Thursday, October 31, 2013

Philippines’ Aquino Defends Own Pork Fund

Philippine President Benigno S. Aquino III is starting to acquire tarnish from the country’s massive and continuing “pork barrel” scandal, in which scores of lawmakers siphoned off hundreds of millions of pesos from development funds and pocketed them

The president, his popularity descending in the polls, was forced to go onto national television Wednesday night to defend his own discretionary disbursement development funds, which include a PHP2.5 billion (US$57.8 billion) social fund from the government-run Philippine Amusement and Gaming Corporation and another PHP130 billion in royalties from the Malampaya gas project off Palawan.

The Social Weather Stations Survey, conducted on Sept. 20-23, found 68 percent satisfied and 19 percent dissatisfied with Aquino's performance, for a net rating of +49 (percent satisfied minus percent dissatisfied), termed as good, according to the polling firm’s website. That meant his net satisfaction rating of +49 was 15 points below his very good net satisfaction rating of +64 in June and the lowest since his personal record-low score of good +42 in May 2012. It has been below +50 in only 4 out of 13 surveys since September 2010, according to the survey.

Another survey by Pulse Asia showed that the president’s approval rating dropped by 12 percentage points, from 59 to 47 immediately after the pork barrel scandal emerged. The Presidential Palace also conceded that a survey commissioned by his office also indicated a steep slide in his popularity.

Aquino requested a 12-minute simulcast from the country’s major television networks to also accuse opposition lawmakers of orchestrating a media campaign against his administration to distract attention from the bigger issue of corruption among lawmakers themselves.

“Let me make it clear: The Disbursement Allocation Program is not pork barrel,” Aquino said. 

“Of the DAP releases in 2011 and 2012, only 9 percent was disbursed for projects suggested by legislators. The DAP is not theft. Theft is illegal." He argued that the fund "is clearly allowed by the Constitution and by other laws," and that the funds came from legal means: savings, above-target collections and new revenues, all "results of good governance."

The pork barrel scandal, which blew up in July, is arguably the biggest in recent Philippine history. And, in a country that in the past has tended to shrug its collective shoulders at most chicanery, the public doesn’t appear to be forgetting about this one. Television viewers have been transfixed at continuing revelations over Priority Development Assistance Funds, which grant each of the country’s 24 senators and 289 congressmen receives PHP200 million and PHP70 million annually, respectively, ostensibly to fund relatively small infrastructure and other development projects. The Philippine Inquirer especially has carried daily stories detailing the spreading scandal.

In fact, much of the funds, when they didn’t simply disappear into the lawmakers’ pockets, critics say, were used to create a vast system of political patronage that welded district officials and others to individual lawmakers. A procession of whistleblowers have identified at least three Philippine senators and at least five congressmen who allegedly channeled money into their own pockets using a Chinese-Filipina businesswoman named Janet Lim-Napoles as a conduit. Napoles, who is now in jail, established a flock of fake NGOs ostensibly designed to complete the development projects, but instead channeled 30 percent of the money into her own coffers and sent the rest back to the lawmakers.

The Department of Justice has filed plunder cases against Napoles and Senators Juan Ponce Enrile, Jinggoy Estrada and Ramon Revilla. Another 40 other government officials, including staff of lawmakers named in the charge sheet, are included in the plunder complaint. The scandal has spread well beyond Napoles to include a host of other fake NGOs as well.

Aquino has repeatedly defended his own funds. In mid-October, the Presidential Communications Development and Strategic Planning Office Secretary, Ricky Carandang said there were no discussions on proposals to limit President Aquino’s use of Special Purpose Funds (SPF) and other lump sum allocations, arguing that it would take time to respond to calamities or contingencies that require congressional approval, where proposals tend to get bogged down if not looted.

