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Return to Relevance: The Philippine-U.S. Alliance
By Renato Cruz De Castro, on 09 Jul 2013, Feature

Prior to 1992, Philippine-U.S. security relations were framed by several bilateral defense arrangements. The two countries became formal allies in 1951 upon signing the Philippines-U.S. Mutual Defense Treaty. Both countries also became members of the Southeast Asia Treaty Organization in 1956. However, the most important of these bilateral defense arrangements predated the collective defense treaties binding the two countries: the 1947 Philippines-U.S. Military Bases Agreement, which facilitated the hosting of major American naval and air facilities in Philippine territory. The U.S. military bases in the Philippines, including the Subic Bay Naval Base and Clark Air Base, extended vital logistical support to American forward-deployed forces operating in Southeast Asia, the Indian Ocean and even in the Persian Gulf during the Cold War. Furthermore, U.S. air and naval assets acted as de facto armed forces against external threats to the Philippines, since the Philippine military was primarily involved in internal security operations.

In September 1991, the Philippine Senate failed to ratify the Philippine-American Cooperation and Friendship Treaty of 1991 (PACT). PACT provided the legal basis for extending the stay of the U.S. military facilities on Philippine territory beyond 1992. Motivated either by simple anti-Americanism or disgust over the low base-related economic and military compensation, the majority of the senators voted down the treaty. With the withdrawal of these American military facilities from the country in 1992, the alliance assumed a form different from the previous configuration. Philippine-U.S security relations became dormant as the Philippines focused its attention on the Association of Southeast Asian Nations (ASEAN). Meanwhile, the U.S shifted its strategic priorities away from Southeast Asia to Northeast Asia.

Starting in 2001, the U.S. global war on terror, and later the tension in U.S.-China relations after 2008, helped restore the U.S.-Philippines strategic partnership. Security relations were revitalized, and the alliance achieved two political and strategic objectives. First, Manila received U.S. support for the Philippine government’s counterterrorism and counterinsurgency campaign in the country’s south. Second, Washington deepened its alliance with Manila, not only to neutralize terrorist groups, but also to counter Beijing’s political and economic influence in the country. The U.S. now regularly extends technical training and defense assistance to the armed forces of the Philippines (AFP) to firm up the U.S.-Philippines security partnership in the face of growing Chinese military power and assertiveness in the South China Sea.

Most recently, the standoff between the Philippines and China over the Scarborough Shoal in April 2012 underscored an international reality—Chinese naval power casts a long shadow over the Philippines, which, along with Vietnam, is at the forefront of the South China Sea dispute with China. Clearly, China is specifically targeting the Philippines in a brinkmanship game. Given the dismal state of the Philippine military, the administration of President Benigno Aquino III has acknowledged the need for U.S. diplomatic support and military assistance in the Philippines’ territorial row with China.

Southeast Asia’s Military Laggard

Since its independence in 1946, the Philippines has been plagued by domestic insurgency. For more than six decades, the government has concentrated its efforts and resources on containing rebel and secessionist groups, including a nation-wide Maoist insurgency and Islamist separatists in Mindanao. This preoccupation with internal security was most evident during the Arroyo administration. In January 2002, the AFP released an internal security plan called “Bantay Laya” (Freedom Watch), which envisioned the AFP decisively defeating the armed component of the Philippines’ communist insurgency within five years. However, the strategic focus on the domestic insurgents left the AFP with no time or funds to develop credible air and maritime capabilities that could modestly deter China’s creeping occupation of the Spratly Islands.

The September 2007 AFP Capability Assessment indicated that the poor condition of AFP equipment adversely affected the military’s effectiveness and efficiency in counterinsurgency operations. Worse still, the report noted that the emphasis on low-intensity conflicts had diverted the military’s attention and resources away from external defense-related modernization projects. Regarding the AFP’s conventional military capabilities, it noted that the Philippine navy “lacks the assets for conduct of maritime patrols over territorial waters, since it does not have any anti-air capability and is incapable of conducting anti-submarine and mine warfare operations.” The assessment likewise underscored the inadequacies of the Philippine air force’s air defense, surveillance, airlift and ground attack capabilities. The report candidly acknowledged: “This situation [of limited combat capabilities] is nowhere more manifest than in the Kalayaan Island Group [in the Spratlys] wherein the AFP is unable to prevent and respond to intrusion into our [exclusive economic zone] or show our resolve in defending areas we are claiming.”

Thus, the Philippine government simply had no choice but to propose diplomatic and security measures with China and other claimant states to foster confidence-building, and to forge bilateral military cooperation agreements for joint patrols and exercises.

