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26 SEPTEMBER 1986 

Southeast Asia Report 



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26 SEPTEMBER 1986 



Columnist Discusses Strategic Factors of U.S. Bases 
(Hermes Vittorio; THE MANILA EVENING POST, 29 Aug 86) ..... 

Paper on USAID ‘Pressure’ on Palay Support Price 
(Michael D. Marasigan; BUSINESS DAY, 2 Sep 86) ....eseeeees 

Use of Peso Counterpart Funding for Loans Proposed 
(Daniel Cc. Yu; BUSINESS DAY, 5 Sep 86) eeeeeeeeeereeeeeeeeee 

NDF International Representative at Nonaligned Summit 
(PANA, 3 Sep 86) eeeeeeaeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee 

Government ‘Finally’ Outlines Economic Thrust 
(BUSINESS DAY, 3 Sep 86) eeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee 

Foreign Debt Repudiation Still Being Considered 
(THE MANILA CHRONICLE, 8 Sep 86 ) eseeeeereeeeeeeeeeeeeeeeeeeee 

Economic Minister Wants Foreign Debte, Exports Linked 
(BUSINESS DAY, 5 Sep 86) e*eeeeeeeeee ee eeeeeeeeeeeeeeeeee eee 

Minister Rules Out Total Lifting of Import Controls 

2 Sep 86) eeeee eee ee ee eee eeeeeeeeeeeee eve ee eee eeeeeeeeeeeee 

Minister Announces More Import Liberalizations 
(NEW DAY, 8 Sep 86) eeeeeeeee eee ee eeee eee eeeeeeeee ee eeteaeeeee 

Rise of Raw Material Imports Reported 
(BUSINESS DAY, 2 Sep 86) eeeeeeet eee eeeeeeeceae eee ee ee ee eeeee 

Coconut Exports Rise 115.6 Percent 
(BUSINESS DAY, 8 Sep 86) eeeeeveeeeeeeeeeeeeeeeeeee eee eeeeee 








Justice Minister Stresses Need for Land Reform 
(Rey G. Panaligan; MANILA BULLETIN, 6 Sep 86) ..........-- 

Farmers’ Sub-Poverty Level Incomes Highlighted 
(Rodolfo Alancastro; THE MANILA TIMES, 6 Sep 86) ......... 

Development Bank's Non-Performing Assets Sold 
( THE MANILA TIMES, 3 Sep 86) seer ewveeeeeeeeneeeeeeeeeeeeeee 

Peso's Exchange Rate Declines; Dollars Sold 
(Noel D. de Luna; BUSINESS DAY, 5 Sep 86) eee eeeeeeeeeeee 

Central Bank Sells All Three-Year Treasury Notes 
(MANILA BULLETIN, 6 Sep 86 ) see veeeeeeeeeeeeeeeerereeeeeeeee 

Central Bank Reduces Rediscount Rate 
(BUSINESS DAY, l Sep 86) see ereeeeeeeeeeeeeeeeeneneeeeneeeeeee 

Commercial Banks' Assets Drop 1.5 Percent 
(BUSINESS DAY, l Sep 86) eee eeeeeeeeeeeeeeeeeeeeeereeeeee 

May 86 Retail Price Index Rises Slightly During May 
(BUSINESS DAY, 3 Sep 86) eeeeeeeeeeeeeeeeeeeeeeeeervreceeeee 

Economic Indicator on Decline of Gross Credit 
(BUSINESS DAY, 1 Sep 86) “ee eeeeeeeneeeteeeneneneeneeeneeeeeeeeeee 

Economic Conditions in Central Visayas Worsening 
(Manuel S. Satorre; BUSINESS DAY, 3 Sep 86) ....seccceeess 

Food Authority Faces Rice Surplus Problem 
(BUSINESS DAY, 3 Sep 86) eeeeeeeeeeeeneeereeeeeeeeeeeeeee eee 

Production Value Index Drops 7.6 Percent 
(BUSINESS DAY, 5 Sep 86) *eeeeeeeeeeeeeeeeeeeeeeeeeeee ee ee 

Domestic Liquidity Rises 5.89 Percent 
(BUSINESS DAY, 8 Sep 86) *eeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee 

Labor, Management Disagree Over Conference 
(M. Selirio; BUSINESS DAY, 3 Sep 86) seeneeeeneenrereeeeeeeeeeee 

Article on Ailing Institutions Cost to Government 
(Daniel Cc. Yu; BUSINESS DAY, 8 Sep 86 ) eeeeeeeeeeeeeeeeeee 

Deputy Minister Says CHDF To Be Retained 
(Romy Dizon; PHILIPPINE DAILY INQUIRER, 2 Sep 86) ........ 

Special Report on Situation in Negros 
(Amando Doronila; THE MANILA CHRONICLE, various dates) ... 


















Weekly on Political Background of Misuari 
(Alex S. Villanueva; NEW DAY, 8 Sep 86) ....ccicecccccceees 

MALAYA Editorial Lauds Aquino-Misuari Meeting 
(ANG PAHAYAGANG MALAYA, 8 Sep 86) eeeeeeeeeeeeeeeeeeeee eevee 

Sison Hits U.S. Bases Before Japanese Audience 
(THE MANILA EVENING POST, l Sep 86) eeeeeeeeereeeeeeeeeeeeee 

NPA Member Tells of Setback After ‘Revolution’ 
(FHILIPPINE DAILY INQUIRER, 6 Sep 86 ) ereeeeeeeeneeeeneereeeee 

NPA Guerrillas Attack Town Hall in North 
(AFP, 1 Sep 86) seep eeaeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee 

Columnist Laments CP?'s ‘Uncompromising Position’ 
(Orlando F. Aquino; MANILA BULLETIN, 2 Sep 86) ....eeeeeees 

Paper Urges Listening to All Sides in Mindanao 
(Editorial; MANILA BULLETIN, 6 Sep 86) eseeeeeeeeeeeeeeeeeee 

Tatad on Military Fears Over Talks 
(Francisco S. Tatad; BUSINESS DAY, 3 Sep 86) ...seseeeseees 

Columnist on Handling of Ceasefire Talks 
(Melchor P. Aquino; MANILA BULLETIN, 3 Sep 86) .....seeee+. 

