• Improvements in fiscal management begun under President Arroyo have made general government debt dynamics more resilient to shocks. Strong economic growth and moderate budget deficits have brought the general government (GG) debt/GDP ratio in line with the 'BBB' median. The sovereign has taken advantage of generally favourable funding conditions to lengthen the average maturity of GG debt to 10.7 years by end-2012 from 6.6 years at end-2008. The foreign currency share of GG debt has fallen to 47% from 53% over the same period.
• Favourable macroeconomic outturns have been supported in Fitch's view by a strong policy-making framework. Bangko Sentral ng Pilipinas' (BSP) inflation management track record and proactive use of macro-prudential measures to limit the potential emergence of macroeconomic and financial imbalances is supportive of the credit profile. Inflation has been in line with 'BBB' peers on average over the past five years.
• Governance standards, as measured in international indices such as the World Bank's framework, remain weaker than 'BBB' range norms but are not inconsistent with a 'BBB-' rating as a number of sovereigns in this rating category fare worse than the Philippines. Governance reform has been a centrepiece of the Aquino administration's policy efforts. Entrenching these reforms by 2016 is a policy priority of the government.
• The Philippines' average income is low (USD2,600 versus 'BBB' range median of USD10,300 in 2012), although this measure does not account directly for the significant support to living standards from remittance inflows. The country's level of human development (as measured in the United Nations Development Programme's index) is less of an outlier against 'BBB' range peers.
• The Philippines had a low fiscal revenue take of 18.3% of GDP in 2012, compared with a 'BBB' range median of 32.3%. This limits the fiscal scope to achieve the government's ambition of raising public investment. The recent introduction of a "sin tax", against stiff political opposition, will likely lead to some increment in revenues and underlines the administration's commitment to strengthening the revenue base. Rating Sensitivities The main factors that could lead to a positive rating action, individually or collectively, are:
• Sustained strong GDP growth that narrows income and development differentials with 'BBB' range peers. An uplift in the investment rate that enhances growth prospects without the emergence of macroeconomic imbalances.
• Broadening of the fiscal revenue base, as well as further improvements in the structure of the Philippine sovereign debt stock.

The main factors that could lead to a negative rating action, individually or collectively, are:

• A reversal of reform measures and deterioration in governance standards.
• Sustained fiscal slippage, leading to a higher fiscal debt burden.
• Deterioration in monetary policy management that allows the economy to overheat.
• Instability in the banking sector, leading to a crystallisation of contingent liabilities on the sovereign balance sheet.

Key Assumptions
The ratings and Outlooks are sensitive to a number of assumptions. The agency assumes the Aquino administration will persist with its fiscal, governance and social reform agenda. Fitch estimates trend GDP growth for the Philippines in a range of 5%-5.5%.

The ratings incorporate an assumption that the Philippines is not hit by a severe economic or financial shock sufficient to cause a significant contraction in GDP and trigger stress in the financial system.

Fitch assumes that there is no materialisation of severe risks to global financial stability that could impact emerging market economies, such as a breakup of the euro zone or a severe economic crisis in China.

http://www.interaksyon.com/business/58115/full-statement--why-fitch-promoted-philippines-to-investment-grade

What investment grade rating means for PH

ABS-CBNnews.com

Q: What does an Investment Grade rating mean for the Philippines?

A: This investment grade rating is a seal of good housekeeping and a resounding vote of confidence in the Philippine economy. It is strong affirmation that the Philippines is on the right path towards sustainable and inclusive growth. It also closes the gap between our market rating and our credit rating. This upgrade was achieved due to sound macroeconomic fundamentals, underpinned by good governance reforms as well as the Philippines’ good economic prospects moving forward.

Q: How will this impact the Philippine economy?

A: We expect to see an increase in investment inflows, as many institutional investors allow the investment of funds in investment grade countries only.

The upgrade also means lower costs for government debt, thereby freeing more funds for social services, infrastructure and other long-term investments for economic development. It means cheaper and broader sources of funds for both government and corporate borrowers. Domestic and foreign businesses would be more encouraged to increase investments in the country’s productive capacity such as in the manufacturing industry and in agri-business, thus generating more employment.

Q: What was the basis of Fitch Ratings’ decision? What were the main drivers?