Aquino is considered by international investors to be making slow if steady inroads against political corruption by cleaning up some of the institutions that allow it to flourish, including the competitive bid process for government contracts and election reform. That isn’t to say that the reform progress has been smooth, or as decisive as it could or should be. He has also been accused of moving far too slowly to clean up corruption on the part of his administration, and of leaving cronies in place after they have been unmasked.

However, the country has been rewarded by upgrades by rating agencies such as Fitch and Moody’s, which cited not only improved governance but strengthening capital requirements of domestic banks, which enabled the banks to play a leading role in overall economic performance. Asia Sentinel

Taiwan: the missing piece in the rebalance

In the wake of the US President’s decision to pull out of any engagements in Asia surrounding the APEC summit in Bali on 5–7 October, critics of the US rebalance to Asia policy have exploited his absence as evidence of US regional strategic bluster.

For the most part, the Chinese media avoided the temptation of hubris, taking a more conciliatory tone and played up the central role of China’s regional economic engagement at the summit. Chinese leaders will have recalled the abrupt departure by Hu Jintao from the G8 summit in Italy in 2009 as insurrection broke out in troubled Xinjiang.

The US has been very quick off the mark with rebuttals, proclaiming the Asia pivot to be firmly rooted in Washington DC’s foreign policy. Standing in for the President, Secretary of State John Kerry’s presence in Bali was a notable exception to his predisposition for the quagmire in the Middle East, viewed by many as another counterweight to the Asia pivot.

World attention in Bali has focused on the windfall presented to Chinese President Xi Jinping, allowing China to steal centre stage. Xi has made a whirlwind circuit through the region on a state visit to Jakarta, then on to Kuala Lumpur before returning to Indonesia for the APEC summit.
China is now Indonesia’s second-largest trading partner, with bilateral trade amounting to US$66 billion in 2012. During the state visit, both countries agreed to increase bilateral trade by a further US$15 billion by 2015.

In Malaysia, China agreed to a five-year plan to boost bilateral trade to US$160 billion by 2017. With these kinds of figures thrown into the mix of China’s increasingly dexterous Southeast Asian diplomacy, it’s difficult to imagine how the US couldn’t have been upstaged at Bali. But the US, facing the looming shadow of debt default as the shutdown continues, has put on a brave face, confident that a final deal on the Trans-Pacific Partnership can be achieved by year end.

Another casualty of the paralysis in Washington is its stake in Taiwan. While acrimony between China and Japan lingered beneath the veneer of economic engagement at the summit, the cross-strait relationship between Taiwan and China appeared to demonstrate new momentum. Heralded as a milestone meeting, Xi Jinping’s discussions with Vincent Siew, Taiwan’s senior envoy and former Vice President, added a new twist to the debate over China’s strategic intent in the Asia Pacific.

Xi called for an end to institutionalised procrastination over Taiwan’s reunification with China, describing Taiwan and China as ‘one family’. He insisted that the time is right for political discussions on the cross-strait relationship, without the conditionality which infused statements on the same issue under Hu Jintao’s leadership.

Aside from the showcase handshake between Siew and Xi, another sign of acceleration in the thaw in cross-strait relations was a meeting between the head of Taiwan’s Mainland Affairs Council, the Taiwanese executive body tasked with managing relations with the People’s Republic, and the head of China’s Taiwan Affairs Office. Both bodies have served as rubber stamp outfits over the years, while the real business has been conducted behind closed doors within the Kuomintang–Communist Party ‘party-to-party’ framework, initiated by Hu Jintao and Lien Chan in 2005 and fast-tracked after the KMT regained power in 2008. At the Bali meeting, both bodies formally referred to their respective official designations. It’s rumoured that significant progress may have been achieved in the establishment of representative offices in Beijing and Taipei.

China’s economic integration of Taiwan in recent years is a good example of how Beijing is courting ASEAN member states. With China’s burgeoning economic clout in the neighbourhood, Taipei, Seoul, Tokyo and ASEAN member states are beginning to hedge their approaches to the US. Some of these approaches seem ad hoc at best, others more developed into what resembles coherent strategy.