Confronting the China Challenge

Since assuming office in July 2010, Aquino has articulated the need to modernize the AFP in the face of new security challenges. Taking the cue from the new president, a joint Department of National Defense-AFP task force has formulated the AFP Long-Term Capability Development Plan. The plan calls for the AFP’s immediate shift from internal security to territorial defense. The plan also pushes for the immediate development of a modest deterrent capability to protect the country’s vast maritime borders and its territorial claim over some islands in the Spratlys. Specifically, the plan calls for the development of maritime surveillance and intelligence capabilities and the upgrade of the Philippine navy’s capabilities for joint maritime surveillance, defense and interdiction operations in the South China Sea.

The urgency of the AFP’s shift from internal to external security was underscored in March 2011, when two Chinese patrol vessels harassed a survey ship from the Department of Energy in the Reed Bank—now called Recto Bank by the Philippine government—about 150 miles east of the Spratly Islands and 40 miles west of the Philippine island of Palawan.

In response to Beijing’s subsequent rejection of Manila’s official protest, the Philippine government increased its military presence on its western border, which faces the South China Sea. Manila likewise allocated $18.4 million for the repair of its existing runway on one of the islands it occupies in the Spratlys, and for the acquisition of naval and air equipment to monitor movements along the country’s vast maritime borders. During a joint Philippine-U.S. military exercise in Luzon, Aquino ordered the release of an estimated $22.5 million in addition to the annual defense appropriation for the immediate purchase of patrol craft, helicopters and modern rifles for the AFP.

The Aquino administration’s 2011-2016 national security policy (.pdf) requires a defensive capability extending from the country’s maritime territory to its contiguous waters and exclusive economic zone (EEZ). Hence, the Philippine military needs to develop a comprehensive territorial and maritime protection system based on its surveillance, modest deterrence and border patrol capabilities. This goal became policy when the Philippine government announced in September 2011 that it would allocate roughly $1.1 billion from the annual national budget for base support and logistic systems, as well as the acquisition of high-endurance cutters and six helicopters for the navy and air force, so that the Philippine military can establish a strong security perimeter in the Reed Bank, Kalayaan Island Group and Palawan.

Bringing in the Philippine-U.S. Alliance

Manila’s turn to the U.S. for assistance in addressing the China threat was facilitated by the fact that the Philippine-U.S. alliance had been revitalized on the heels of the Sept. 11 attacks. For the past decade, Manila and Washington have cooperated in containing the various insurgent and terrorist groups in the Philippines. In 2002, the U.S. Joint Special Operations Task Force-Philippines (JSTOF-P) was established as a separate and new stream of U.S. troops to counter transnational terrorists located in the Philippines.

Through the JSTOF-P, the Pentagon trained three light reaction companies that eventually constituted the AFP’s 1st Special Forces Group. The JSTOF-P operates alongside the AFP to improve the latter’s operational capacity in counterterrorism and counterinsurgency warfare (.pdf). It is also training and equipping two more light reaction companies and four light infantry battalions for the Philippine army, while enhancing the night-flying mission capabilities of the UH-1 pilots of the Philippine air force. The U.S. Navy also provided the AFP with another refurbished Cyclone-class special operations mother ship for smaller patrol craft, in order to bolster the interdiction and reconnaissance capabilities of the Philippine navy along the country’s coastal areas and territorial waters.

In addition to supporting the AFP’s programs to improve its internal security capabilities, the Pentagon Has supplied the Philippine military with essential materiel such as spare parts for V-150 and V-300 armored fighting vehicles and UH-1 helicopters, assorted rifles and squad machine guns, combat life-saver kits, communication equipment, ammunition for small arms and artillery pieces, night-vision devices and armored vests, as well as training manuals for combat operations.

The Pentagon has also enhanced its access arrangements with the Philippine government. For example, in 2007, the allies renewed the Military Logistic Support Arrangement originally signed in 2002. This agreement allows American forces to source logistics such as food, fuel, ammunition and equipment from the host state on a reimbursement basis. It lowers the cost of alliance cooperation by minimizing administrative outlays and developing the interoperability of the allies during joint activities, peacekeeping missions and other multilateral military deployments under the United Nations. Interestingly, the Pentagon has also established temporary and small forward operating bases in the southern Philippines and potential cooperative security locations in strategic parts of the country that can be used by American forces in any crisis situation in East Asia. A current “big ticket” security undertaking between the allies is the Coast Watch South project in southern Philippines. This project involves the installation of listening and communication stations along the coast of Mindanao linked to Philippine air force aircraft and naval patrol craft operating in the Sulu and Sulawesi Seas.