A: According to the Press Release of Fitch Ratings, the following are the key rating drivers for the upgrade of the Philippines’ sovereign ratings:

“-The Philippines’ sovereign external balance sheet is considered strong relative to ‘A’ range peers, let alone ‘BB’ and ‘BBB’ category medians. A persistent current account surplus (CAS), underpinned by remittance inflows, has led to the emergence of a net external creditor position worth 12% of GDP by end-2012, up from 6% at end-2010. Remittance inflows were worth 8% of GDP in 2012 and proved resilient even through the shock of the global financial crisis. Fitch expects a rising import bill stemming from strong domestic demand to lead to a narrower CAS and to stabilise the net external creditor position at a strong level through to 2014.

-The Philippine economy has been resilient, expanding 6.6% in 2012 amid a weak global economic backdrop. Strong domestic demand drove this outturn. Fitch expects GDP growth of 5.5% in 2013. The Philippines has experienced stronger and less volatile growth than its ‘BBB’ peers over the past five years.

-Improvements in fiscal management begun under President Arroyo have made general government debt dynamics more resilient to shocks. Strong economic growth and moderate budget deficits have brought the general government (GG) debt/GDP ratio in line with the ‘BBB’ median. The sovereign has taken advantage of generally favourable funding conditions to lengthen the average maturity of GG debt to 10.7 years by end-2012 from 6.6 years at end-2008. The foreign currency share of GG debt has fallen to 47% from 53% over the same period.

-Favourable macroeconomic outturns have been supported in Fitch’s view by a strong policy-making framework. Bangko Sentral ng Pilipinas’ (BSP) inflation management track record and proactive use of macro-prudential measures to limit the potential emergence of macroeconomic and financial imbalances is supportive of the credit profile. Inflation has been in line with ‘BBB’ peers on average over the past five years.

-Governance standards, as measured in international indices such as the World Bank’s framework, remain weaker than ‘BBB’ range norms but are not inconsistent with a ‘BBB-’ rating as a number of sovereigns in this rating category fare worse than the Philippines. Governance reform has been a centrepiece of the Aquino administration’s policy efforts. Entrenching these reforms by 2016 is a policy priority of the government.

-The Philippines’ average income is low (USD2,600 versus ‘BBB’ range median of USD10,300 in 2012), although this measure does not account directly for the significant support to living standards from remittance inflows. The country’s level of human development (as measured in the United Nations Development Programme’s index) is less of an outlier against ‘BBB’ range peers.

-The Philippines had a low fiscal revenue take of 18.3% of GDP in 2012, compared with a ‘BBB’ range median of 32.3%. This limits the fiscal scope to achieve the government’s ambition of raising public investment. The recent introduction of a “sin tax”, against stiff political opposition, will likely lead to some increment in revenues and underlines the administration’s commitment to strengthening the revenue base.”

Q: Moving forward, how do we expect government policy and government action to change in response to the credit rating upgrade?

A: While we expect an investment grade rating to open new opportunities for the Philippines, it also poses a challenge to all of us to maintain it. Hence, the Philippine Government will continue to focus on sustaining the progress that we have achieved both in terms of economic growth and institutionalizing good governance reforms. We will preserve all the factors that made this investment grade rating possible-low and stable inflation, favorable interest rates and a sound banking system, a sustainable fiscal position and a strong external position. Most of all, the platform of good governance which has made such progress possible, will continue and are irreversible. Foreign and local businesses can rely on a government that will continue to be transparent, effective and responsive.

http://www.abs-cbnnews.com/business/03/27/13/what-investment-grade-rating-means-ph

Rich and powerful dominate party lists, undermining law for representation of 'marginalized'

 Lira Dalangin-Fernandez, InterAksyon.com

MANILA, Philippines - Political families and big business persons dominate the partylist groups in the House of Representatives, undermining the law that created it to give representation to the "marginalized and underrepresented sectors," the poll watchdog Kontra Daya said on Tuesday.

Kontra Daya criticized the Commission on Elections (Comelec) for its "questionable" accreditation process that paved the way for the elite to secure seats in the House through the partylist route.

“In 2007 and 2010, Comelec accredited these questionable partylist groups and their nominees despite the fact that these persons have close ties with political clans, government officials, and big business interests thus making them unqualified to participate in the partylist elections,” the group said.