A confidant of Taiwanese President Ma Ying-jeou and former secretary-general of the National Security Council, Su Chi, best sums up the predicament of US friends and allies on China’s littoral as ‘the tail wagging two dogs’. The biggest question mark is whether or not Xi Jinping will sacrifice the hitherto sacrosanct cross-strait status quo in order to pursue the reunification agenda with as much vigour as China’s other core concerns.

The lingering fissure in the integrity of the motherland is apparently of such pressing concern for the Chinese communist party that an additional tenth dash recently appeared off Taiwan on Chinese maps showing China’s maritime territorial demarcation. Crucial to any political progress across the strait will be military de-escalation and the offer by both sides of military confidence building measures. Former Premier Wen Jiabao had hinted in 2010 at de-targeting the People’s Liberation Army’s (PLA) missiles pointed at Taiwan but it appears the opposite has happened. The PLA’s strategic rocket force known as the second artillery corps has now deployed its new anti-ship ballistic missiles across the strait.

Taiwan is still China’s greatest concern, and the issue has driven the modernisation of the PLA for the last decade. A few years ago, defence analysts in the US warned that the military balance across the strait was tipping in favour of the PLA. According to Taiwan’s 2013 National Defense Report released on 8 October, China will be able to successfully invade Taiwan by 2020. And as Chairman of the Central Military Commission, Xi may also feel emboldened by the decline in Taiwan’s defence spending.

Traditionally, Taiwan has kept the US in the loop on important junctures in cross-strait relations and Washington has been careful not to engage with Beijing on such issues over the head of Taipei. Post shutdown, as the White House resuscitates its rebalance to Asia, Congress would be well advised to review its commitments under the Taiwan Relations Act.

Alexander Neill is a Shangri-La Dialogue senior fellow for Asia-Pacific Security, at the International Institute for Strategic Studies-Asia, Singapore. 
This article was first published on the Australian Strategic Policy Institute.

Malaysia’s bumiputera debate asks the wrong questions

Malaysian prime minister Najib Razak rolled out his Bumiputera Economic Empowerment Programme (BEEP) on 14 September 2013

The agenda’s blatant political motives, ethnically exclusive giveaways and the absence of any acknowledgment of past shortcomings or lessons learned delighted his UMNO faithful and Malay nationalist audience.

He made it easy — perhaps too easy — to condemn the BEEP.

The most voluble criticism is that the policy does not benefit the vast majority of the bumiputera or the poor in general, and that the money should be allocated to broader social spending instead. This contention is understandable, but detracts attention from a more important question.

The time is ripe to ask whether Malaysia should in the first place promote bumiputera industry. 

In particular, should Malaysia endeavour to raise bumiputera participation in the ownership and management of dynamic enterprises, especially in industrial sectors, and should the country implement effective programs that directly try to achieve that national objective?

These questions are better tackled head-on because, for the most part, reactions to the BEEP have split into opposing flanks, neither of which offers constructive and feasible prospects for reform. There is the Perkasa–UMNO–Barisan Nasional stance of explicitly supporting the agenda and perpetuating corrupt policies. In contrast, there is a popular counterpoint of implicitly supporting bumiputera industrial development (opposition to the objective is very rare) but advocating needs-based, pro-poor policies as solutions. This argument is usually paired with the claim that race should not be a factor in qualifying for empowerment opportunities, especially government contracting and licensing.

Rhetoric and popular momentum behind needs-based policies and meritocracy are high, and much negative reaction to the BEEP springs from these principles. However, the discourse is disconnected and muddled.

This bumiputera agenda does follow a long line of failure, shortfalls and mishits. Nonetheless, these past experiences do not in any way make social spending a viable alternative for the purpose of bumiputera industrial development. Such needs-based policies are pursuing distinct objectives. They will help level the field in basic needs and attainments, but can scarcely be depended on to produce dynamic bumiputera enterprises.