Army Official Assures Capability of Military 
(BUSINESS DAY, 3 Sep 86) eeeeeee eo eee eeee ee eee eeeeeeeeeeeeee 

Supreme Court Warns Military on Rights, Abuses 
(R. G. Panaligan; MANILA BULLETIN, 6 Sep 86) ....seseeeseees 

Bicol Military Accused of Human Rights Violations 
(THE MANILA JOURNAL , S Sep 86) eeeeeeeeeeeeeeeeeeeeeeeeeer ee 

Officers Group Denounces Military Discrimination 

2 Sep 86) eeeeeeee ee eee eee eee eee eeeeeeee eee eee eeee ee eeeeeee 

Military Says NPA Set Up Davao del Norte Ambush 
(THE NEW PHILIPPINES DAILY EXPRESS, 2 Sep 86) ...ceeseeeess 

Paper on Insurgency's Impediment to Democracy 
(Editorial; MANILA BULLETIN, 2 Sep 86) eeneeeeeeeeeeeeeeeeee 

Military Denies Breaking Davao del Norte Ceasefire 
(Lito Mangaser; THE MANILA CHRONICLE, 3 Sep 86) ...sseeeees 

Analysis Notes ‘Fast-Rising' Level of Frustration 
(Luis V. Teodoro; THE MANILA CHRONICLE, 1 Sep 86) ......6.. 

eo Eg @= 
















National Political Party for Women Organized 
(BUSINESS DAY, 5 Sep 86) see eeereeeeeeeeeeeeeeeeeeeeeeeeeeee 

Valencia on Formation of Partido NG Bayan 

2 Sep 86) eee eee eeeeee eee eeeeeeeeeeeeeeen eee eee eeeereeeeeeee 

Commission Opens Heariags on Marcos Wealth 
(AFP, l Sep 86 ) eee eeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeete 

3,000 Loyalists Hear Taped Marcos Interview 
(Lito Zulueta; THE MANILA CHRONICLE, 8 Sep 86) ..cesececees 

Trade Zones’ Export Earnings 
New Political Party Formed 
Military Participation in Peace Talks 


Leaders Receive National Day Greetings From Socialist Countries 
(VNA, various dates; Hanoi Domestic Service, 6 Sep 86) .... 

GDR, Hungarian, Other Messages 
Polish, Nicaraguan Greetings 
Praise From Afghanistan 

Bulgaria, Poland, Cuban Greetings 
Japanese, Others Mark National Day 
UK Amity Group Marks Day 

Greetings on Bulgarian National Day 
(VNA, 8 Sep 86) eevee eeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee 










26 September 1986 


HKO11426 Manila THE MANILA EVENING POST in English 29 Aug 86 p 4 

("The White Paper" column by Hermes Vittorio: "U.S. Military Facilities: 
Their Strategic Factors") 

[Text] In a few days, the Con-Com [Constitutional Commission] will hold a 
plenary session on the controversial issue of U.S. military facilities in the 
Philippines and their foreign policy implications. Despite the raging polemics, 
there is a growing sense that the majority of the Con-Com members still favor 
the retention of the facilities until 1991. 

These facilities are here to stay. 

Despite the majority votes favoring retention, however, the supporters of the 
U.S. facilities should come clean and candidly admit that these facilities are 
not primarily for Philippine but for American strategic policy. In the scheme 
of things, military calculations will show that the Philippines is merely 
secondary in American strategic thinking. 

Based on the U.S. global security network, the military facilities in the 
Philippines have two purposes: an "ideal" deterrent system, and as part of the 
command, control and communications (3 C's) system vital to the development of 
weapons technology and strategic doctrine. 

According to U.S. military calculations, intelligence and early warning systems 
(EWS), of which Clark and Subic are major installations, more than deter a per- 
ceived surprise attack. They identify targets necessary for the planning of 
counterforce attacks as well as locate missile silos and bomber bases, enemy 
command and control centers and other military installations of the American 
enemy. Without the Clark and Subic facilities, current U.S. strategic doctrine 
would have to be changed entirely. This they can carry out right now. 

Consequently, the strategic implications for the are not indepen- 
dent of U.S.-Russian strategic thinking. Because of the unstable global 
strategic structure, there is no doubt that the Philippines is a cockpit in 
the nuclaer arena. Both the U.S. and the Soviet Union, by their very state- 
ments, have targeted the Philippines as a potential for counterforce attacks 
and selective and flexible response by America's enemy. Any military conflict 

involving the great powers in the area will not preclude the Philippines as a 
prime target of attack. Since these facilities are more strategic- than 
tactical-oriented, the argument that they are here to defend the Philippines 
does not follow. These facilities will never be used in isolation. This means 
that they are for American rather than Philippine reasons. They will be used 
ior American reasons and purposes. They are not and have never been for mutual 
defense. Commitments therefore are doubtful. 

American military facilities in the Philippines are unreliable in terms of 
Philippine defense against Philippine enemies. The U.S. will decide whether 
aid is to be given or not. In terms of strategic rather than conventional 
thinking, these facilities therefore become a reason for threat. Remove them 
and the threat disappears. 

The Con-Com therefore is called upon to study the realities in the area before 
any decision on the U.S. military facilities is finally made. 