“Comelec cannot wash its hands of the problem. The Comelec accreditation process is highly questionable. It is no surprise that partylists for sale are happening because interest groups see that there is a big chance for moneyed candidates to gain a seat in congress via the partylist system,” it added.

Kontra Daya said that the poll body still has time to “clean up its mess” by strictly reviewing the accreditation of partylist groups who will participate in the 2013 elecitons.

In a separate statement, ACT Teachers partylist Representative Antonio Tinio should give the public access to records of partylist groups applying for accreditation.

“The people can help Comelec weed out bogus partylist groups, but they have to be armed with information which, right now, is mostly in the hands of Comelec. If these information are hidden from the public then bogus partylist groups can slip into Congress,” Tinio said.

Kontra Daya said partylist slots should go to deserving and qualified groups as defined in the Partylist System Act.

The law states that “the State shall promote proportional representation in the election of representatives to the House of Representatives through a party-list system of registered national, regional, and sectoral parties or organizations or coalitions thereof, which will enable Filipino citizens belonging to the marginalized and underrepresented sectors, organizations, and parties, and who lack well-defined political constituencies but who could contribute to the formulation and enactment of appropriate legislation that will benefit the nation as a whole, to become members of the House of Representatives.”

The group cited the cases of presidential son and former Pampanga representative Mikey Arroyo of Ang Galing Pinoy, businessman Teodorico Haresco of Ang Kasangga, and Catalina Bagasina, former Pampanga board members and known Arroyo ally, as “glaring cases of violations of the spirit of the partylist system.” 

The three do not come from the sectors they claim to present (security guards, workers, small entrepreneurs) and are financially capable to compete in the regular congressional district elections. They are also the top three richest partylist representatives as of 2011, with a combined net worth of P326.7 million, according to Kontra Daya.

Kontra Daya prepared this table of partylist representatives with their respective net worth based on their 2011 Statement of Assets Liabilities and Net worth.

PARTYLIST                            REPRESENTATIVE                    NETWORTH (as of CY 2011)

1. ALE                                       Catalina Bagasina                                 133,938,000

2. AGP                              Juan Miguel Macapagal-Arroyo                      99,954,309.00

3. ANG KASANGGA          Teodorico Haresco Jr.T.                             92,814,808.25

4. AKO BICOL                            Co, Christopher                                  91,063,195.68

5. 1-UTAK                               Mercado, Homer A.                               65,014,804.52

