CHINA'S growing influence in the Philippines has expanded into mining; the latest bulletin of its economic might is evident in the newfound craze among some provincial small-time miners who had been granted mining permits under the Small Mining Act, which grants provincial authorities the power to issue mining permits to small-time miners as long as they are not “mechanized.”
In one province, we are told, the small-mining activities are specifically related to magnetite iron ore, that black-hued sand found in many of our beaches and coastal areas. A large part of the mined magnetite iron ore or black sand, Leo Jasareno of the Department of Environment and Natural Resources (DENR) told the Kapihan sa Diamond Hotel, finds its way to China where it is smelted and processed to produce iron or steel.
Black sand is easily mined with the use of magnets. One shipload, or about 50,000 tons, is worth P10 million, according to Jasareno’s calculations. The problem, though, is the government is ill-equipped to monitor the movement of foreign vessels that dock in Philippine ports and leave with the precious cargo. When we asked him for specifics on the quantity or volume of magnetite iron ore that has so far been spirited out of the country, Jasareno responded by shaking his head. The problem, he told me, is that the DENR cannot effectively monitor the shipments owing to the Small Mining Act that allows this kind of activity.
In fact, he said, if the DENR wanted to know which vessel or vessels sail away with the mined magnetite iron ore, it would have to check with the Bureau of Customs and the Philippine Ports Authority and chances are they might also be of little help, if at all. Hmmm. We hate to say this but the DENR official appears to be holding back some vital information on this one and we suggest that an investigation, an honest-to-goodness one, be conducted. Most of the mining, we understand, is being done somewhere in the coastal areas of Northern Luzon.
At any rate, aside from mining, China’s growing influence is similarly evident in the telecom sector, a sunshine industry, which is contributing much to the growth of the economy. A big China telecom firm, for instance, supplies much of the requirements of the local telecom industry. Big and small telcos use various equipment that the Chinese firm Huawei supplies them.
The cheap pricing is what makes China influential here. When it buys, it offers top prices, such as those for the magnetite iron ore or wet nickel. But when it sells, it offers the lowest prices, thus enabling it to corner the bulk of the needs of the telcos. This strategy is due in part to the Chinese government’s thrust to encourage exports or even loans. In fact, Chinese firms can each get government support that is equivalent to 5 percent of its investment cost, This is why Huawei is the preferred telco supplier. The danger here, though, is the issue of national security because the prevalence of just one telecom supplier could have serious implications.
Huawei has so far emerged as the largest IT solutions and telecom-equipment vendor in the country, accounting for the supply of mobile phones, modems, computers, network equipment, IT solutions and Internet devices used by Philippine Long Distance Telephone Co. (PLDT), Smart Communications, Globe Telecom, Bayan Telecommunications, Sky Internet, Wi-Tribe and Next Mobile. It has won numerous deals with local telcos by offering cheaper equipment and IT solutions. It has also deployed its own advanced Core Network Solutions in the country for support facility.
But what happens if the Shenzhen-based Huawei suddenly withholds critical telco equipment needed, by say, PLDT, for its operations. That would definitely jeopardize the firm and lead to serious security concerns. This was what probably prompted Taiwan’s National Communications Commission (NCC) to issue a ruling that requires telcos to secure an approval first from the NCC and the Investigation Bureau before they can use core network equipment supplied by Huawei.
A Google search also revealed that Huawei is also under suspicion in the United States, where it is accused of having ties with the Chinese military. In fact, the US Department of Commerce has apparently thumbed down a bid of the Chinese telco giant for the US so-called network of the first responders, such as the fire department, ambulance and police force. The anti-Huawei sentiment is because of security concerns, although the Chinese firm is protesting this. Here in the Philippines, perhaps the government should try to reduce the growing influence of Huawei in the telco sector by also looking into the supply contracts as telecom network is crucial, especially on sensitive matters. Pricing, after all, is different from national security.
PDIC rejoinder
We have received a rejoinder from the Philippine Deposit Insurance Corp. (PDIC) regarding an earlier item concerning the closed LBC Bank. The letter, signed by PDIC Executive Vice President Cristina G. Orbeta sets forth certain items, foremost of which is that “PDIC as receiver [for LBC Bank] is still in the process of gathering bank records and assets and conducting an inventory thereon. The turnover of records and assets of the bank is still ongoing. Hence, the PDIC has not yet come up with a report on the realizable value of the bank’s assets and has not made any statement or report on the bank’s realizable assets.”
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