CSO: 4200/1425 

26 September 1986 


HKO31253 Quezon City BUSINESS DAY in English 2 Sep 86 p 2 
[Article by reporter Michael D. Marasigan] 

[Text] Notwithstanding the repeated denials of Agriculture and Food Minister 
Ramon Mitra and his deputy minister Emil Ong of the National Food Authority 
(NFA), the United States Agency for International Development (USAID) may 
have indeed pressured the government into lowering the support price for 

Documents obtained by BUSINESS DAY showed that Peter Timmer, a USAID grains 
expert, has submitted to the government as early as April a working paper on 
alternative palay procurement prices and retail prices for rice. 

The government, through the NFA council, last week approved in principle to 
reduce the support price of palay from P3.50 to P3 a kilo. Sources further 
said a reduction in the support price of corn, from P2.90 to P2.50 per kilo, 
will also be implemented once the NFA is provided its procurement funds. 

Several farmer organizations protested against the NFA decision, claiming 
that the government has again yielded to pressure from foreign interests, in 
this case, USAID. However, both Mitra and Ong denied that there was such a 

The USAID has been extending soft loans to the Philippines to finance develop- 
mental projects. It agreed last week to convert about $99 million worth 

of long-term loans into grants. In addition, it also approved last week a 
$20-million grant to finance agricultural projects. 

NFA employes admitted that there was really pressure from the USAID. They 
claimed it was related to the country's consumption of wheat. The U.S. is 
the Philippines’ biggest supplier of wheat. 

The strategy is simple, the sources said. Once the support price for palay 
is brought down, fevmers will be discouraged from planting palay since it is 
no longer profitable. In a scenario like this, it will be justifiable to 
increase wheat importation. 

There is a ban on rice and corn imports but there is no such restriction on 
the importation of wheat. Too much importation of wheat could adversely 
affect both the rice and corn industries. 

Thus, increased wheat importation should first be justified. Rice production 
should be inadequate so that consumers will buy more bread products. 

But wheat is not only used for bread. It could also produce feed substitutes 
(by-products) such as bran and pollard. This could severely affect the animal 
feed market for corn and rice bran. 

This issue, however, is not discussed in the Timmer working paper. The 
government's official reason for lowering the support price for palay is to 
enable the FNA to buy more despite its limited funds. 

On the other hand, the Timmer report emphasized that the NFA will need a huge 
subsidy if the difference between palay procurement prices and rice retail 
prices is narrow. 

But if the margin is wider, the NFA would only need a little subsidy or no 
subsidy at 211. Thus, the support price should be lowered to widen the margin. 

The Timmer report cited several prices for palay procurement (ranging from 
P2.70 to P3.50 per kilo) and rice retailing (ranging from P6.50 to P8 per 

At a support price of P2.70 per kilo, the NFA would only require a subsidy 
amounting to P8 million if it retails the rice at P6.50 per kilo. No subsidy 
will be required if the retail price is raised to P7 per kilo. 

At a support price of P3 per kilo, the subsidy would amount to P363 million 
at a retail price of P6.50 per kilo. The subsidy could go down to P77 million 
if the retail price is brought up to P7 per kilo. No subsidy is necessary if 
the retail price is set at P7.50 per kilo. 

At a P3.50 support price, however, the subsidy would start at P163 million 
if the retail price is fixed at P8 per kilo; P490 million at P7.50 per kilo; 
P980 million at P7 per kilo; and a staggering P1.63 billion if the retail 
price is maintained at P6.50 a kilo. 

In a dialog with agriculture officials, farmer leaders of the Kilusang 
Magbubukid ng Philipinas [Peacants' Movement] yesterday said that instead of 
widening the margin, the government should convert the P3.50 support price 
into a “floor price.” 

If this is not possible, the farmers asked that the support price be maintained 
at P3.50 and the government's procurement funds be increased. 

Deputy Minister for Agriculture and Foo Carlos Dominguez told the farmers 
that their requests will be considered. However, he informed the farmers 

that the government is really short of funds and may not be in a position 
to increase the NFA's procurement budget. 

At the same time, he saic, it will be difficult to mandate a floor price 
since this would run counter to the government's policy of minimizing market 
intervention. There is also a possiblity that traders would refuse to buy 
palay if the support price is converted into ~ floor price,” he said. 

CSO: 4200/1415 

26 September 198 


HKO51529 Quezon City BUSINESS DAY in English 5 Sep 86 p 2 
[By Daniel C. Yu] 

[Text] The Philippines has proposed to the Japanese Government the use of the 
peso counterpart funding of three loans from Japan's Overseas Econonic 
Cooperation Fund (OECF) to finance critical government expenditures this year. 

Finance Minister Jaime V. Ongpin submitted the proposal concerning the eight, 
ninth and a portion of the present 13th OECF yen package to fund the 
government's Rural-Based Eaploysent Progras. 

Ongpin said the Japanese gcvertaoment's approval of the request would be 
regarded highly and that future budget programs would give priority to 
providing peso counterpart funding for conventional Japanese-assisted 
projects. Ongpin's proposal would mean a P5,777-million net inflow into the 
expenditure progrum for this year, basud on the current exchange rate. 

Documents made available to BUSINESS DAY indicate that the eighth yen loan 
package has $74.8 million undisbursed since May 1984, when the yen package was 
made available. They also show that the ninth yen loan package has $103.6 
million which can be tapped, and a proposed special commodity loan {n the 13th 

yen package, can provide $103.3 sillion. 

The Philippines has agreed to drop 4 «? 11 projects in the 13th yen package. 
It has proposed that credit for the 4 projecte be converted into a special 

commodity loan. 

Ongpin said this conversion would be “essential in building up (the country's) 
international reserves and in financing the government budget deficit.” 

