Moody's projected 5 - 6% growth for Philippines' economy in 2011- 2012

Moody's Corporation is the holding company for Moody's Analytics and Moody's Investors Service, a credit rating agency which performs international financial research and analysis on commercial and government entities. The company also ranks the credit-worthiness of borrowers using a standardized ratings scale. It is one of the big three credit rating agencies and has a 40% share of the world market, as does its main rival, Standard & Poor's, Fitch Ratings has a smaller share.

Moody’s Investors Service has kept a favorable growth outlook for the Philippines, saying the economy could grow between 5 and 6 percent for 2011 and 2012.

In a report on its credit assessment of the Philippines, Moody’s recognized the increase in private-sector investments, which have been helping drive growth of the economy since 2010.

“The recent strength of investment spending is credit positive for the Philippines,” Moody’s said

“The Aquino government’s emphasis on good governance – coupled with an increasingly strong track record of macroeconomic stability – has seemingly supported the return of greater investment spending, especially from the private sector,” the credit rating firm added.

The growth projection of Moody’s for this year is the same as that of the government. For 2012, however, the government is aiming for a faster growth rate of at least 7 percent.

Meantime, Moody’s said any adverse impact on the Philippines of the recent natural disaster in Japan and the political tensions in the Middle East would be insignificant.

The credit ratings firm said Japan has been gradually recovering from the calamity, and so has been its demand for imported goods, such as those from the Philippines.

Moreover, it cited steeply growing remittances from Filipinos based in various countries, so that any negative effect from the Middle East conflict would be tempered.

In June, Moody’s upgraded the country’s credit rating to Ba2, or from three to two notches below investment grade, citing favorable macroeconomic indicators. The outlook on the rating is “stable,” meaning it is relatively safe from a downgrade for at least a year.

However, the credit rating firm said the Philippines should work more on the fiscal aspect, noting that substantial improvements in its budget position would result in the further upgrading of its credit rating.

“The Philippines’ sovereign rating now sits atop its methodological range at Ba2. Further upward movement in the rating will thus require a more significant improvement of its credit fundamentals,” it said.

Moody’s noted that the revenue-to-GDP ratio of the Philippine government has been lagging far behind those of similarly rated countries. In 2010, the ratio for the Philippines stood at 14.7 percent compared with the average of 23.7 percent for other countries with comparable credit ratings.

It acknowledged that the Philippines, since the start of this year, has recorded improvements in its revenue collection and significantly reduced its budget deficit. However, Moody’s also said it would take some time before the Philippines could reach the revenue-to-GDP ratio of similarly rated countries.

Moody’s also said that although the country’s overall economy has grown, its per capita income, which has just surpassed the $2,000 mark in 2010, remains low.

The credit rating firm said the Philippines would grow at a respectable growth rate this and next year, and that the stable outlook would remain. It stressed, however, that challenges involving fiscal position and per capita income should be addressed before the country could expect its credit ratings to improve further and move much closer to investment grade.

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The Philippines will raise the protest to UN tribunal for Chinas' invasion - Sino no comment

The United Nations Convention on the Law of the Sea (UNCLOS), also called the Law of the Sea Convention or the Law of the Sea treaty, is the international agreement that resulted from the third United Nations Conference on the Law of the Sea (UNCLOS III), which took place from 1973 through 1982. The Law of the Sea Convention defines the rights and responsibilities of nations in their use of the world's oceans, establishing guidelines for businesses, the environment, and the management of marine natural resources. The Convention, concluded in 1982, replaced four 1958 treaties. UNCLOS came into force in 1994, a year after Guyana became the 60th state to sign the treaty. To date, 161 countries and the European Community have joined in the Convention..

Jul 11, 2011 - The Philippines told China it plans to take their Spratly Islands dispute to a United Nations tribunal in trying to resolve their conflicting claims peacefully, the Philippine foreign secretary said.

At their meeting in Beijing first week of July 2011, Chinese Foreign Minister Yang Jiechi did not respond on China's thoughts about the Philippine plan, Foreign Secretary Albert del Rosario said.

"The Chinese position has not changed," del Rosario told a news conference. "Our position also has not changed. Our claims are based on international law."

Both sides did agree the disputes should not damage overall relations, del Rosario said.

President Benigno Aquino III plans to visit China in late August or early September 2011. The nations are trying to cool tensions after the Philippines alleged Chinese forces repeatedly intruded into the West Philippines’ Sea – Philippines claimed Spratly areas since February.

The chain of barren, largely uninhabited islands, reefs and banks in the West Philippines’ Sea (WPS) or  South China Sea are claimed entirety or partly by China, Taiwan, Malaysia, the Philippines, Vietnam and Brunei. They are believed to be the 4^th largest deposit of  oil and natural gas which said to be and straddle a busy international sea lane.

The Spratlys are regarded as a potential flashpoint for armed conflict.

In one of the most serious incidents, Philippine officials said a Chinese naval vessel allegedly fired to scare away Filipino fishermen from Jackson Atoll in the province of Palawan, near the Spratlys.

In March, Chinese patrol boats threatened a Filipino oil exploration ship into leaving the Reed Bank, which the Philippine government has said is within its regular territorial waters and not part of the Spratlys.

Yang said there were no intrusions because those waters belonged to China, del Rosario said. "Of course, we disputed their position," he said.

Del Rosario did not elaborate on what the Philippines intends to raise before the International Tribunal on the Law of the Sea, which decides cases stemming from the 1982 U.N. convention ratified by both countries.