Since 2009, however, China’s assertiveness in the South China Sea has been an increasing concern of the U.S.-Philippine Mutual Defense Board, the liaison and consultative body that oversees the Philippine-U.S. defense posture against external threats. The Mutual Defense Board’s annual meeting in August 2010 discussed the security challenges the allies face, such as terrorism, domestic insurgency and maritime security concerns, as well as potential flashpoints like the contentious territorial dispute in the South China Sea. The U.S. and the Philippines decided to complement each other’s military capabilities, to enhance interoperability between their armed services and to strengthen the AFP’s territorial defense capabilities with tangible U.S. security assistance.

Consequently, during the height of the Philippines’ territorial row with China in mid-June 2011, the Aquino administration acknowledged the need for U.S. diplomatic support and military assistance. The U.S. ambassador to the Philippines, Harry Thomas, readily pledged U.S. support to the Philippines. Further expression of support came from then-U.S. Secretary of State Hillary Clinton. During her meeting in Washington with Philippine Foreign Secretary Albert Del Rosario, she expressed U.S. wariness about China’s intrusion into the Philippines’ EEZ and declared that the U.S. would honor the 1951 Mutual Defense Treaty and strategic alliance with its Southeast Asian ally. She also reaffirmed American support to the Philippines, even if it meant providing “affordable” material and equipment to enable the AFP to defend the country.

The Role of Philippine-U.S. Alliance

Undoubtedly, the Philippine military needs new arms and equipment to develop its territorial defense capability. Current U.S. assistance includes the transfer of three former U.S. Coast Guard Hamilton-class cutters to the Philippine navy through the Foreign Military Sales credit. Once transferred to the Philippines, these cutters will be the largest vessels in the country’s inventory and will replace vintage World War II-era destroyer escorts (.pdf) still used by the Philippine navy for patrolling the high seas.

Likewise, the AFP will require pressing reforms before it can devote its attention and resources to territorial defense. These reforms will prepare the organization for its evolving function of territorial defense in its medium-term defense program. Decades of internal security operations have bred a bureaucratic inertia within the AFP that prevents it from undertaking a territorial defense function. Indeed, a crucial task at hand is for the U.S. and the Philippines to discuss how the latter can reorient its present security outlook and restructure its defense expenditures.

No amount of American material and technical assistance, however, will enable the Philippines to confront an assertive China in the South China Sea. Given its limited military capabilities, Manila has asked for an unequivocal U.S. commitment to Philippine defense and security as provided by the 1951 Mutual Defense Treaty. This U.S. commitment to assist its ally was indeed tested during the 2012 Scarborough Shoal standoff between the Philippines and China.

During the standoff, the Philippines appealed for diplomatic and military support from the United States. In response, Washington sent the USS North Carolina, a Virginia-class fast attack submarine, on a port call to Subic Bay on May 13, 2012. A month later, another nuclear-powered attack submarine, the USS Louisville, made a port call to Subic Bay. Though formally routine port calls, the fact that the much-publicized visits were made during the standoff intimated that the U.S. would not stand idly by if its treaty ally were threatened by any form of armed aggression.

After the standoff, Aquino asked for a definite security guarantee when he met President Barack Obama in the Oval Office in June 2012. Obama answered that the U.S. would abide by its treaty obligation under the 1951 Mutual Defense Treaty. The United States’ ability to guarantee the Philippines’ external defense, however, actually depends on whether American forces are physically pre-positioned to provide immediate and timely assistance. The U.S. can effectively defend its ally only if it has access to facilities near the South China Sea from which it can respond in a timely manner in case of an armed confrontation.

To this end, during the August 2011 meeting of the Philippine-U.S. Mutual Defense Board and Security Engagement Board, the allies agreed to develop a framework for heightened bilateral and multilateral security and domain awareness. The board considered the following measures: rotational presence of U.S. maritime defense assets in the Philippines to support Mutual Defense Board and Security Engagement Board activities while the AFP develops its own capability for territorial defense; increased joint bilateral maritime security activities in the South China Sea; development of joint-use maritime security support facilities; improved information-sharing between U.S. and Philippine forces; and the conduct of integrated maritime security initiatives involving the U.S. Pacific Command and the AFP. Washington has also expressed its commitment to strengthening Manila’s capability to monitor and defend its maritime territory through an increase in military exercises and capacity-building efforts.

In January 2012, the Philippine-U.S. Bilateral Security Dialogue was held in Washington, where Philippine foreign and defense officials emphasized the need for an expanded U.S. military presence in the Philippines. This presence was proposed in the face of China’s naval capabilities and assertiveness in East Asia, and in line with the Obama administration’s strategic guidance, which provides for a rebalancing of the U.S. force structure and investments to meet persistent and potential threats in the Asia-Pacific and the Middle East, and to advance capabilities for maintaining access and projecting power globally.