6. Senior Citizens                            Kho, David L.                                   59,521,695.31

7. AGBIAG                                Antoinio, Patricio T.                              55,641,886.76

8. BUHAY                       Velarde, Mariano Michael Jr M.                      53,326,935.26

9. ALIF                                    Tomawis, Acmad M.                              48,530,000.00

10. AGAP                                   Briones, Nicanor M.                            46,618,319.00

11. ABS                                  Leonen-Pizarro, Catalina G.                     40,375,377.50

12. AKO BICOL                        Batocabe, Rodel M.                             30,237,702.50

13. YACAP                                Lopez, Carol Jayne B.                          29,444,000.00

14. AMBIS/OA                               Garin, Sharon S.                              25,868,194.24

15. AVE                              Magsaysay, Eulogio "Amang" R.                  24,240,000.00

6. AANGAT TAYO                  Abangon, Daryl Grace J.                       23,443,905.76

17. BUHAY                                          Tieng, Irwin C.                           20,054,633.38

18. Senior Citizens                           Arquiza, Godofredo V.                    19,985,000.00

19. AN WARAY                           Montejo, Neil Benedict A.                19,690,000.00

20. Coop-NATCO                             Ping-ay, Jose K.                          19,400,000.00

21. AGHAM                                     Palmones, Angelo B.                     17,966,567.60

22. ABONO                          Ortega, Francisco Emmanuel III R.           17,200,743.36

23. BUTIL                                        Guanlao, Agapito H.                      15,691,000.00

24. A-TEACHER                                Furtona, Juliet R.                        15,244,000.00

25. LPGMA                                          Ty, Arnel U.                             15,184,112.50

26. A KASOSYO                        Pangandaman, Nasser C.                   14,655,000.00

27. ATING COOP                                Lico, Isidro Q.                          14,114,222.68

28. AN WARAY                          Florencio, Gabriel "Bem" G.               13,105,000.00

29. ABONO                                Estrella, Robert Raymund M.              12,597,927.00

30. ALAGAD                                 Marcoleta, Rodante D.                    12,200,000.00

31. PBA                                           Sambar, Mark Aeron                     11,640,820.00

32. CIBAC                                    Cruz-Gonzales, Cinchona                  11,022,340

33. AKO BICOL                              Garbin, Alfredo Jr A.                       9,680,000.00

34. Abante Mindanao                       Rodriguez, Maximo Jr B.                  9,120,000.00

35. DIWA                                        Aglipay, Emmeline Yan                     8,900,942.81

36. Bagong Henerasyon                   Herrera-Dy, Bernadette I.                  8,721,997.66

37. 1CARE                                     Rivera, Michael Angelo C.                  8,361,506.51

38. 1CARE                                     Cabaluna, Salvador III P.                   7,490,000.00

39. APEC                                            Payuyo, Ponciano D.                     7,105,095.00

40. Coop-NATCO                               Paez, Cresente C.                        6,553,000.00

41. Unang Pamilya                          Obillo, Reena Concepcion G.             6,087,424.00

42. ANAD                                         Alcover, Pastor Jr M.                     5,450,000.00

43. A-TEACHER                              Piamonte, Mariano Jr U.                 5,113,000.00

44. GABRIELA                                  Ilagan, Luzviminda C.                    4,890,184.00

45. AKBAYAN                                   Bello, Walden F.                          3,974,400.00

46. CIBAC                                          Tugna, Sherwin N.                       3,852,000.00

47. KAKUSA                                   Canonigo, Ranulfo P.                     2,647,208.00

48. TUCP                            Mendoza, Raymond Democrito C.              2,079,515.00

49. GABRIELA                            De Jesus, Emerenciana A.                  1,240,000.00

50. ACT                                          Tinio, Dante Antonio L.                   1,161,568

51. AKBAYAN                                   Bag-ao, Kaka J.                        1,098,320.30

52. BAYAN MUNA                          Colmenares, Neri J.                        697,701.00

53. KALINGA                                  Feriol, Abigail Faye C.                    483,006.30

54. KABATAAN                                Palatino, Raymond V.                   195,000.00

55. BAYAN MUNA                             Casiño, Teodoro A.                      91,000.00

56. ANAKPAWIS                                Mariano, Rafael V.                       46,946.73

http://www.interaksyon.com/article/36409/rich-and-powerful-dominate-party-lists-undermining-law-for-representation-of-marginalized

Clueless on Sabah, messed up on Jabidah, toothless on China

By Francisco S. Tatad

President B.S. Aquino III’s actions and utterances on Sabah have won for him not only much derision and ridicule at home and abroad but also renewed Chinese irritations against the Philippines in the Spratlys. The country does not deserve any of these.

Filipinos can only express their dismay that China has apparently decided to exploit the leadership vacuum shown by Aquino’s total mishandling of the Sabah crisis by pressing its aggressive stance in the Kalayaan Island Group, which the Philippines has incorporated within its territory.

Despite Aquino’s bellicose posture during the Philippine-China maritime standoff in Scarborough Shoal last year, he has done nothing to prevent or minimize the latest reported Chinese air and maritime incursions into what the Philippines claims to be its lawful domain.

All of Aquino’s efforts seem focused on campaigning for “Team Patay” in what promises to be a thoroughly debased process skewed in favor of his announced senatorial favorites, and on pressing his horrible official line against the followers of the Sultan of Sulu who had gone to Lahad Datu in Sabah on February 9 to press for a settlement of the Sultan’s (and Philippines’) territorial claim.

Not content with the Malaysian security forces killing as many as they could of the Sultan’s Filipino followers, charging those arrested with terrorism and other crimes, and rounding up thousands of Filipino residents, who had nothing at all to do with the Sultan’s undertaking, Aquino has directed his Secretary of Justice to study the possibility of charging those who have survived the Malaysian slaughter or escaped the dragnet with conspiracy and other crimes.

Still not content with that,  he recently tried to promulgate as unadulterated official and historical truth the most sensational fisherman’s tale, hyped in the media of the late 60s but never confirmed or documented, about the so-called  “Jabidah massacre” of  unnamed and unnumbered Muslim “trainees”, purportedly recruited by the Marcos government  in 1967-68,  for the purpose of “invading”  Sabah.