Practically, as well, programs and allocations cannot be lightly switched from one set of recipients to another. Many have focused on the approximately RM30 billion worth of spending that can be tallied from Najib’s BEEP launch speech, especially RM20 billion per year of Petronas contracts for upstream and downstream projects. This forthcoming largesse clearly placates Malay contractors who have complained of being neglected. However, it does not immediately follow that this comes at a cost to society at large.

The Malaysian government cannot carve up a Petronas contract to one firm and offer it instead to masses of people. Likewise, these funds are tied up in particular projects and cannot simply be appropriated for other purposes. Inflated prices and substandard quality do incur a social cost, but this raises questions about the amounts being spent and the selection process, not the entire procurement policy.

Again, the pertinent question is: should Malaysia intervene in bumiputera industrial development? It’s plainly untenable to answer ‘yes’ and then leave it to social spending to deliver the results. On the interrelated matter of meritocracy, undoubtedly there is a case to be made for abolishing racial representation in selection criteria for contracts and licences, and making the process transparent, stringent and competitive. Still, such policies have no direct role in facilitating bumiputera participation in industry.

So, those opposing bumiputera industrial development policies must acknowledge the consequences: purposefully omitting bumiputera enterprise development as an objective and bumiputera representation as a target, and leaving these outcomes open-ended. Such a reform would hold out the possibility that bumiputera participation might not increase or be sustained — and may well decline. The risk of the latter seems to have been ignored.

Interestingly, there is frequent talk of resetting politics and resetting policies, never of resetting expectations. Yet can Malaysia implement meaningful and difficult reforms, and continue to target ambitious growth and improvement? Odds are stacked against having it all. The current situation arguably calls for more restrained and effective bumiputera industrial development — and suitably modest expectations and targets. Select policies are needed to cultivate long-term bumiputera industrial development and avert major declines in participation in the short term.

Surely this is better than Malaysia’s recent experience, where the government announces ‘needs-based’ and ‘merit-based’ affirmative action; provokes the ire of Malay contractors and the Malay Chamber of Commerce (and their UMNO patrons), who claim to have been sidelined; then makes concessions and yields the opportunity. Political courage and cogent policies are needed to seize these opportunities and admit that there will be transition pains.

Of course, the prospects of real reform are slim. But the BEEP and reactions to it have not even engaged in policy discourse. Malaysia needs to return to the starting blocks and deliberate whether to have bumiputera industrial development policies at all. If the answer is ‘no’, the country must think of the possible consequences, especially the politically unpalatable ones. If the answer is ‘yes’, then Malaysia needs to think of effective measures, and leave aside social spending for other conversations.

Hwok-Aun Lee is Senior Lecturer in Development Studies at the University of Malaya.East Asia Forum

Wednesday, October 30, 2013

Trail of murder: Indonesia's bloody retreat

Trail of murder: Indonesia's bloody retreat

How the murder of a journalist in East Timor in 1999 impacted the life and work of Al Jazeera's Step Vaessen

View the Video report:

Step Vaessen investigates the murder of her friend and colleague Sander Thoenes by an Indonesian military battalion in East Timor in September 1999.

The Financial Times journalist was just 30 years old and full of promise when he was shot and mutilated while covering the violence during the nation’s independence struggle. He was the last of at least 12 people executed by the battalion.

His killing has had a deep impact on Step’s professional life; affecting the way she sees her chosen profession. But it has caused even more devastation in her personal life. Her husband, and sometimes cameraman, went into a depression and committed suicide.

As well as exploring how that single event has had such a profound impact on her life, Step goes in search of the members of the military battalion that killed Thoenes. None have ever been brought to justice. In fact, two of the commanders who ordered the killings are now running for the Indonesian presidency. One of them is the leading candidate.

Step also finds the family members of other victims of the battalion, examining how they have had to cope with trying to forgive these crimes and exploring the consequences of the impunity that has permeated Indonesian society.