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Saturday, April 20, 2019

Duterte's China's Sell-Out- He Forgot The Painful Lessons Of Sri Lanka ?

“Walang mang -aalipin kung walang nagpapaalipin.”
Jose Rizal
“If we say yes to something we believe is wrong now, what guarantee is there that the wrong will not be further exacerbated down the line?” he said. He later added, “At what point do you say, ‘Enough is enough’? Well, the world has to say it — remember that the Sudetenland was given in an attempt to appease Hitler to prevent World War II.” P.Noy
From Forbes:
Filipinos are beginning to see the ugly side of the Chinese investments: a large influx of Chinese workers, rising property values, and fears that Philippines could turn into another Sri Lanka.
That’s according to several stories that circulated the Asian media since President Duterte opened up the Philippines economy to China.
These stories come at a time when Philippines equities trade sideways, trying to find direction.
Let’s begin with the influx of Chinese workers. Back in July 2017, an ABS-CBN story claimed that “the government intends to hire low-skilled workers from China for China-financed infrastructure projects around the Philippines.”
Then there’s a story published  in South China Morning Post in December of 2018, which claims that Chinese workers are flooding into the Philippines.
How many? Nobody knows the exact number, as some are illegally in the country.
A story published in the Nikkei Asian Review quotes statistics from the Philippines immigration authorities showing that the number of Chinese workers applying for working visas has jumped from a few thousand in 2015 to 200 thousand in 2018.
Meanwhile, Chinese citizens are snapping up local properties in rich districts, according to a Bloomberg report. And that’s creating a housing bubble. The Philippines’ Residential Real Estate Price Index has increase from 106.900 in 2016 to 117.200 in 2018.
Again, housing bubbles aren’t a bad thing. If you are a seller of properties, that is. But it is a bad thing if you are a buyer.
China is also investing heavily in the Philippines infrastructure, to finance Duterte’s “Build, Build, Build” initiative, promising a “golden age of infrastructure.” “Duterte’s plan very much relies on China which topped the list of foreign investors in the Philippines in 2018 by far,” says Nils Langgärtner, a Philippines expert with Deutsche Börse. “In 2016, Duterte and the Philippines secured more than $24 billion in investments, credits and loans pledges from the Chinese government to enhance his country’s infrastructure.”
The trouble is that some of these investments have yet to materialize. And when they do, they will leave the Philippines heavily indebted to China, as they are financed with loans rather than grants. And that raises the prospect of debt turning into a “trap,” and turning the Philippines into another Sri Lanka.
Sri Lanka’s debt trap saga began with Beijing lending that country funds needed to have its ports upgraded by Chinese construction companies. When Sri Lanka couldn’t pay back the loans, Beijing turned them into equity. And that gave China ownership and control of Sri Lanka’s two major ports.
The Hambantota port on Sri Lanka’s southern coast. 
From New York Times:
NEW DELHI — Struggling to pay its debt to Chinese firms, the nation of Sri Lanka formally handed over the strategic port of Hambantota to China on a 99-year lease last week, in a deal that government critics have said threatens the country’s sovereignty.
In recent years, China has shored up its presence in the Indian Ocean, investing billions of dollars to build port facilities and plan maritime trade routes as part of its “One Belt, One Road” initiative to help increase its market reach.
Along the way, smaller countries like Sri Lanka have found themselves owing debts they cannot pay. Sri Lanka owes more than $8 billion to state-controlled Chinese firms, officials say.
Sri Lankan politicians said the Hambantota deal, valued at $1.1 billion, was necessary to chip away at the debt, but analysts warned of the consequences of signing away too much control to China.
“The price being paid for reducing the China debt could prove more costly than the debt burden Sri Lanka seeks to reduce,” said N. Sathiya Moorthy, a senior fellow specializing in Sri Lanka at the New Delhi-based Observer Research Foundation.
Sri Lanka has long been in India’s orbit, but its relationship with China has strengthened in recent years. As Western nations accused Mahinda Rajapaksa, the country’s former president, of grievous human rights abuses during the final stages of Sri Lanka’s nearly 26-year civil war, China extended billions of dollars of loans to Mr. Rajapaksa’s government for new infrastructure projects.
In July, the state-controlled China Merchants Port Holdings Company signed a deal with the Sri Lanka Ports Authority to control a 70 percent stake in the Hambantota port, which lies on the southern coast of the country.
Sri Lanka’s Parliament voted to grant tax concessions to a joint venture led by China to develop the port. On Saturday, the government completed the handover of the port to two state-controlled entities run through China Merchants Port Holdings, which has already made its first payment of $300 million to the Sri Lankan government.
“With this agreement, we have started to pay back the loans,” Prime Minister Ranil Wickremesinghe said in an address to Parliament. “There will be an economic zone and industrialization in the area which will lead to economic development and promote tourism.”
Critics said the lease could set a precedent for Sri Lanka and other countries that owe money to China to accept deals that involve the signing over of territory. After the original port deal was signed in July, Namal Rajapaksa, a member of Parliament and son of the former president, asked on Twitter whether the government was “playing geopolitics with national assets.”
Perceiving a threat to its regional hegemony, India has also watched with suspicion as cranes operated by Chinese firms began to dot the skyline in Colombo, Sri Lanka’s capital. To reset the imbalance, India has partnered with Japan to develop a port on Sri Lanka’s eastern coastline, and it has entered into talks to invest in an airport near Hambantota.
“India has been overwhelmed by China’s offensive in its strategic backyard,” said Constantino Xavier, a fellow at Carnegie India in New Delhi.
But across South Asia, there have been some signs of pushback to Chinese investment, including the recent sidelining of hydropower projects in Nepal, Pakistan and Myanmar.
Mr. Xavier said Sri Lanka’s dependency on China has alarmed some countries. “Countries in the region are beginning to realize the long-term costs of Beijing’s massive investment promises,” he said.