The Philippines must harness the potential of its amended Public Service Act, which allows full foreign ownership in key domestic industries, and tap new markets for investments through road shows to veer away from China, which had wrestled its way into vital public utility industries, thereby putting national security at risk.
The Philippines also needs to solidify its industrial base to climb the global value chain in response to Chinese moves to invest in strategic industries here, said Brian Poe-Llamanzares, political scientist and chief of staff of Senator Grace Poe.
He pointed out that China had made significant investments in key Philippine industries like electricity, telecommunications, and water, enabled by the absence of competing foreign investors.
“There are only a few investors who are looking at the Philippines, and many of us would question what China’s intention is in investing in these industries,” he said at a forum of WR Numero Research (WRN).
For one, the National Grid Corporation of the Philippines (NGCP), in which the State Grid Corporation of China has a 40-percent stake, has been flagged in various Senate inquiries as a possible national security threat.
China even invaded and claims the entire South China Sea, including areas that are well within the Philippines’ exclusive economic zone.
Its Coast Guard has been performing dangerous maneuvers and deploying water cannons to block Philippine resupply missions to its outposts in disputed waters.
During the Duterte administration, it welcomed DITO Telecommunity, where China had 40 percent stake as the third player in the telecommunications market.
“In the spirit of a free-market economy and with the lack of competitors, it became necessary to bring in a third telco player that was willing to go through congressional scrutiny and service the unserved and underserved areas,” he said.
“It’s not like DITO was our first choice. It was our only option. We have yet to see a serious attempt by any American or European player in the telco market,” he noted.
In 2019, DITO and the Armed Forces of the Philippines (AFP) signed a deal allowing the company to build facilities in military camps supposedly to help improve the AFP’s ICT infrastructure.
While the Philippines has been touting interest from other countries in helping build the Philippines’ telco and ICT infrastructure, “very few of them actually have put a bet on the table,” he said.
Poe noted that under the Duterte administration, China effectively entered the water industry by financing a dam through a $283.2-million loan secured by Duterte from China to build a dam to support Metro Manila’s water needs.
Chinese contractor China Energy Engineering Corp. Ltd was selected to build the Kaliwa River dam project within Rizal and Quezon provinces.
“It’s really important that we continue to expose ourselves to the international community because we were closed off for six years. In addition, we must create a competitive business climate,” he said as he lamented that red tape continues to be a major concern among investors, limiting the sources of foreign investments.
He said the Philippines also needs to build industry and make its educational system competitive by “removing the stigma of vocational work.”
Poe said a potential escalation of tensions between the Philippines and China would have little to no impact on the Chinese economy because “what we’re providing them is not critical to China. If they decided to stop trading and buying our fresh fruits and products, then it’s not going to hurt their economy too much.”
“But if we were to develop something more critical — like Taiwan did — an industry that’s indispensable not just to China but also the international community, then suddenly we’re on negotiating terms.”
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