MANILA, Philippines - The government has agreed to allow Chinese government-owned firm Sino Petroleum Corp. to conduct oil exploration in the disputed Spratly Islands in the West Philippine Sea, a ranking government official reported yesterday.
Trade Undersecretary Cristino Panlilio said this is part of the $2-billion to $7-billion investment package the Philippine contingent is expected to get during the state visit of President Aquino to China next week.
Panlilio, the overall program head for the business sector for the state visit, said Sino Petroleum is prepared to invest over $1 billion for oil exploration only.
The Chinese firm is looking for a local partner and is considering Oriental Petroleum, Basic, Petron and Philippine National Oil Co.
He said they do not expect any problems with the Spratlys operations because Sino Petroleum has already agreed to conduct the oil exploration “under Philippine laws.”
This is not the first time that the Philippine and Chinese governments forged an oil exploration agreement. The first was the controversial survey agreement at the Recto (Reed) Bank, which is part of Philippine territory near the Spratlys. The accord was forged during the term of former President Gloria Macapagal-Arroyo.
Panlilio said a top official of Sino Petroleum would meet Aquino during the state visit.
Energy Secretary Jose Rene Almendras would sign the agreement on behalf of the government.
During the visit, Aquino is expected to sign the Philippines-China Development Program.
Under the agreement, China promises to invest $50 billion over the next five years. The $2 billion to $7 billion is included in the $50-billion commitment.
Meanwhile, the Lucio Tan-owned firm Macro Asia is looking for a Chinese partner for their $1-billion mining investment.
Close to 15 companies have already agreed to sign agreements with the Philippine delegation. Latest data showed that there are already 220 to 230 delegates.
Panlilio, who is also the managing head of the Board of Investments (BOI), said that they have offered the Private-Public Partnership (PPP) infrastructure projects to Chinese companies.
The Department of Transportation and Communications (DOTC) and the Department of Public Works and Highways (DPWH) are expected to push for the railroad projects.
Panlilio said that aside from the PPP, the investments would be coming from diverse industries like automotive, mining, shipbuilding and agriculture.
Meanwhile, the Philippine Chamber of Commerce and Industry (PCCI) said they have already arranged for $1 billion worth of projects and one big project worth $2 billion.
PCCI president Francis Chua said China, through its China-ASEAN (Association of Southeast Asian Nations) fund, is looking at more investment opportunities in the Philippines.
It already has a $100-million stake in Negros Navigation Co. and Aboitiz.
“They are seeking opportunities to invest more. It will definitely be more than $100 million,” Chua said. The fund is co-owned by the Bank of China and the China Import-Export Bank.
Two investment funds are expected to infuse money in the country. Aside from the fund, Chua enumerated four more committed investments.
Ruian Dongfang Auto Parts Co. Ltd. will invest $200 million. They would have a local partner and the chairman will be Miguel Varela and the president Johnny Sy. Ruian Dongfang is a manufacturer of automotive parts.
Another investment is for the $300-million rubber tire factory here. The investment will require 100 to 200 hectares of land.
The other is a $300-million nickel processing plant running nickel iron ore to semi-finished construction. The firm will likewise construct their own power unit. The investment will most probably be in Zambales.
Meanwhile, Vice President Jejomar Binay discounted the probability that the Spratlys dispute would result in an armed conflict between the Philippines and China.
Binay, who is now in Boston, Massachusetts for a two-week study program on security, said there is still a need to upgrade the security ties of the Philippines with the United States.
He also urged China to become a truly positive force for peace and development in Asia.
Binay told top-level defense and security officials from 23 countries gathered at Harvard University’s Kennedy School that although the US is not obliged to take the side of the Philippines in its dispute with China on the Spratlys, it is bound under the 1951 Mutual Defense Treaty to come to the defense of the Philippines if its troops, public vessels or aircraft are attacked in the area.
“Although I do not believe a China-Philippine armed confrontation would ensue because of Spratlys, it would be good for everyone to understand what could happen if the improbable happened,” Binay said.
He said Southeast Asian countries should support “a balance of power in the region” by encouraging China to become a truly positive force for peace and development.
He is in Harvard for a two-week senior executives program in national and international security and was the only participant asked to give a lecture to the class of 72 highly selected security professionals who included some defense ministers and major generals of the US armed forces. – With Jose Rodel Clapano