Expat issue worsens Fil-Sino row

Luis Leoncio

A decision by the Department of Energy to send home 16 Chinese nationals working for the privately owned National Grid Corp of the Philippines (NGCP) threatens to exacerbate the tense diplomatic relations between China and the Philippines.

The Chinese workers are with the state-owned State Grid Corp. (SGC) of China, which has a 40-percent stake in the $4-billion NGCP, roughly equivalent to $1.6 billion or P72 billion.

The expat issue exploded when Sen. Miriam Defensor-Santiago raised “security concerns” over the presence of the Chinese workers in the NGCP. She made the observation during the discussion by the Senate of the Joint Resolution 12 seeking to grant President Aquino emergency powers to address a looming energy crisis (See related story below).

Without naming the SGC, Santiago said the Philippines’s electric-power industry has been “infected by a national-security virus.”

“The Philippine Constitution is replete with requirements of nationalism but such a vital and strategic industry such as the electric-power industry is infected by a national-security virus,” Santiago said.

Following the senator’s comments, Energy Secretary Jericho Petilla revealed his department’s plans to send home the Chinese workers in the NGCP, the obvious target of Santiago.

Petilla agreed with the senator that the presence of the Chinese workers in the NGCP was “certainly a concern of NSA (National Security Adviser).”

He said he believes Filipinos now have the skills to do the work being done by the Chinese technicians. “Hence, to harmonize those concerns, it was agreed last year that the management and technical operation (of the NGCP) would be run by an all-Filipino team by July,” Petilla said.

But he also said the Chinese state firm would retain its stake in NGCP and that two of the six Chinese members of the NGCP board would retain their positions.

China has already expressed its concern over the developments in the NGCP.

Chinese Foreign Ministry Spokesman Hong Lei noted that the Chinese firm had made important contributions to building the grid in the Philippines and told reporters: “(We) hope the Philippines side can fairly and justly handle the relevant issue, earnestly uphold the legal rights of the Chinese company operating in the Philippines and create a good investment environment for foreign investors.”

Xinhua, China’s state news agency, also weighed in and, as it has done in the case of China’s maritime row with the Philippines, promptly raised the decibel of its rhetoric. It likened the Manila’s move on the NGCP to attempts by Washington to exploit its growing business links with the Asian giant as a political bargaining chip.

 

According to Xinhua, Chinese investors faced the heaviest scrutiny in the United States for the second straight year in 2013, with many of its high-profile investments hitting snags for “national security” reasons.

“In a move that seems to follow the US lead, its Asian ally, the Philippines, has announced suspending a Chinese company’s involvement in the construction of the country’s power grid, also citing ‘national security concerns’,” Xinhua said. “This is not only a flagrant violation of business ethics, but also lays bare Manila’ s shortsightedness and asininity.”

Private-sector observers are also questioning the government’s “paranoia” in riding on the security concern raised by Senator Santiago, and its motives in ‘meddling’ with a private operation between the NGCP and the Chinese firm. The members of the NGCP board are Henry Sy, Jr. vice chairman of SM Investments Corp. and son of mall magnate Henry Sy; Robert Coyiuto Jr., chairman of the board and CEO of Prudential Guarantee and Assurance, Inc., and chairman of the Board of PGA Cars Inc.; former Trade and Industry Secretary Jose Pardo, currently chairman of the Philippine Stock Exchange (PSE); Francis Chua, chairman emeritus of the Philippine Chamber of Commerce and Industry Inc. (PCCI) and consul general (ad honorem) of the Honorary Consulate General of Peru in Manila since 2006; Anthony Almeda, chairman and CEO of ALALMEDA Land, Inc. and director of various corporations, including Blue Ocean Acquisitions, Inc; Paul Sagayo Jr., a partner at Sagayo Law Offices and currently a professor at the San Beda College of Law. The Chinese board members are Du Zhigang, director-general and vice president of the SGCC Department of International Cooperation of China; Wen Bo, NGCP chief technical officer and concurrent director-general of the Philippine Office of SGCC; Ma Ruoxin, NGCP chief executive adviser and assistant chief technical officer for system operations; and Lin Xinhua, chief administrative adviser and chairman of the Board Audit Committee of NGCP, and former head of the SGCC Planning Division.

The focus of the government’s security concern is on Wen and Ma, who both hold strategic positions related to the operations of the national grid.

Both Chinese officials will likely be removed from the board, with Du and Lin being retained only as board members. The government is asking NGCP to strip both of their management positions.

Diplomatic relations between the Philippines and China have steadily worsened in recent years over rival claims to parts of the South China Sea, which is believed to contain vast gas and oil deposits.

The Philippines has charged China with fortifying islets in the disputed area to possibly turn them into armed outposts, while accusing it of bullying diplomatic tactics.

The Philippines also infuriated Beijing by asking a United Nations tribunal to declare the Chinese maritime claims invalid. China has refused to recognize the legal proceedings.

Observers said the case of the Chinese workers, unless resolved immediately, would further strain the ties between the Philippines and China.