A BUSINESS DAY source in the Japenese embassy yesterday said Japan has 
received the Philippine request for the use of the peso counterpart funding to 
finence the employment programs but has not yet responded. The source 
explained thet the Philippines and Japan agreed last December to convert one- 
third of the $245 million in the 13th yen loan package into a commodity loan 
to finance imports, and to use the remainder to finauce 11 projects [word 
indistinct] the previous administration to the (CF. 

The rew government has scrapped four of the projects because they were 
“political projects” of persons close to the past administration. The embassy 
source said that in view of the “already long pipeline of credit assistance” 
available to the Philippines, the Japanese Government has asked for additional 
documents to justify the conversion of loans for the four projects into a 
commodity loan. The Central Bank and the Ministry of Finance have submitted 
the documents. The source said the Embassy understands the government's 
urgent need to get Tokyo's response. A follow-up cable was sent to the OECF 
Tokyo office the other day, other sources said. 

Ongpin also told the Japanese government that complete disbursement of the 
eighth OECF loan is expected by the end of this month. He said regulatory 
limitations had previously prevented fast use of the facility. Libralized 
rules have stcpped up disbursements, he said. 

Ongpin proposed that, to facilitate disbursement from the ninth loan and the 
special commodity loan, the same liberalized procedures be adopted and that 
the list of commodities eligible for funding be expanded. 

Ongpin said Japanese government support through new OECF commodity loans and 
liberalized procedures for disbursements would help the Philippines greatly in 
achieving a favorable balance of payments this year. 

CSO: 4200/1413 


MBO40510 Dakar PANA in English 1418 GMT 3 Sep 86 

[Text] Harare, 3 Sep (PANA)--The Philippines needs the assistance of anti- 
imperialist and other democratic forces in the world to get rid of U.S. domin- 
ation so as to become genuinely independent and thereby make full contribution 
for peace and non-alignment. 

This was said by the representative of the opposition National Democratic 
(NDF) [as received] of the Philippines, Luis Jalandoni, in an interview with 

He said that his front would continue to press for the dismantling of the more 
{words indsitinct] military bases in the Philippines as well as the domina- 
tion of the economy by [words indistinct] country's trade. 

Jalandoni said the Philippines cannot qualify to be a nonaligned country if 
the military bases of the U.S. are not (?dismantled) because these were 
being used as launching pads for attacks against other countries. 

The front condemns the misuse of the U.S. bases in the Philippines for sending 
aircraft carriers, troops and war material to the coast of Libya to threaten 
the people and Government of Libya and endanber peace and security in that 
region of the world, Jalandoni said. 

He said this was not the first time it had used the military bases in the 
Philippines as launching pads of intervention. It did this in the 1960's 
against the people of Vietnam, he said. 

On the peace talks between his front and the new government of President 
Corazon Aquino, he said these were being sabotaged by the U.S. which had 
doubled military aid to the Aquino government and was pressing it to go for 
a military solution to the Philippine problem. 

He reiterated the resolve of his front to achieve a peaceful settlement based 
on a comprehensive agreement which would include a nationwide ceasefire. 

However, he said, this was being sabotaged by Defence Minister Juan Ponce 
Enrile and the Armed Forces chief of staff, (?Gen.) Fidel Ramos, who had 

intensified military repressions especially in the countryside, where he 
claimed his front controlled 62 of the 73 provinces. 

He said his front's 30,000 combatants were implementing a policy of active 
defence and were restraining themselves from nationwide tactical offensive. 

However, we reserve the right to actively prevent troops of Defence Minister 
Enrile and Gen. Ramos from committing acts of harassment and brutality 
against the people and entering our guerrilla fronts, Jalandoni said. 

He said Aquino had a genuine desire for a negotiated solution but her defence 
minister and Army chief of staff were sabotaging her efforts. 

On the ongoing summit of the Nonaligned Movement, Jalandoni [words indistinct] 
being taken to increase the anti-apartheid struggle in Namibia and South 
Africa and the Frontline States. 

We hope that concrete steps will be taken so that the self-reliance efforts 
of these peoples and states will be complimented by militant assistance and 
solidarity to bring about the definitive abolition of apartheid, he said. 

CsO: 4200/1415 

26 September 19 


HKO31420 Quezon City BUSINESS DAY in English 3 Sep 86 p 2 

[Text] Six months after it assumed power, the Aquiono government has finally 
put together a broad outline of its economic thrust, strategies for develop- 
ment and overall thinking on key policy issues which businessmen and invest- 
ors alike have been waiting for. 

The broad outline was drafted by a number of close presidential advisers in 
preparation for President Aquino's trip to the United States starting the 
middle of this month. 

In a capsule, the Aquino government, according to this broad outline, will 
endeavor to keep the Philippine economy open, vigorously encourage local 

and foreign investments, abandon a labor-intensive industrialization program 
and scrap a commodity-led export strategy. 

The Aquino government is committed to a policy of an open economy and is 
distancing itself from the "isolationist stance" advocated by some quarters 
in the economy. 

At the same time, however, the new government does not intend to swallow 
prescriptions of the International Monetary Fund-World Bank “hook, line and 
sinker." In fact, it said, some economic prescriptions of the IMF and the 
World Bank are seriously flawed. 

The new government does not intend to focus its export strategy simply on 
the export of raw materials. It said export-led development should be 
seriously restudied in the light of new developments in the international 
economic environment. 

At the same time, the Aquino government does not intend to make economic 
growth purely dependent on the country's labor-cost advantage. In today's 
environment and in view of recent technological developments, labor-intensive 
technology is no longer effective especially with the advent of robotics, it 

Labor, in today's international economic setting, no longer provides the so- 
called comparative advantage which was true during the ‘60s and ‘70s. In 


the coming decade, the new government believes capital will be the key to 
development . 

The economies that provide the cheapest cost of capital for development will 
most likely be the ones to succeed in the coming years. Thus, the real rate 
of interest must be brought down, the government said. 