The two allies are also currently developing the concept of an increased rotational presence of American forces in the Philippines. This might involve the stationing of a squadron of U.S. Marine fighter planes in a Philippine air force base for six months, after which it would be replaced by a U.S. Navy fighter-bomber squadron that would be stationed in another Philippine base for another six months. Currently, the Pentagon is implementing a three-year program that aims to enhance credible U.S. maritime presence in Philippine archipelagic waters through rotational presence. The program entails improving Philippine port infrastructure, upgrading equipment, developing secure communication to allow greater interoperability between the U.S. military and the AFP and assisting in Philippine interagency planning and coordination at the ministerial and operational levels.

However, greater U.S. strategic access to the Philippines will surely be opposed by nationalist political figures and militant left-wing organizations in the Philippines. The Aquino administration will also face widespread public discomfort with relying too much on the Philippines’ only strategic ally. Closer security ties with the U.S. will also limit the Philippines’ room for diplomatic maneuver in negotiating with China for an amicable settlement of the territorial row as well as adversely affecting vibrant Philippine-China trade relations. As a result, the Aquino administration will have to muster enough political capital to weather the massive protest and economic fallout that a ubiquitous U.S. strategic footprint in the Philippines could generate.

Conclusion

Notwithstanding the dismal state of the Philippine military, the Aquino administration has adopted a delicate balancing policy toward China. In mid-2011, it decided to pursue a substantial modernization of the AFP, which at the time was still focused on internal security operations against domestic insurgent groups. Preoccupied with internal security and devoid of U.S. military assistance after the withdrawal of the American forces from the country in 1992, the AFP found itself with no military capability to confront China’s heavy-handed behavior in the South China Sea.

The post-Sept. 11 revitalization of the Philippine-U.S. alliance has now created the opportunity for the U.S. to assist its ally in facing up to the China challenge. Currently, the U.S. extends technical, material and financial assistance to develop the AFP’s capabilities for maritime surveillance and patrols. In the long run, the U.S. must also help rid the Philippine defense establishment of the bureaucratic inertia that inhibits it from assuming the function of territorial defense.

Such assistance demands that the AFP incorporate external defense in its security planning and revamp its defense spending, which prioritizes personnel expenditures over capital outlay. Furthermore, the U.S. must also assure the Philippines that it will abide by its treaty obligations under the 1951 Mutual Defense Treaty in the face of China’s assertive moves in the South China Sea. Finally, these assurances must also be buttressed by U.S. resolve to remain the foremost Pacific power far into the second decade of the 21st century. Both sides have an abiding interest in seeing that their security partnership continues to expand, in the context of a stable Asia-Pacific region.

WPR Article | Return to Relevance: The Philippine-U.S. Alliance
 
BRP Ramon Alcaraz to boost patrol abilities in Philippine waters -- Palace
By: Lilybeth G. Ison, Philippine News Agency
July 10, 2013

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MANILA, Philippines - Amid tensions in the West Philippine Sea, Malacanang on Tuesday said that Philippines war ship BRP Ramon Alcaraz, which is expected to arrive first week of August, will boost capabilities of authorities patrolling the country's waters.

"It's (BRP Ramon Alcaraz) a step in the right direction in terms of upgrading our hardware, our capabilities, and that this will certainly be a boost to our patrol abilities," said Deputy Presidential Spokesperson Abigail Valte in a press briefing on Tuesday.

"As you know, as an archipelago medyo mahaba po ‘yung talagang kailangang i-patrol ng ating Navy, so this will be a good addition to the Philippine Navy," she added.

The Alcaraz is a 115-meter decommissioned US Coast Guard ship that the Philippines acquired last year. It underwent $15.5-million (P620-million) refitting and refurbishment and sea trials in May.

The Hamilton-class weather high endurance cutter had served as the US Coast Guard’s USCGC Dallas for four decades before it was turned over to the Philippine Navy under the Excess Defense Article Military Assistance Program of the United States.

Meanwhile, Valte said the Armed Forces of the Philippines (AFP) has sent three Philippine Navy officers to the United States last week to join the crew of the BRP Ramon Alcaraz and document its journey from San Diego to the Philippines.

The team is composed of Commander Gilbert O. Pacio, Navy Lieutenant Marineth Riano Domingo, and Lieutenant Junior Grade Errol N. dela Cruz who are all Public Affairs officers.

As part of the project -- in partnership with the Presidential Communications Development and Strategic Planning Office (PCDSPO) -- Valte said, the group will share, through blogs and social media, their experiences aboard the newest ship of the Philippine fleet.