Two Filipino diplomats said the Philippines intend to ask the U.N. tribunal if China's claim to the entire South China Sea conforms to the U.N. convention. That claim, which surfaced in 2009 as a map China submitted to the U.N., is rejected by the Philippines and other claimants in ASEAN countries with stakes of 200 Nautical Miles Exclusive Economic Zone.

The Spratlys has a history of deadly territorial clashes. In the worst fighting, Chinese and Vietnamese navies fought at Johnson Reef in the Spratlys in 1988 in a fierce battle that sank several Vietnamese boats and killed more than 70 Vietnamese sailors.

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China will declare a War against the Philippines, Vietnam and ASEAN countries over Spratlys disputes.

China will teach a lesson to the Philippines for taking control the Spratlys? 

Hardliners in the Chinese Military Academy are raring to teach China’s neighbors “a lesson” for intruding into the South China Sea, which they consider part of their national territory, a Chinese Southeast Asian expert said.

It has been known and expressed by the China’s spokesperson that they will not respect the UNCLOS international laws of SEA as they have their own law. China said their claim over the island and waters of the West Philippines’s Sea (WPS) or also known as South China Sea will supersede the UNCLOS and the China Law of the sea must prevail. 

According to China’s spokesperson, the called intrusion by the Philippines and Vietnam to their waters is not a violation of UNCLOS as china did not respect UNLCOS and they have their own law and they considered the Sea of Vietnam and the West Philippines’ Sea is their jurisdiction.

Shen Hong-Fang, professor and senior research fellow at the Center of Southeast Asian studies at Xiamen University, spoke of “a new upsurge” of Chinese nationalism set off by claims made by some Asian countries, including the Philippines, over the called territory China considers its own.

“Some suggested that it is the right time to adopt necessary measures to teach some countries a lesson,” Shen said, startling participants at the two-day Conference on the South China Sea held in Manila last first week of July 2011.

She added there are those who think it justifiable “for China to launch a war against the invaders.” or a war against the Philippines, Vietnam, Malaysia, Brunei, Indonesia and the ASEAN countries.

The Philippines, Vietnam and Malaysia have staked claims over some of the 160 islands that constitute the Spratlys in the West Philippines’ Sea or South China Sea. These countries, along with Indonesia which is a non-claimant, have filed protests before the United Nations Commission on the Limits of the Continental Shelf (CLCS) over the “nine-dash line map” China submitted to prove its claim.

That map practically covers the whole of the South China Sea and encroaches over the 200-nautical-mile exclusive economic zone of some its neighbors, the Philippines included.

Brunei and Taiwan are also claiming parts of the Spratlys.

In its note verbale last April 14, China accused the Philippines of having “started to invade and occupy some islands and reefs of China’s Nansha (Spratly) Islands.”

Asked by Paranaque Rep. Roilo Golez about the role of the Chinese Military Academy in the leadership’s decisions, Shen said it is “a very influential group. “

The Chinese Military Academy, formally known as the Academy of Military Sciences (AMS), is the highest-level research institute and center of military sciences of the People’s Liberation Army which is a major force in the Chinese government.

A Philippines’ diplomat who requested anonymity said Shen would not be making such strong statements without the approval of the Chinese government.

Shen reiterated previous declarations of Chinese officials that the South China Sea is a “core interest,” just like Tibet and Taiwan.

She quoted a published statement by Han Xudong, an army colonel and a professor at the PLA’s National Defense University (NDU), that “China’s comprehensive national strength especially in military capabilities is not yet enough to safeguard all of the core national interests.”

Golez expressed concern over what China would do “if their ‘national strength especially in military capabilities’ would be enough to take care of all core national interests.”

Shen also quoted another NDU professor, Zhang Zhongzhao, as saying that “the best time of solving the territory disputes has already passed” and that “diplomatic negotiations alone cannot solve the problem.”

She described Zhang as “a well-known military theorist,” and further quoted him saying that to defend national sovereignty; the Chinese should have the “courage to use the sword if it is really needed.”

Shen said the Chinese government is under public pressure to stand firm on the South China Sea. “If China lost more territory to foreign states, the national honor would be under attack and the people and the army would question the legitimacy of the government,” she said.

“It is of utmost importance that the government is not considered by people or the army as internally or externally weak which in turn could have severe political consequences,” she added.

Included in Shen’s recommendations to ease tension in the South China Sea is joint exploration in disputed areas. The Philippines already took this step during the term of former president Gloria Macapagal Arroyo when it started a Joint Marine Seismic Undertaking (JMSU) with China and Vietnam, which was completed in 2008. The previous administration of Gloria- Macapagal Arroyo has already submitted the Spratlys to China and At least 70 percent of the coverage of the JMSU is in areas claimed by the Philippines. The constitutionality of the agreement is being questioned in the Supreme Court of the Philippines as Singapore analyst voice-out that Gloria Arroyo is almost selling the Spratlys to China and she did not respect the ASEAN neighbors by making a move in absence of the ASEAN who are also partially claimants of the islands and waters of the Spratlys under 200 Nautical Mile Exclusive Economic Zone by the UNCLOS.

The Manila SCS conference was organized by the Foreign Service Institute of the Department of Foreign Affairs, the National Defense College of the Philippines and the Development Academy of Vietnam. (VERA Files is put out by veteran journalists taking a deeper look at current issues. Vera is Latin for “true.”)

 

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