In addition, the new government will increasingly shift its attention away 
from the never-ending negotiations with the IMF, the World Benk and the 
country’s creditor-banks. It will widen its scope of coverage to include 
as well other sources of capital fund. 

In view of these, the Aquino government would work toward making the invest- 
ment climate in the country as attractive as possible for both local and 
foreign investors. 

These [as published] broad policy outline which the President will discuss in 
her visit to the U.S. was disclosed yesterday by Jesus P. Estanislao, chair- 
man of the Development Bank of the Philippines (DBP) and who is believed 

to be one of the key presidential advisers that drafted the framework. 

Estanislao yesterday spoke before the American Chamber of Commerce of the 
Philippines and said this broad indication of the stand of the new government 
principally reflects a new approach as a result of international developments. 

Basically, he said, the notion of an inter-linkage between agriculture and 
industry in development has slowly been eroded and that worldwide developments 
indicate that such a linkage has already been broken with agriculture and 
industry going their separate ways. 

In the case of industry, there is no longer a connection between industrial 
production and industrial employment as data on the world economy during the 
last decade (1975 to 1984) showed that while industrial production went up by 
40 percent, industrial employment actually fell by five million people. 

Estanislao also pointed out that there is no longer any linkage between capital 
movement and trade surplus. A clear example, he said, is the United States 
which continues to suffer a substantial trade deficit but, on the other hand, 
continues to attract capital. 

Estanislao said the Aquino government's economic program, which is now being 
finalized, will be completed by the end of this month. 

Principally, it will focus on the development of farm products for domestic 
consumption. There will be a deliberate effort to reduce the total number 
of food items imported by the country. 

At the same time, the government will work toward rebuilding its consumer 
goods industry. The rehabilitation will be undertaken in line with the need 
to upgrade the industry's standard in order to meet international competition. 
Tariff protection of 5 percent to 10 percent will be given. 


The Philippines will also go into production sharing arrangements. These 
will entail the linking of the Philipoine economy with international produc- 

tion processes, something which an observer noted, is what t*> IMF-World Bank 

Industry observers told BUSINESS DAY that the pronouncements made by the 
government on its economic orientation would perhaps clear once and for all 
the leaning of the Aquino government. 

CsO: 4200/1415 


26 September 1986 


HKO81113 Manila THE MANILA CHRONICLE in English 8 Sep 86 p 9 

[Text] Economic Planning Minister Solita C. Monsod has not given up efforts 
to reduce the country's foreign debts through her controversial case-to-case 
disengagement, or the nore diplomatic term for selective debt repudiation. 

Monsod said that she already has an itemized listing of the foreign loans 
stating the nature of the borrowing, the names of the borrower and creditors 
and the date they were contracted. She said that she was furnished the 
listing by the Central Bank [CB] last month that contained the loans inventory 
made by the CB 1984. Monsod pointed out that she would ask the help of some 
businessmen in identifying which of the foreign loans would be eligible for 
the case-to-case disengagement scheme. She said that the eligible loans would 
be those with which the tacit knowledge of the creditors, were contracted for 
projects that were grossly overpriced and non-feasible and those where there 
is strong evidence that the money was incurred to finance “ghost” projects and 
essentially aimed at capital flight. 

While many in the Aquino Cabinet favor such scheme in reducing the country's 
debt burden, some bankers have cautioned that this could further delay the 
planned restructuring negotiations with the foreign creditor banks. The delay 
in the approval of the standby credit by the International Monetary Fund (IMF) 
has already pushed back the planned talks with the commercial bank creditors. 

Monsold' case-to-case disengagement plan, however, could well serve as a good 
bargaining point in the Philippines’ negotiations for a lighter debt burden 
with the foreign banks. 

For one, part of the loans identified as eligible for litigation could be 
traded off for lower interest charges on rescheduled loans. 

CSO: 4200/1413 



HKO51525 Quezon City BUSINESS DAY in English 5 Sep 86 p 3 

[Text] Economic Planning Minister Solita C. Monsod is proposing that the 
Philippines pay interest on foreign debts only if there is foreign exchange 
left after deducting import payments from export earnings. 

If imports equal or exceed exports, the unpaid interest will be considered 
“new loans" automatically, according to her proposal. 

Monsod said she would “push very hard" for such an arrangement with foreign 
credit banks, calling it an “interest conversion scheme." 

"I'm going to be pushing for it so hard, as hard as I'm pushing for internal 
structural reforms," she said. 

She said she expects the creditor banks to “react very badly because auto- 
matic capitaliziation of interest is a no-no," but added, “we just have to 

keep pushing." 

The minister emphasized that the Philippine economy "is trying to grow,” 
and that growth is impossible when all of the country's foreing exchange 
earnings are spent on foreign debts. 

A local banker interviewed by BUSINESS DAY said Monsod is following the 
example Peru has set in dealing with international creditors, but is 
“modifying” it. Whereas Peru has acted unlaterally in limiting foreign debt 
payments to a portion of its export income, the Philippines hopes to ne- 
gotiate with its foreign creditors to accept the proposal. 

However, the banker said, "We're just going to be buying time with that 
proposal, I guess. She (Monsod) cannot convince the bankers to turn the 
unpaid interest into equity.” 

CSO: 4200/1415 


HKO21515 Manila THE NEW PHILIPPINES DAILY EXPRESS in English 2 Sep 86 p 8 
{Article by Claro Fernandez] 

[Text] Trade and Industry Minister Jose S$. Concepcion Jr. yesterday said 
that a number of products would continue to receive protection from the 

This means that of the 304 items still excluded from the government's trade 
liberalization program, only about 138 products will be liberalized. 

