Home Top News Marcos: South China Sea tensions affect global economy

Marcos: South China Sea tensions affect global economy

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Tensions remain high amid maritime sovereignty disputes in the South China Sea. — PHILIPPINE STAR/RYAN BALDEMOR

By Kyle Aristophere T. Atienza, Reporter

PHILIPPINE President Ferdinand R. Marcos, Jr. said countries outside the region should consider tensions in the South China Sea as a major issue for their economies, citing the waterway’s importance to international trade.

He made the remarks ahead of the premier summit of defense leaders and analysts across the world, and as China pushes policies seen restricting access to one of the world’s most important waterways.

“It’s so important to international trade that we can actually say that the stakeholders are no longer limited to ASEAN (Association of Southeast Asian Nations), Asia, Indo-Pacific. It really involves the global economy already,” Mr. Marcos told reporters, based on a transcript from his office.

He said he would highlight the government’s position amid tensions in the South China Sea and “see the ways forward for the Philippines and for the region.”

“The fact that they asked the Philippine President to come and speak on that very subject is significant in the sense that it is a recognition that there are challenges facing the Philippines, specifically,” he said.

China has been blocking Philippine government and civic missions within Manila’s exclusive economic zone (EEZ). Scarborough Shoal, a traditional fishing ground, and Second Thomas Shoal, in which a Filipino military outpost was established in 1999, have been among South China Sea features most frequented by Chinese Coast Guard vessels last year.

The Philippines has also been reporting increasing Chinese presence in features near Reed Bank, a large tablemount in the waterway that according to the US Energy Information Administration could hold up to 5.4 billion barrels of oil and 55.1 trillion cubic feet of natural gas.

As the country deals with the potential depletion of its sole indigenous source of natural gas — the Malampaya gas field, there’s been growing focus on the waterway’s economic importance.

Two Philippine tycoons recently backed the government’s efforts to defend the country’s claims in the waterway, with San Miguel Corp. Chief Executive Officer (CEO) and President Ramon S. Ang citing its vast energy potential.

“We have a big reserve in the West Philippine Sea,” he said at a government economic briefing earlier this week, referring to parts of the South China Sea that fall within the Philippine EEZ.

Manny V. Pangilinan, chairman and CEO of Manila Electric Co. (Meralco), said Mr. Marcos “has been making the right decisions” amid tensions with China.

“We fully support what he’s been doing,” he said last month.

PXP Energy Corp., which is chaired by Mr. Pangilinan, has struggled conducting drilling and exploration activities for its Reed Bank concession or Service Contract 72.

VITAL TO TRADEJoshua Bernard B. Espena, vice-president at Manila-based International Development and Security Cooperation, said the Philippines is on the right track of “internationalizing” the dispute with China since the South China Sea is vital to international trade.

He said China keeps on insisting that disputes in the waterway should only involve claimants, but the Marcos government has “resisted” and kept doing what it needed to do — “unilateral and minilateral approaches to contain Chinese excessive moves so that the Philippines might stand to gain amid geopolitical shifts.”

“This is vital given the limitations on the Philippines’ capability to protect its fishers and deny Chinese arrests,” he said in a Facebook Messenger chat.

On the other hand, Ateneo de Manila University economics professor Leonardo A. Lanzona said the Marcos administration’s South China Sea policy may be “frightening investment out of the Philippines.”

“The exodus of firms from China because of these geopolitical issues is unlikely to benefit the country since the government has put the Philippines at the center of this tension,” he said via Messenger chat.

“Southeast Asian countries even closer to China, such as Thailand and Vietnam, are taking advantage of this situation as the firms exiting China are moving into their borders,” he said, noting that these countries are unlikely to get involved in the issue.

Mr. Lanzona said Manila should maintain stable diplomatic ties with China even as it defends its sovereignty and “most importantly focus on making our industry more attractive to investors.”

The Philippines has gained strong international support after it launched a transparency campaign last year that seeks to expose China’s aggressive acts within the Philippine EEZ such as the use of water cannons and dangerous maneuvers.

Mr. Marcos is set to deliver a keynote message for the IISS Shangri-La Dialogue in Singapore on May 31.

Beijing recently announced a four-month fishing ban in the entire waterway, just weeks after it adopted a policy authorizing its coast guard to detain foreigners it suspects of violating its exit-entry rules “in the waters under the jurisdiction of China” for up to 30 days — and in some cases for as long as 60 days — without a trial.

The Philippine military on Thursday said it had prepared contingency plans amid China’s fishing ban and new coast guard policy, which it said will be handled by law enforcement agencies such as the Philippine Coast Guard.

“We have contingency plans in place,” Armed Forces of the Philippines spokesperson Colonel Francel Margareth Padilla told ABS-CBN’s Teleradyo Serbisyo, noting that Manila regularly conducts patrols within the Philippine EEZ.

“We also have additional resources that are available and on standby.”

A group of fishermen from Zambales, Pangasinan, Bataan and Palawan provinces said their fishing rights are continuously “threatened by harassment and intimidation from China’s coast guard and maritime militia who are keeping Filipinos away from the rich waters.”

While the Philippine Coast Guard and the Bureau of Fisheries and Aquatic Resources provide them effective protection, the government needs to step up efforts to provide “economic support services” to affected fishers “who are mostly neglected and left on their own with little state benefits,” they said in a statement.

John Paolo R. Rivera, president and chief economist at Oikonomia Advisory & Research, Inc., said the South China Sea “will be an economic issue if the situation poses economic impacts to countries involved.”

Over $3 trillion worth of trade passes annually through the South China Sea.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said Manila is well-positioned to forge more economic partnerships with friendly nations amid increasing tensions with China.

China is the Philippines’ largest source of imports and second-largest export market. On the other hand, the United States, a major defense ally that has backed Manila amid Beijing’s intrusions at sea, is the largest destination of Philippine products and the fifth-largest source of imports.

A recent report from Nomura Global Markets Research said geopolitical concerns from the South China Sea dispute “could be an impediment to Chinese companies looking to diversify supply chains into the Philippines.”

Philip Arnold “Randy” P. Tuaño, dean of the Ateneo School of Government, said via Messenger chat the expected establishment of an economic corridor on the main island of Luzon will help Manila in its efforts to diversify the country’s trade ties away from China.

Philippine Ambassador to the US Jose Manuel Romualdez earlier said Washington and Tokyo, which has also been backing Manila in the South China Sea dispute, are expected to marshall $100 billion worth of investments for the country in the next 5 to 10 years.

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