"We encourage everyone to follow the updates on the BRP Alcaraz -- the first of the Navy's ships to be named in honor of a Philippine Naval officer -- and learn about the life and experiences of the members of the Philippine Navy," said Valte.

BRP Ramon Alcaraz to boost patrol abilities in Philippine waters -- Palace - InterAksyon.com
 
Ooh la la! More French tourists coming to PH
By Tarra Quismundo
Philippine Daily Inquirer
Wednesday, July 10th, 2013

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MANILA, Philippines—From a “question mark,” the Philippines is slowly becoming a destination to check out for the French.
Tourist traffic from France is gradually picking up amid growing interest in the Philippines, about which the French virtually know nothing, French Ambassador to Manila Gilles Garachon said on Monday night.

French awareness of the Philippines has been increasing of late as cultural, political and academic exchanges between the two countries increase, said Garachon, who has been serving in Manila since 2012.

“It’s starting. There is a momentum. And I think we have to keep this momentum. This is going to increase, I’m sure. There is plenty of room to increase the relations—of course there is cultural relations, but also in the field of trade, in the field of politics, also the exchange of students between universities,” Garachon said on the sidelines of the French Embassy’s celebration of Bastille Day at his Makati City residence.

Embassy data showed French tourist arrivals in the Philippines increased by 14 percent from 29,591 in 2011 to 33,709 in 2012.

Main difficulty

Garachon said promoting the Philippines in France was his “main difficulty “as an ambassador, as most French knew only nations that figured in their history.

“French people… see the geography very linked to history. And if a country has historical links with France, then it appears on the map. But for the Philippines, we never had any historical connection. Not at all. So for French people, the Philippines is just a question mark,” Garachon said.

“So part of my job and part of the job of the ambassador of the Philippines in Paris is to make French people discover more about the Philippines,” said Garachon, who had been posted to Hong Kong, Jakarta and Bangkok before being assigned to Manila.

Texting PH envoy

According to Garachon, he is constantly in touch with Philippine Ambassador to France Cristina Ortega, hoping to coordinate their efforts to boost people-to-people exchanges between the two countries.

“I text the Philippine ambassador in Paris every week. We exchange a lot of information and we work very much closely together,” Garachon said.

He is optimistic that air services negotiations between the Philippines and the European Union would lead to the reopening of European destinations to Philippine airlines.

The European Union is set to decide Wednesday on the Philippines’ bid to lift a ban on Philippine airlines in Europe.

“[I hope] it will work out. We don’t have any direct flight to Europe now. And there should be, because to go to France from the Philippines, it takes 24 hours. If there were a direct flight, it would take only 12 hours. So we all look forward to having those direct flights. I think it’s going to happen,” Garachon said.

Philippine exhibit

The Philippines is boosting its image in France with a three-month exhibit of precolonial art at the Quai Branly Museum in Paris.
The exhibit, “Philippines: Archipel des échanges” (Philippines: An Archipelago of Exchanges), opened on April 9 and will end on July 14, coinciding with France’s National Day.

“I think this exhibit is a great occasion. [All over] Paris, you had a signboard about this exhibit about the Philippines, with beautiful pictures,” Garachon said.

“People loved it and because they were discovering something completely new. In France, nobody knows about the art of the Philippines. And so they discovered it and they enjoyed it very much,” he said.

The exhibit brings together Philippine precolonial art and artifacts from collections in the Philippines, Spain, Belgium, the Netherlands, Austria and the United States.

It is the largest exhibit of Philippine art in Europe, according to the French Embassy in Manila.
 
More patrol boats for Coast Guard
By Jerry E. Esplanada
Philippine Daily Inquirer
Wednesday, July 10th, 2013

MANILA, Philippines—Aside from the 15 patrol boats it expects to get from Japan and France in late 2014 or early 2015, the Philippine Coast Guard (PCG) plans to acquire a 52-meter vessel from an unnamed country, the PCG announced Tuesday.

Cmdr. Armand Balilo, also chief of the PCG public affairs office, said the vessel would be “second-hand but in very good condition.”

“The project has been approved for negotiation by the DOTC. But there’s no timetable yet for the purchase of the patrol boat,” he said. The Coast Guard is a Department of Transportation and Communications-attached agency.

Balilo did not go into detail.

But on the patrol boats from France, he said “the government is wrapping up talks with its French counterpart.”

“We’re hoping delivery of the new boats would be made late next year or early in 2015,” he said.

Last month, the National Economic and Development Authority approved the procurement of the French patrol boats.

In October 2012, the PCG announced it was buying the patrol vessels—one 82-meter craft and four 24-meter boats—for around 90 million euros ($116 million or P5 billion).

