Press Release
November 13, 2019

Recto budget interpellation raises Chinese inroads in AFP, PNP, energy contracts
(Excerpts from DND budget interpellation)

Recto: I'd like to put into perspective the budget of DND with regards to our Asean neighbors. Mr. President, isn't it true that one's defense is dependent on the size of the economy and of the population?

Lacson: That is correct. Minimum of 2 percent of the economy.

Recto: In fact, yun ang panawagan ni Trump sa NATO allies--to spend at least 2 percent, because some of them are spending less than that. Of GDP. The US spends roughly 3 percent of GDP for their armed forces, around $600 billion. If China spends $170 billion, the US outspends them 3:1. And that's why they have the biggest navy in the world. And that's why we use the US dollar as well in global trading.

May I know, what is the defense spending on the entire ASEAN region--who should be our partners not only in trade, but also, supposedly, for defense?

Lacson: We are ranked number 5 among the ASEAN countries. Singapore, Indonesa, Malaysia is next is to us at number 6.

Recto: If you add the budget of all the ASEAN countries for their defense in the region, and you include Australia, Japan and Korea, wouldn't that be more or less equivalent to the China spending for defense?

Maybe we should band together with our ASEAN neighbors, including Korea and Australia. Assuming they have a problem with China, they are also landlocked. There are 21 other countries landlocked with them.

Defense spending should be a minimum 2 percent of GDP. Looking at the budget of DND, I was surprised to see that their budget is 4.6 percent of the national budget, but only 1 percent of GDP. Our GDP today is P20 trillion.

We're spending roughly P190 billion. Ilagay na natin sa P200 billion. Ang ekonomiya natin, P20 trillion. Ibig sabihin, 1 percent lang. So we should be spending double that.

Lacson: According to them, it's 1.2 percent of GDP.

Recto: That's 1.2% if you include the pension. Hindi naman dapat sinasama ang pension.

Mahal ang AFP modernization. We have spent around P150 million already, in capital outlay for this modernization

Of that P200 billion spent, meron ba tayong, to a certain degree, na local content requirement? Yung made in the Philippines?

Lacson: Yes, sa government arsenal

Recto: Halimbawa, Navy. The Philippines today is the fourth biggest shipbuilder in the world. So yung non-technical aspects ng shipbuilding, such as the radar, i-import natin 'yan. Pero yung Naval ship, gumagawa na tayo sa Cebu niyan. 4000, 5000 vehicle carrier.

We could be building our own navy, our own coast guard. Why not partner with the countries I mentioned earlier, especially the US, and some other European allies with regard to producing Navy ships in the Philippines? Using PH workers?

Aren't we purchasing a Black Hawk from Poland? (16 Black Hawks) American technology, made in Poland. We have mutual defense treaty with the US. So why can't we make Black Hawks in the Philippines?

It's a way of thinking. If we could build up certain local content requirement, made in the Philippines, more jobs created, then our economy becomes bigger and bigger. And we will have sustainability for spending more in our military. And would cost us less. More bang for the buck.

Last two items. What is the mandate of the government arsenal?

Lacson: The manufacturing of the ammunition requirements of the AFP. Small arms.

Recto: Is it not part of their mandate to formulate plans and programs to achieve self-sufficiency in small arms, mortar and and other weapons and munitions. Napakahalaga nito.

Noong araw, gumagawa na tayo ng M-16 dito, noong panahon ni Marcos. Elizalde Tool Company. Today ba gumagawa pa tayo niyan?

Now we have private manufacturers--Armscor--who produce for other police and military units in the region. They buy from the Philippines. One of their pistols is one of the biggest sellers in the US. They're able to win awards, those in the PNP and AFP who join in competitions abroad using their firearms.

Hindi ba dapat magkaroon tayo ng plano, maybe the government arsenal can be like a special economic zone (300 hectares). We can have foreign suppliers locate there

Hindi ba dapat magkaroon tayo ng plano, maybe the Government Arsenal can be like a special economic zone (300 hectares). We can have foreign suppliers locate there, create jobs there.

Lacson: There is a bill filed about that. Of the 300 hectares, only 10 is being utilized.

Recto: We can also produce for the region. Pwede pa tayo mag-export. I wanted to put that on record so that in the future, those in the AFP who are responsible and accountable for the Government Arsenal can develop such a plan. It is part of their mandate under the law.

Maybe in the next year's budget, meron na kayong presentation dito, about investments needed for the Government Arsenal.

Recto: One final issue. A year ago, before this issue even came out, there is a China loan we have, for Safe Phils. China telecoms na naman, but with DILG naman. Do you look at it wholistically o kanya-kanya lang kayo? CCTV.

Lacson: You raised your concern during the budget last year.

Recto: Tinanggal ko sa budget. Today nasa budget ulit. Tinanggal ko sa committee report. It was vetoed by the President. So ibinalik, hindi naman nagastos.And then today, nandyan na naman.

Lacson: There's no connivance daw with the PNP.

Recto: That's what I'm saying. There should be connivance. Our AFP and PNP should connive, because there seems to be connivance from them (China). They are entering the PNP, they are entering the AFP.

Let me also put on record, there have been security concerns raised re China co-owning the Phl grid - NGCP.

Lacson: In fact, I heard the equipment that arrived in Chinese charater na and they are manned by Chinese personnel.

Recto: That is correct. That is the point I am going to drive at. Right now ang buong kuryente ng Pilipinas ang nagpapatakbo the state grid of China. All the equipment - written in Chinese. Di naiintindihan yan ng mga tao natin. They can turn it off remotely. Ang gyera naman na darating ganon na, not necessarily missiles. Cyberwar. And what is that? Telecommunications. Di ba?

So nandyan na, nasa NGCP. And then part of the plan of China Telecom is to use the wires of NGCP for their mid mile telecommunication. It is all over the papers. Why can't the national defense and security officials look at all of these wholistically? We are seeing what is happening in the DILG, in the DND, in the NGCP, in the telecom sector, not to mention there are bills filed in the Senate amending the Public S ervice Act to allow foreigners 100% ownership, di lang 40% ha. Di ba dapat tinitingnan mabuti yan ng national security?

Lacson: They are doing it already. I was informed that it is being done already to make sure that the security concerns you are raising now are addressed properly.

Recto: Thank you very much. I will no longer belabor the point. I am not the expert; they are the experts. I hope they don't ask me to submit documents. But maybe they should be the one submitting documents to us of what actions they're taking, and assuming they allowed China Telecom to be in the AFP, why, what clearances do we have, what regulations do we have, how do we compare to other countries in the region or our allies, with regard to these regulations.

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