ASEAN ended the year with a statement of its priorities and unveiling the focus of the next chairman - Thailand - for 2019. On the other hand, in November, the region watched as the Asia Pacific Economic Cooperation (APEC) forum failed to come up with a joint statement, due to the continuing Sino-United States trade tensions. Meanwhile, Philippines-China bilateral relations was marked by a historic two-day visit by Chinese President Xi Jinping to Manila. China also expressed its interest in helping revive the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA).
Back-to-back summits in November
During Singapore’s chairmanship in 2018, ASEAN laid out three priority deliverables for its Master Plan on ASEAN Connectivity or MPAC. MPAC 2025 aims (1) to develop an initial list of priority ASEAN infrastructure projects by the first quarter of 2019, (2) to develop a sustainable urbanization strategy with specific action plans and urban challenges mitigation tool kits for cities, and (3) to study the adoption of digital technology by micro, small, and medium-sized enterprises.
Speaking at the ASEAN Business and Investment Summit just before the Leaders’ Summit from November 11-15, ASEAN’s new chair Prime Minister Prayut Chan-o-cha vowed to push for greater ASEAN connectivity to attract businesses and investments both in public and private sectors.
One the other hand, APEC which was held on November 17-18 failed to issue a joint communiqué for the first time in its 29-year history. This was attributed to the Sino-US trade conflict (see timeline). US Vice President Mike Pence reiterated US’s concern that China is employing unfair trade practices such as forced technology transfer. He said that the US will maintain its course until China changes its ways as well. He further warned countries accepting loans in connection to Beijing’s Belt and Road Initative (BRI) that these could compromise their sovereignty.
Xi Jinping in town
In a joint statement during Xi Jinping’s visit, Manila and Beijing agreed to elevate their ties into a comprehensive strategic cooperation and to deepen the synergy between the BRI and Philippine development plans. The two parties signed 29 agreements. Most of which are on economics and development, including infrastructure, industrial parks, bonds, and energy. Out of the 29 deals only two are on security—on a project of container inspection equipment with the Bureau of Customs and the Safe Philippines Project of the Philippine National Police.
Among these, the agreement on oil and gas exploration was scrutinized by the public in the Philippines. Several lawmakers expressed concern over the exploration deal which is known to cover disputed areas in the South China Sea. In an exclusive interview with CNN, Department of Foreign Affairs chief Teddy Locsin clarified that the agreement did not specify which areas are subject to the exploration. It rather creates a joint intergovernmental steering committee and working groups that would help both governments to come to an agreement within a year from the signing of the memorandum. Philippine Ambassador to China Chito Sta. Romana attested that the signed agreement is "significantly different" from the earlier draft version released by Senator Antonio Trillanes IV. The leaked draft was proposed by the Chinese, while the signed agreement was the Philippine counter-draft which was reviewed and vetted by Philippine officials.
Xi was welcomed to Manila amid controversies and issues: news report about a Chinese national Michael Yang being one of Duterte’s presidential economic advisers; China Telecom-backed Mislatel Consortium entry as the country's third major telecom player, and the growing numbers of illegal immigrants and illegal online gambling operations in the country.
As mentioned in the 3rd Quarter Chronalysis, most of Philippine online gambling operations (POGOs) employees are Chinese who provide translation and IT support to clients in mainland China. Rumored to involve an estimate of 100,000 to 250,000 Chinese workers, such movements of operations or businesses and people are creating impacts on economic development, particularly in the property and food sectors where prices have been rising. Moreover, these may also have security implications. Secondly, coordination in policies and actions of the concerned Philippines government agencies, and implementation of existing rules are being tested.
During a two-hour Senate hearing in November, three Philippine government agencies responsible for issuing workers’ permits (the DFA, Bureau of Immigration under the Department of Justice, and Cagayan Export Zone Authority) failed to uncover the exact count of Chinese workers who had come to the country to work since 2016. All four of them however claimed that an Alien Employment Permit (AEP) is a pre-requisite for acquiring a working visa; and only the Department of Labor can issue AEP.
Aside from these, a continuous debate on Chinese “debt trap” and the South China Sea disputes remained inescapable topics in discussions. Netizens took their dislike of China to social media by posting photos or memes of Winnie the Pooh, a cartoon character that is banned in China due to frequent comparisons with the Chinese president.
Xi’s trip to the Philippines culminated with a meeting with House Speaker Gloria Macapagal Arroyo and Senate President Vicente Sotto. The Chinese leader called for more legislative exchanges in the areas of state governance and for a bigger role for the legislature in forwarding multilevel, multiform cooperation for the development of the two nations' bilateral ties.
Lastly but significantly, Xi in his statement expressed support to the Philippines as the country coordinator for ASEAN-China dialogue and BIMP-EAGA-China cooperation.
In October, Duterte signed Executive Order No. 64, reviving and institutionalizing barter trade in Mindanao and creating three “barter ports” in Sulu and Tawi-Tawi to facilitate this type of trade. He acknowledged that the reopening of barter trade is a complex issue because it has to work well with the Bangsamoro Basic Law. But once it is already implemented he will assess which elements need to be added. The EO also created a Mindanao Barter Council.
In Davao City, China’s consulate general formally launched its visa-processing center, which means Chinese workers, tourists and other visitors from and to China no longer have to go to Manila or Cebu to process their documents. This was launched as direct flights between Davao City and Jinjiang City, Fujian Province will also soon take-off. The Chinese consul added that Davao City Mayor Sara Duterte had recently been to Jinjiang to formally sign the sisterhood agreement between the two cities.
In relation to ASEAN, the Mindanao-Visayas power grid interconnection project will conduct the pilot testing of the country’s link to the regional energy network. The proposed ASEAN power grid is a component of the MPAC. Mindanao Development Authority Deputy Executive Director Romeo Montenegro indicated that Mindanao seeks to pilot the country’s integration into the ASEAN power grid.
Observations and analysis
Mindanao and Palawan have been getting much attention since the start of Duterte’s term in 2016. Four of the 29 signed agreements between Manila and Beijing are specifically on infrastructure in Davao and Marawi, not counting projects which might stem from broader infrastructure agreements. China is also directly linking with Davao where they feel they are welcome. Forging a 10-year infrastructure cooperation with the Philippines, China is moreover trying to secure the latter’s commitment to the BRI and bilateral cooperation while Duterte is still president.
While China is promoting multilateralism more than before, it is pushing for dialogue partnership as well. It will continue to participate or to show interest in these kind of arrangements. The Philippines, on the other hand, has potentially crucial roles to play in the next three years as country coordinator for both ASEAN-China and BIMP-EAGA-China cooperation. It must use these opportunities not just to contribute at the regional level but to forward its own economic interests without jeopardizing political-security goals.