Concepcion made this disclosure in reaction to earlier reports that the 
International Monetary Fund (IMF) and World Bank (WB) “were dismayed" by a 
government decision declaring a three-month moratorium in the full implement- 
ation of the import liberalization scheme. 

Covered by the moratorium were 304 products on which the government were to 
conduct hearings to determine which of the items “will be free and which will 
continue to receive protection." 

The government has so far lifted import controls on some 939 products or 
short of the 1,243 items demanded by the IMF. 

The IMF has demanded the lifting of import curbs on the products in connection 
with the country's bid for a new standby credit. 

According to Concepcion, the IMF and WB should not be dismayed over the 
moratorium declared on the 304 products “because the government is doing a 
‘tailored program’ to come up with a healthy compromise on the issue." 

He added “the Philippine government, through Finance Minister Jaime Ongpin, 
will be sending a telex to the IMF today to explain the deferred implementa- 
tion of import liberalization program." 

The telex will include the results of the 12 public hearings that the MTI 
[Ministry of Trade and Industry] has so far conducted. 
The moratorium on the liberalization program will expire this October 31. 

CsO: 4200/1415 


26 September 


HKO80956 Quezon City NEW DAY in English 8 Sep 86 p 16 

{[Text] The government will liberalize the importation of 80 more commodities 
by the end of this month. They are among the 137 commodities that were sche- 
duled to be liberalized last April 30, Trade and Industry Minister Jose S. 
Concepcion Jr. said. 

Concepcion also said the government will comply with the deadline set by the 
International Monetary Fund and the World Bank on May 1, 1988 on the absolute 
deadline for the deregulation of the remaining commodities under the current 
program which covers a total of 1,232 items. 

Among the 80 items to be liberalized this month are steel products (which 
accounted for 43 items), high tariff rubber-based and wood-based items, new 
tires, vinyl-asbestos tiles and sheets, synthetic resins and paper products. 

The remaining 54 items due for liberalization in April are currently being 
reviewed and a plan of action on what to do will be available by the end of 
next month, Concepcion said. 

The 80 items will be deregulated as soon as adjustments on their import taxes 
are made within this month. 

Other commodities still regulated, including 169 items scheduled to be liber- 
alized by the end of this year and anothe: 77 items by the end of June next 
year, will be reviewed and a program of action will be available by the end 
of this year, he added. 

The import liberalization program is one of the key policy reforms that the 
government has committed to undertake under the letter of intent it had sub- 
mitted to the IMF. 

The government has furnished the IMF with the results of consultations with 
the affected sectors. Substantial compliance with the import liberalization 
plan is one of the IMF requirements for approval of a Philippine request for 
a new standard by arrangement. 

CSO: 4200/1415 


26 September 1986 


HKO21538 Quezon City BUSINESS DAY in English 2 Sep 86 p 2 

["Economic Indicator" column: "Raw Material Imports Rise"] 

[Text] The country's imports of raw materials and intermediate goods in the 
first half of 1986 rose by 15.30 percent to $1,246 million from $1,072 mil- 
lion during the first six months of 1985, latest data from the Central Bank 

This represented 51.04 percent of vital imports of P2,441 million in the 
first half of the year. 

These commodities included wheat, inedible crude materials, animal and vege- 
table oils and fats, chemicals, manufactures, embroideries, materials and 
accessdries for the manufacture of electrical equipment, and iron ore (not 

Purchases of raw materials used in the manufacture of rubber, paper and 
paper products, textile yarn, fabrics and made-up articles, iron and steel, 
nonOferrous metals and metal products reached $291 million, up 19.26 percent 
from last year's $243 million. Responsible for the increase was the substan- 
tial 44.72 percent growth (from $65 million in 1965 to $94 million) in the 
purchase of raw materials used in the manufacture of iron and steel. 

In terms of volume, 330,000 metric tons of these materials were imported at 
a unit price of $284 per metric ton compared with the 169,000 metric tons 
purchased in 1985 at a unit price of $384 per metric ton. 

[Word indistinct] reason for the increase was the 41.94 percent hike in the 
purchases of raw materials for textile manufacturing to $28 million during 
the first six months of 1986 from $62 million in 1985. 

[Table on following page] 


Raw Materials and Intermediate 
Foods Imports 
January to June 1985 & 1986 
(FOB value in million US dollars) 

Commodity 1986 1985 Z of change 
Wheat 60 51 17.65 
Crude materials, inedible 113 67 68 .66 
Animal & vegetable oils & fats 6 8 (25.00) 
Chemica! 328 270 21.48 
Manufactures 291 244 19.26 
Embroideries 106 102 3.92 
Materials & accessories for manu- 

facture of electrical equipment 308 304 1.32 
Iron ore, not agglomerated 24 26 (7.69) 
Total 1,236 1,072 15.30 

Source: Central Bank 

CSO: 4200/1415 



HKO81211 Quezon City BUSINESS DAY in English 8 Sep 86 p 3 

[Text] A generally much lower price for coconut oil pushed up the volume of 
coconut product exports by as much as 115.6 percent to 1,260,582 metric tons 
in copra terms during the period of January to July this year from 564,637 
metric tons last year. 

The average coconut oil price for the seven-month period was reduced by sore 
than half to $311.29 per metric ton from the previous year's record of $684.46 
per metric ton. As a result, total export receipts increased by only 6.6 
percent from $313,511 million to $334.04 aillion despite the substantial 
increase in volume. 

The latest available data from the United Coconut Association of the 
Philippines, Inc. (UCAP) showed that coconut ofl accounted for the bulk in 
terms of both volume and value. 

Representing 86.3 percent of the total volume (copra terms), coconut oil 
shipped during the period amounted to 685,622 metric tons, marking a 127.8 
percent increase from lest year’s 301,000 metric tons. 