Earlier, Balilo said the new patrol boats would be deployed throughout the archipelago and not just to areas of the West Philippine Sea (South China Sea) being contested by the Philippines and China.
 
Japanese premier to visit Philippines
Kyodo News
07/09/2013

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TOKYO - Japanese Prime Minister Shinzo Abe is set to visit the Philippines, Malaysia, and Singapore later this month to discuss with their leaders economic and security cooperation, a Japanese government source said Tuesday.

The three-day trip will start on July 25 after Japan's House of Councillors election on July 21. Abe aims to further enhance economic and security ties with members of the Association of Southeast Asian Nations, following his trips earlier this year to Vietnam, Thailand, Indonesia and Myanmar, the source said.

China's maritime assertiveness has amounted to a major security concern for some Asian countries. Malaysia and the Philippines are in territorial rows with China in the South China Sea, while Japan faces strong opposition from Beijing over its control of a group of islands in the East China Sea.

Abe's latest trip comes as China is apparently trying to avoid being isolated in the region over such security issues.

Late last month, foreign ministers from China and the ASEAN agreed to talk on creating a legally binding code of conduct that would help prevent conflicts in the South China Sea.

Japanese premier to visit Philippines | ABS-CBN News
 
IMF raises Philippine outlook
July 10,2013

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A DAY after it announced it had slashed global growth projections for this year, including overall outlook for five members of the Association of Southeast Asian Nations (ASEAN-5), the International Monetary Fund (IMF) said yesterday it has raised its forecast for the Philippines for both 2013 and 2014.

Speaking to reporters at the central bank headquarters in Manila yesterday, IMF Resident Representative Shanaka Jayanath Peiris said: "For the Philippines -- given the very strong growth in the first quarter and the strong growth momentum for 2013 -- we have raised the forecast to 7% this year from 6% (announced in November last year), and 6% in 2014 from 5.5%."

The country’s gross domestic product grew by 7.8% in the first quarter, beating both market and government expectations, and 6.8% in 2012, topping the government’s 5-6% target and the IMF’s own 6.5% forecast.

IMF’s revised growth forecast this year is at the upper end of the government’s 6-7% goal. But the outlook for 2014 is below the official 6.5-7.5% target for that year.

Mr. Peiris explained that the new forecast for 2014 was lower than the revised projection for this year due to "base-effects."

He added that second-quarter growth could have been "within the same range" as that of the first quarter, and that expansion this semester could be slower than the first half due to the government’s "front-loading" of spending.

The Philippines, Mr. Peiris said, will stand out among its peers in ASEAN-5 -- comprising Indonesia, Thailand, Malaysia and Vietnam as well -- for which the IMF had slashed growth projections this year to 5.6% from 5.9% previously, but raised the 2014 outlook to 5.7% from 5.5%. In the latest World Economic Outlook Update it released last Tuesday, the IMF had also slashed its global growth projection this year to 3.1% from 3.3% previously, while forecast for next year was cut to 3.8% from 4.0%.

"Economic growth here is higher; the region has been softer than expected," Mr. Peiris noted. "Most countries’ forecasts were reduced, but the Philippines is an outlier."

Asked if the Philippines was the only country in ASEAN-5 that got an upward adjustment in forecast, Mr. Peiris replied, "Yes."

"The growth momentum: leading indicators such as remittances, which continue to drive domestic spending, and last year’s fiscal spending, which has a carry-over effect this year" Mr. Peiris said, when asked for growth drivers particularly in the face of a slump in exports amid continuing weakness in global markets. -- A. R. R. Gregorio

http://www.bworldonline.com/content...&title=IMF-raises-Philippine-outlook&id=73206
 
DND approves terms for acquisition of 12 fighter jets
By Alexis Romero (The Philippine Star) | Updated July 11, 2013

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MANILA, Philippines - The government is moving closer to acquiring 12 fighter trainer jets for the Air Force after the defense department’s Bids and Awards Committee (BAC) yesterday approved the terms of reference for the project.

Defense Assistant Secretary Patrick Velez said the terms of reference, which contain key details of the acquisition, would soon be forwarded to Defense Secretary Voltaire Gazmin for final approval.

Once the terms of reference are approved with finality, the defense department could begin negotiations with the aircraft supplier, state-run Korean Aerospace Industries (KAI).

Velez told The STAR they hope to finish the negotiations by the end of August.

“We are expediting it because it is a priority project,” Velez said.

The government has allotted P18.9 billion for the acquisition of the 12 FA-50 fighter jets for the Air Force, which has suffered from a depleted inventory due to recent aircraft accidents.

Defense Undersecretary Fernando Manalo had said that they are awaiting the sales agreement from Malacañang, which will pave the way for the start of negotiations with KAI.