Without any evidence to back up his claim, or any rationale remotely allied to any recognizable national interest or purpose, B.S. Aquino went to Corregidor Island on the 18th of March to “commemorate”, at government expense, the “45th anniversary” of the alleged massacre, solely for propaganda purposes.

It was an extraordinary attempt to make former President Ferdinand Marcos, dead for nearly a quarter of a century, the convenient scapegoat for a problem which unnecessary official ignorance has compounded beyond all telling, and to further glorify the memory of Aquino’s late father, in whom Malacañang and the conscript media have already invested more heroic virtues than he himself ever sought to attain in his lifetime.  The attempt was as audacious as it was baseless, and it all but blew up in B. S. Aquino’s face.

Aquino sought  to promote as a historical fact the so-called 1968 “Jabidah massacre” on Corregidor Island on the basis of one rabble-rousing speech   delivered by the late former Senator  Benigno “Ninoy” Aquino Jr. on March 28, 1968.   That speech repeated what Ninoy had heard about the alleged massacre, but ultimately  cast serious doubt on the veracity of the entire tale.

Whoever wrote that Corregidor speech did an atrocious job in digesting  the referenced Senate  speech, as written and delivered, and in coming up with the exact opposite of what it says.   Obviously our machine-made President never read his father’s speech himself.  

Otherwise,  he would never have said the so-called  Jabidah massacre really “happened” and that “it is our responsibility to recognize this event as part of our national narrative.”

Indeed,  Ninoy’s speech—entitled “Jabidah! Special Forces of Evil?”—repeated allegations  of a massacre by the purported lone survivor Jibin Arula, who quickly fell under the control of Marcos’s sworn political enemies in Cavite,  but it ultimately  questioned the credibility of his narrative.

After  entertaining his audience with salacious details about how Marcos’ so-called “Operation Merdeka” was conceived, and how the recruits were shipped off to Corregidor from Sulu and finally massacred there after they threatened to walk out in protest against the delayed payment of their meager allowances,  Ninoy Aquino finally said:

“In Jolo yesterday, I met the first batch of 24 recruits aboard RP-68. This group was earlier reported missing—or even worse, believed ‘massacred’.

“William Patarasa, 16 years old, one of the leaders of the petitioners, in effect corroborated all the points raised by Jibin Arula. But he denied knowledge of any massacre.

“Like Jibin Arula, up to yesterday he claimed he had no knowledge of what had happened to their four leaders called by Major (Eduardo) Martelino last March 3. He confirmed, though, some suspicion among the petitioners that the four had been ‘liquidated’ by Major Martelino’s boys.

“One of the leaders has since presented himself to army authorities.

“This morning, The Manila Times, in its banner headline, quoted me as saying that I believed there was no mass massacre on Corregidor Island.

“And I submit it was not a hasty conclusion, but one borne out by careful deductions. What brought me to this conclusion:

“1) Massacre means, to my mind, the wanton killing of men—maybe premeditated, but definitely committed according to a previous plan.  I submit that there was no plan to kill the Muslim recruits.

“2) What would have been the motive for the ‘massacre’? Some quarters have advanced the theory that the trainees were liquidated to silence them.  But then, 24 boys have already shown up in Jolo safe and healthy. To release 24 men who can spill the beans and liquidate the remaining 24 ‘to seal’ their lips would defy logic.

“3) Jibin Arula has been telling the truth all along.  However, his fears, which in his place may be considered valid, may not be supported by the recent turn of events. Twenty-four recruits have turned up.

“I went to Sulu with a sworn statement of Jibin Arula. I checked out everything Jibin Arula had told me—the description of the camp, the names of the boys—and everything that Jibin Arula had told me checked out.

“It must be emphasized here that Jibin Arula never said that the four were murdered. All he said was that they were taken by Major Martelino and never returned.”

In the 45 years that have elapsed since the alleged massacre reportedly took place, no grieving widows, fathers, orphans or siblings had surfaced to protest their kin’s brutal murder, or to claim financial indemnity for any of the victims,  in the same manner that the “human rights victims” in the communist insurgency against Marcos  had claimed, and been awarded, “damages” by an external American court.

And against B.S. Aquino’s claim that it was the  alleged “Jabidah massacre” that triggered the Moro National Liberation Front’s  secessionist rebellion in the South,  there is no mention of that extravagant claim in any MNLF document or  in the political discourse of its most responsible leaders.