In terms of value, coconut oil improved 3.6 percent from $206.02 aillion to 
$213.43 million, accounting for 63.9 percent of the total for all coconut 

The second biggest earner among coconut products was copra meal with $39.97 
million or 191.7 percent sore than last year's $13.7 aillion. The total 
shipment likewise went up 152.3 percent to 460,262 metric tons from 182,412 
metric tons. 

All copra seal exports went to Western Europe which has become the 
Philippine's biggest buyer of coconut products. The continent, during the 
period, again edged out the United States as the country’s biggest buyer of 
coconut oil. 

Although the US and Western Europe combined accounted for almost half of the 
country's total coconut oil shipments, buying 45.7 percent and 42.8 percent, 
respectively, Europe's total coconut oil purchase increased gore than three- 
fold fro 73,730 metric tons last year to 313,181 setric tons. 


The US reported a 71.6 percent increase from last year's volume of 171,079 
metric tons to 293,609 metric tons. In terms of value, however, the United 
State's $92 million worth of coconut ofl purchased during the period was not 
very far from Europe's $%6.26 million. 

It was only in 1983 that Europe bought more coconut oil from the Philippines 
than the US. During that year, the Europeans bought 442,339 metric tons 
against the Americans’ 426,612 metric tons. In terms of value, however, the 
USA's purchases were bigger at $225.92 million against Europe's $204.96 

Exports of copra which resumed last March also went mostly to Europe. During 
the period, a total of 26,153 metric tons were exported to Korea, Taiwan, 
Japan, and Europe. Total shipments were valued at $3.33 million. 

Europe accounted for more than a third, buying 9,000 metric tons for $1.14 

Exports of coconut products are expected to increase this year following a 
substantial improvement in production. According to UCAP’s initial forecast 
for 1986, total output will reach 2.15 million metric tons, a 9 percent 
increase from last year's 1.973 million metric tons in copra terns. 

Due to the expected increase in overall production, UCAP estimates that the 
total exportable volume will reach 1.795 million metric tons from 1985's 1.254 
million metric tons. 

CSO: 4200/1413 

26 September 1986 


HKO81217 Manila MANILA BULLETIN in English 6 Sep 86 p 8 
[By Rey G. Panaligan] 

[Text] Justice Minister Neptali A. Gonzales warned yesterday of communist 
take over if the government fails to implement immediately a genuine land 
reform in the country. 

Speaking before a group of lawyers of the Ministry of Agrarian Reform (MAR), 
Gonzales said that “a genuine land reform must be a reality in our time.” He 
said that failure on the part of the government “may drive the people into the 
despair and hopelessness, and force them to embrace communism that seeks to 
destroy everything we believe in and install a new political, social, and 
economic order.” 

“When this shall come to pass, the landed amongst us may lose their land, 
their property, their freedom, and those of us in government may lose not only 
our jobs but our heads.” 

He urged the MAR lawyers “to sharpen their legal tools and strengthen the 
administrative apparatus so that they can act as catalysts in the realization 
of an age-old dream of providing the toilers of our soil a newer and better 

It was in 1963 when the government started impleventing the program of land 
reform which is aimed at breaking up the feudalistic monopoly in the ownership 
of land through the distribution of land to tenant farmers. 

During the martial law regime of then President Marcos, a decree was issued 
proclaiming the entire country as a land reform area, he said. Thereafter, 
another decree was issued emancipatiag tenants of rice or corn land holding 
from the bondage of the soil and transferring to them ownership of the land 
they till. 

CSO: 4200/1413 


26 September 1:86 



HKO90256 Manila THE MANILA TIMES in English 6 Sep 86 p 4 
{Text} How much does an ordinary farmer earn? 

If data gathered during the recent 2nd Annual Congress of the Kapisanan ng 
Uring Tagapagsaka sa Quezon [Association of Farmers’ Groups] serve as a basis, 
an ordinary rice farmer earns less than P14 per hectare per day, while a 
coconut farmer earns even less—about P4.70 (provided he does all the work 
involved in copra production and does not hire help). 

Another group, a Canadian fact-finding mission, came up with a higher income 
figure for Negros Occidental rice farmers--less than P20 per hectare per day. 

This means that, depending on the region, an ordinary rice farmer's income 
ranges from P420 to P600 per hectare per month, while that of a coconut farmer 
averages only P123 per hectare per month. 

According to recent figures, the average land size for rice tilled by a farmer 
is 1.8 hectares, while for coconut land, the average is 2 to 3 hectares. This 
gives the rice farmer a real income of from P756 to P1,080 per aonth, while a 
coconut farmer nets P246 to P369 per month. This income range is way below 
the country's poverty line income set by the National Economic and Development 
Authority at P2,200 per month. 

The Quezon farmers based their income figures on a test case in Candelaria, 
Quezon where farmers harvest an average annual yield of 160 cavans for two 
crop seasocus. 

At the prevailing market price of P120 per cavan a farmer grosses P19,200. 
From this, production costs amounting to P14,280 are deducted, leaving a net 
of P4,920. 

A coconut farmer working on a hectare planted to about 150 coconut trees will 
average 5,000 nutes per harvest. Per estimate, 100 nuts yield 25 kilos of 
copra. Thus, 5,000 nuts would yield 1,250 kilos of copra. At the current 
price of P1.20 per kilo of copra, a farmer would gross P1,500. 

From this amount, P250 would be deducted as transport cost for 1,250 kilos of 
copra (based on a rate of P120 per 100 kilos), leaving ea difference of P1,250. 
The difference is divided between the landlord and the farmer based on the 
usual 60-40 sharing ratio in favor of the landlcrd. Thus, the landlord gets 
P750 while the coconut farmer gets P500. 

Total production cost is actually greater than the farmer's real income of 
P500. He, therefore, incurs a loss of P145. How does the coconut farmer 
reverse this loss? 