Manalo previously told The STAR that the Defense Acquisition Program Administration (DAPA), a state-run firm that coordinates with other countries seeking to acquire South Korean military assets, would sign in behalf of Seoul.

He said DAPA would also guarantee the performance of the assets to be bought even if a private firm manufactured the aircraft.

President Aquino has vowed to modernize the military to enable it to secure the country’s territory and to perform internal security operations.

For the Air Force, the government aims to acquire fighter jets, radar systems, close air support aircraft, and combat utility helicopters.

The Navy will be provided with two warships, amphibious assault vehicles, naval helicopters, multi-purpose attack craft, and base support facilities.

The government would also acquire rocket launchers, hand-held radios and night fighting system for the Army.

DND approves terms for acquisition of 12 fighter jets | Headlines, News, The Philippine Star | philstar.com
 
Korean telco keen on entering Philippine market, exec says
By: Ben Arnold O. De Vera, InterAksyon.com
July 18, 2013

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MANILA - A South Korean telecom company is looking for a local partner to enter the Philippine market, the head of a visiting business delegation said today.

Thomas T. Y. Shinn, chairman and chief executive of Korea Importers Association (KOICA), told reporters that a "big" South Korean telco is interested in pursuing a joint venture in the Philippines.

Shinn, refused to identify the company, only to say that its executive approached him to tell Philippine officials about its interest in the local telco business.

"I'll talk to [Trade] Secretary [Gregory L.] Domingo about it," Shinn said. South Korea has three telecom service providers, namely SK Telecom, Korea Telecom and LG.

Besides telecoms, a number of South Korean investors are also looking into prospects for food processing, aluminum foil manufacturing, and fertilizer production, Shinn said.

South Korean traders are eyeing to increase imports of minerals and processed food from the Philippines, he said.

Korean telco keen on entering Philippine market, exec says - InterAksyon.com
 
Army to shift to territorial defense
Nolcom chief Catapang says troops ready to defend PH vs China aggression

By Tonette Orejas
Inquirer Central Luzon
Wednesday, July 17th, 2013

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CITY OF SAN FERNANDO—The military’s Northern Luzon Command (Nolcom) is shifting its operations from internal security to territorial defense in 2014, focusing on the Luzon coastlines amid disputes over marine boundaries in Southeast Asia, the new Nolcom chief said on Wednesday.

Maj. Gen. Gregorio Pio Catapang Jr. revealed the new thrust two weeks after he assumed leadership of the AFP command, which operates in the Ilocos, Cagayan, Cordillera and Central Luzon regions.

Nolcom has jurisdiction over the Bajo de Masinloc, also known as Scarborough Shoal in Zambales, which is being claimed by China. President Aquino has publicly stated that his administration would give the United States and Japan wider access to Philippine bases to protect the country’s territory.

Gas rich

Also in Nolcom’s area of concern is the gas and mineral-rich Benham Rise off northeastern Luzon.

Nolcom oversees the 5th and 7th Infantry Divisions of the Philippine Army, 1st Air Division of the Philippine Air Force and the Naval Forces Northern Luzon of the Philippine Navy.

Replying to questions the Inquirer sent to him by e-mail, Catapang said he would begin to “integrate the capability of major services operationally controlled by Nolcom in conducting joint operations so that we can transition from internal security operations to territorial defense.”

He said the responsiveness of the Armed Forces of the Philippines is adjusting to a “very globalized world [where] the threats to our national security will likewise be global.”

“Of course, we have to protect our 7,100 plus islands against global threats such as terrorism, climate change, international crimes and maritime security, plus protect our interest in exclusive economic zones,” he said.

2013 target

By the end of 2013, Nolcom should have declared the four regions “peaceful and ready for further development,” he said.

As of June, Nolcom had assessed the insurgency in the four regions as having been “reduced to a very minimal level,” which would allow it to shift priorities next year, Catapang said.

He said remnants of the New People’s Army (NPA) that killed nine policemen in two recent ambushes in Luzon are being hunted down.

He described as “desperate moves” the rebel attacks on policemen on May 27 in Cagayan where eight policemen were killed, and on July 28 in Tadian, Mt. Province, where a policeman was killed among more than 90 officers who were jogging in the mountains.

Core competency

“In the absence of a clear headway toward a negotiated peace settlement between the government and the Communist Party of the Philippines, the NPA remnants will [fight] to survive,” Catapang said.

He said the attacks were meant “to highlight that there are still NPA remnants and spoilers that can sow fear in the area.”
The police would take the lead role in internal security operations, with the AFP providing support role, he said.