Rereading Ninoy’s speech after 45 years, or reading it for the first time today, one necessarily has  to wonder:  If Ninoy Aquino doubted the veracity of the massacre story,  why did he choose to repeat it in his privilege speech and spread it on the record of the Senate?

Was it simply to satisfy a natural craving for  publicity? Or did he  just want  to blow the cover off a top-secret state project which he could not allow Marcos to pursue, even in the name of  national security?

To Marcos, the most damaging and therefore unacceptable part  of Ninoy’s “expose” was not his repetition of allegations which could not be independently confirmed, and which he himself doubted,  but rather his disclosure of the alleged existence of  “Operation Merdeka,” a secret state project to infiltrate Philippine government agents inside  Sabah.

That disclosure was deemed irresponsible and dangerous, to say the least, and risked, among other things, possible  armed confrontation with Malaysia.

In a democracy, the government has a right to undertake state security projects to protect its sovereignty, territorial integrity and other national interests. It has a right to count on  every official or citizen, even when he or she is identified with the political opposition, to protect and safeguard the secrecy of such project.

A responsible official, on getting wind of any such project,  would instantly recognize his duty to protect the national interest .  Should he have any doubts or questions in his mind,  he has a right and a duty to demand that the responsible officers concerned, including the President and Commander-in-Chief himself, tell him, in the strictest confidence, what the project is all about, if they did not  want him to talk to  the press instead.

This was what Aquino was expected to do, but did not.  His first impulse was to deliver a privilege speech in the Senate, and in the process inform the Malaysian and  British authorities,  the other parties in interest, of what he suspected Marcos was up to.  He faulted Marcos for keeping the reported project “secret,” and its objectives  “known only to himself and a handful of his confidants.”

There is  reason to believe there was a national state security project called “Operation Merdeka.” But it is so silly to suggest that its objective was to “invade” Sabah. No country uses a handful of amateurs to invade another country, unless it was to film a wacky movie about an invasion that failed.  It is more reasonable to assume the objective was to infiltrate propaganda agents into Sabah.

Given  the Philippines’  legal claim to Sabah,  lodged in 1963 after the Sultan of Sulu ceded his sovereignty over the territory to the Philippine government, such a project would be fully in keeping with the national interest.  Marcos did not have to announce it in a press release,  and no opposition leader had any duty to expose it to the media, or any foreign government.

The unasked—and unanswered—question, therefore is, was Aquino  acting as a patriot when he exposed the project’s purported existence?  Or was he acting  solely in his own interest,  regardless of its potential injury to his own country’s interests and the consequential benefits to  Britain and Malaysia?

In the only interview I ever had with Marcos  in Makiki, Hawaii, in July of 1987—seven years after I left the Cabinet, and a couple of months after  Cory Aquino’s  senatorial slate ran away with 22 of the 24  senatorial seats in the  elections that year—the exiled fallen leader was completely dismissive of Aquino.

Curious why he had not been more lenient and accommodating to Aquino during martial law, I reminded him that in their June 21, 1977 conversation  in Malacañang,  which I witnessed, Ninoy  had asked to be made  special envoy to  the MNLF and the Islamic countries in the Middle East.  Marcos’ reply to me sharp:  “Ninoy  was never a political rival. He was an enemy of the State.”

Now, in his inept summarization of his father’s speech, B.S. Aquino says Marcos had ordered the recruitment of Muslim trainees to “sow chaos and destabilization” in Sabah, so that  “in the midst of the chaos, the Marcos regime would then find a way to claim Sabah for the Philippines.”

After all the blood that has been spilled in Lahad Datu and Samporna, it is absolutely cruel to see so much ignorance spouting out of so high a source. The Philippine government, for Mr. B. S. Aquino’s information,  lodged  its Sabah claim not in 1968, but in 1963, first with Britain, with whom we held one round of diplomatic talks in London,  and then with Malaysia, after it incorporated Sabah as one of its 13 states.

How  can we expect any intelligent word from government on this issue when the President himself does not  have the slightest notion what it is all about?  How in Heaven’s name did we ever get to have such a president who is clueless on Sabah,  messed up on Jabidah, and toothless on China?

fstatad@gmail.com

http://manilastandardtoday.com/2013/03/25/clueless-on-sabah-messed-up-on-jabidah-toothless-on-china/