Philippine Foreign Affairs Secretary Alan Peter Cayetano gestures during a news conference on the South China Sea issue which was also discussed during last week's ASEAN Ministerial Meeting in Singapore on Tuesday, Aug. 7, 2018, in suburban Taguig city east of Manila, Philippines. The victory gained by the Philippines in the arbitration case it filed before the UNCLOS (United Nations Convention on the Law of the Sea) was placed on the backburner as President Rodrigo Duterte seeks investments and infrastructure funding from China in the "Build Build Build" program of his administration.
AP/Bullit Marquez
Philippines will not spend on joint exploration with China — Cayetano
Patricia Lourdes Viray ( - August 8, 2018 - 5:47pm

MANILA, Philippines — The Philippine government will not directly invest in oil and gas exploration amid proposals to pursue a joint venture with China in the West Philippine Sea, Foreign Affairs Secretary Alan Peter Cayetano said Tuesday.

Asked how much capital the government was willing to spend on joint development, Cayetano said the project would only be among private entities.

"It will be a commercial venture. I think that's a smarter thing to do but as I've said these are preliminary talks but we don't, as of now there's no plans on the Philippine government side," Cayetano said in a press briefing.

Cayetano said the government will be building upon existing contracts. He earlier said that the Philippines is seeking a same or better agreement than the Malampaya project.

The Philippines' top diplomat assured his critics, including acting Chief Justice Antonio Carpio and Magdalo Partylist Rep. Gary Alejano, that any framework on the joint venture with China would comply with the 1987 Constitution.

"We cannot come up with any agreement that is unconstitutional. That is just not, cannot be done," Cayetano said.

Cayetano reiterated the urgent need for a framework on the joint development with Beijing as the Malampaya field is forecast to run out by 2024.

The Reed Bank, which is one of the proposed areas for joint venture, is being considered as an alternative to the Malampaya field, which supplies power to the majority of Luzon.

"For us, since it's an urgent need, and it will benefit all Filipinos, I wanna work double time on it and I'm hoping our side of the working group can do a lot this August and then try to hit September or October," he said.

Cayetano also noted that public acceptability may be a challenge on the possible joint project with China. Any agreement must also pass the scrutiny of the Supreme Court, he added.

"The challenge is for us to be able to draft a framework or an agreement that the Supreme Court will have an easy time saying it’s constitutional," Cayetano said.

Under Section 2, Article XII of the Constitution, the state may enter into "co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens."

Natural resources, such as oil and gas in the West Philippine Sea, are owned by the state under the Constitution.

"The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources," the constitution read.

The Congress should be informed of any agreement the president made in accordance with this provision within 30 days from execution.

Under Republic Act 7042 or the Foreign Investment Act of 1991, foreign equities may invest up to 40 percent on the exploitation of natural resources and utilization of land ownership.

Carpio earlier told the government to make sure the country's sovereignty will not be compromised in the proposed 60-40 scheme with China.

“As long as the joint development complies with the Philippine Constitution and there is no waiver of our sovereign rights under the arbitral ruling, I have no objection,” Carpio said.

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