“We will not give up our core competency in fighting the remnants of the NPA to maintain our skills for guerrilla warfare,” he said, clarifying that the Scout Rangers and Special Forces would focus on military operations. “This will free our infantry battalions to train for territorial defense,” he said.
 
Philippines' new attack choppers could fire laser-guided rockets
(philstar.com) | July 26, 2013

MANILA, Philippines - The country will acquire eight new attack choppers that will be equipped with laser designators capable of firing laser-guided rockets.

The bids and awards committee of the Department of National Defense said that the laser designator is a laser light source which is used to designate a target.

The said equipment provides targeting for laser-guided bombs, rockets, missiles, or precision artillery munitions.

The Boeing Company, Eurocopter Group, AgustaWestland NV and MD Helicopters, Inc. were the international helicopter manufacturers that participated in the pre-bid conference of the DND's attack helicopter program.

The four aerospace companies have acquired the required bidding documents.

The DND attack helicopter program has a budget of P3.44 billion and will be sourced from the General Appropriations Act and the AFP Modernization Act Trust Fund of 2000.

The helicopters must have full night operation capability and complete weapon systems aside from integrated logistics support package.

"These helicopters shall be capable of performing close air support during day and night, and navigate safely during inadvertent instrument meteorological condition. Furthermore, they shall be equipped with armaments and avionics system highly suitable for said flying operation conditions," documents obtained by the Philippine News Agency disclosed.

Philippines' new attack choppers could fire laser-guided rockets | Headlines, News, The Philippine Star | philstar.com
 
PNoy to welcome home Alcaraz warship
By Camille Diola (philstar.com) | July 25, 2013

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MANILA, Philippines - President Benigno Aquino III will lead the welcoming ceremony of the Philippine Navy's newly acquired Hamilton-class cutter BRP Ramon Alcaraz (PF-16) upon its arrival.

Navy spokesperson Lt. Cmdr. Gregory Fabic said Thursday that Aquino will grace the event on August 6 after the warship docks at Subic Bay.

"We will be having a meeting with the Presidential Management Staff regarding (the event) as President Aquino will be our guest of honor," Fabic revealed.

The vessel is expected to enter Philippine territory by August 3 and will be painted with the Navy's traditional haze gray while in Subic.

He said the warship's arrival is met with much anticipation in the Navy.

"The morale of the PN is very high with the arrival of the 378-foot BRP Ramon Alcaraz as (it) will greatly boost the capabilities of our fleet," Fabic said.

Declining to reveal the ceremony's exact venue for security reasons, Fabic explained that another Navy vessel will meet the Alcaraz at sea to escort the frigate as tradition requires.

The Alcaraz will be commissioned in the second week of October and will be reportedly deployed to protect the country's exclusive economic zones.

PNoy to welcome home Alcaraz warship | Headlines, News, The Philippine Star | philstar.com
 
We have to thank China because its recent movements and strategies in the South China Sea have made us look at our defense policies anew and it really invigorates our appetite to modernize our Armed Forces therefore our spending have been positive to those countries we are buying armaments from.
 
PH hopes for early ratings upgrade from Moody's
Reuters
07/26/2013

MANILA - The Philippines hopes to get its third investment grade rating after a visit next week from Moody's Investors Service, which has placed its rating for the country on review for an upgrade.

"We are hoping to receive investment grade rating sooner than we earlier expected," central bank Governor Amando Tetangco told reporters in a mobile text message on Friday.

Moody's last upgraded the Philippines' credit rating to Ba1 from Ba2 in October, and a one notch upgrade would bring it to Baa3, the lowest investment grade.

The Philippines has won investment-grade ratings from two agencies this year. Fitch Ratings delivered the first, in March, and that was followed five weeks later by Standard & Poor's.

News about a possible upgrade from Moody's helped push yields on longer-dated peso bonds lower by 10-15 basis points, a local debt trader said.

A team from Moody's will be in Manila next week, Tetangco said, and soon after the visit, the U.S.-based ratings agency is expected to hold a committee meeting.

"Hopefully they would be convinced even more that the positive overall performance and the reforms are sustainable," Tetangco said.

Moody's said on Thursday the country's economic performance had exceeded its expectations, supporting the view that growth could be significantly faster than similarly rated peers over at least the next two to three years.

The ratings agency also cited stable and favorable government funding conditions, improving fiscal and debt dynamics, political stability and a strengthened government policy mandate as the main triggers for the ratings review.

On Thursday, the Philippine central bank left its benchmark interest rate unchanged at a record low, saying the domestic economy remains strong despite subdued global prospects and possible external shocks.

The government is targeting growth of as much as 8.5 percent before President Benigno Aquino steps down in 2016.

PH hopes for early ratings upgrade from Moody's | ABS-CBN News
 

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