Usually, he takes a co-worker to help him in copra production, thea divides 
his net earnings and savings on production cost (totalling P1,145} equally 
between him and hie co-worker. Thus, each man gets P5/72.50, which represents 
earnings for three months. 

Since a coconut farmer harvests three times a year, he earns P1,717.50 per 
year, or around P4.70 per day. 

A group belonging to the Canadian Catholic Organization for Development and 
Peace (CCODP) which visited the country last June also gathered data on the 
economic conditions of Filipino farmers. Their findings reveal that an 
average farmer in Negros Occidental earns less than P20 per day. 

In its report, the Canadian-based organization, which sponsors development 
projects for Third World countries, estimated a farmer's income to be merely 
P7,146 per year. 

They arrived at this figure upon computations based on a maximum harvest of 
120 cavans per hectare. At P110 per cavan, the farmer grosses P13,200. 

Gross earnings per harvest (P13,200) less production costs (P11,612) gives the 
farmer a real income of P1,588 per hectare per harvest. 

Multiplying real income by 5 (being the number of crops every two years) 
results in P7,940. Half of this (P3,970) represents the farmer's income per 
hectare per year. 

Since the average size for rice land is 1.8 hectares, the farmer's real income 
amounts to P7,146 per year, or abcut P19.35 per day, according to CCODP. 

CSO: 4200/1413 


26 September 1986 


HKO30946 Manila THE MANILA TIMES in English 3 Sep 86 pp 1, 2 

[Text] The Development Bank of the Philippines [DSP] told President Aquino 
Monday more than P900 million worth of DBP’s non-performing assets has al- 
ready been sold to the private sector. 

The [BP board of governors met with the President to brief her on the recent 
achievements of the bank. 

DBP Chairman Jesus Estanislao also told Mrs Aquino the DBP had already re- 
sumed agricultural lending. He said since the takeover of the new DBP 
management, about 163 loans for small and medium-scale agricultural projects 
had already been granted. 

In line with Mrs Aquino's priority program to develop the countryside, 
Estanislao said, most of these loans were given to beneficiaries in the 

Tomas Apacible, a member of the DBP board, said only 10 out of 163 loan reci- 
pients come from Metro Manila. 

Apacible said the President, contrary to reports, “is very happy about 
these developments." 

He said the DBP board also briefed President Aquino about the two foreign 
offers to buy the Cebu Plaza Hotel in Cebu City. These offers, he said, 
came from an Australian businessman and from a Japanese group. 

The Cebu Plaza Hotel was constructed during the Marcos administration using 
DBP funds. 

Apacible added that the Australian businessman has offered to buy the hotel 
for P212 million, while the Japanese group for P2111 million. He noted that 
the hotel was being sold during the previous administration for only P90 

He said the two offers "are very good," but the DBP still needs the recommen- 
dation of the Ministry of Tourism before awarding Cebu Plaza to any of its 


CSO: 4200/1415 


26 September 1986 


HKO51527 Quezon City BUSINESS DAY in English 5 Sep 86 p 2 
[Article by Noel D. de Luna] 

[Text] The peso'’s exchange rate slipped further to P20.533 per U.S. dollar 
during yesterday's expanded trading on the foreign exchange trading floor 
of the Bankers Association of the Philippines [BAP]. 

Off-floor transactions, handled during the morning session and technically 
not within the BAP floor trading--saw Philippine Banking Corp. selling 

$2 million and Equitable Banking Corp. selling $1 million, both to the Land 
Bank of the Philippines at a rate of P20.61 to a dollar. 

During the afternoon session, which is the trading floor exercise, the 
Central Bank [CB] sold $4 million to the Philippines National Bank and 
$1.4 million to the Associated Bank at a rate of P20.49 per dollar. 

The resulting average for the day was P20.533, up by P0.021 from Wednesday's 

On the black market, BUSINESS DAY sources said, the rate was P20.99 to a 
dollar for telegraphic transfers and P20.45 for greenbacks. 

Traders were divided on the CB's dollar selling, which was first noted last 

Some said the CB was merely posting its price "for display” and that no 
deliveries were taking place. They considered the CB-PNB and CB-Associated 
Bank deals as “wash sales." 

Other traders said the CB may really deliver dollars to PNB for reselling to 
a major oil multinational company. Traders confided that an oil multinational 
needed at last $9 million for today and that the dollars therefore should 

have been ordered through the interbank network in the past few days. During 
the past two days, two government banks bought $7.7 million. 

Traders sympathetic to the CB argued that had the CB not priced its dollars 
below those of other sellers, there would have been wide fluctuations in the 

exchange rate. 


The CB has pledged to the International Monetary Fund, not to intervene in 
the dollar market but does not look kindly on wide fluctuations, they said. 

The traders said a PO.10 fluctuation is wide enough for a thin market and 
the CB will have to bring the rise down to a maximum of 70. 05. 

They also said the market for this month is an [word indistinct] because of 
the dollar demand of oil companies. 

Since the market is rather narrow, a sudden surge in demand may cause wild 
gyrations in the exchange rate, which can cause panic in the business commun- 

Except for oil companies, importers are not yet putting on pressure on the 
dollar market. Banks, on the other hand, are still awash with dollars. 

However, some traders are positioning for a yearend rate of P21 to P21.50 
per dollar, and are speculating on the profit they can make. 

Such a rate “would still not be that bad," a trader said. 

For the moment, those with money prefer to buy dollars because of the low 
interest rate on pesos. They put their dollars on call deposits, such as 
those in Singapore and London, and earn almost the same interest rates as 
they would in peso accounts, with the advantage that the peso yet depreciate 
in the future. [as received] 

CSO: 4200/1415 


26 September 1986 


HKO81213 Manila MANILA BULLETIN in English 6 Sep 86 p 17 

[Text] The Central Bank [CB] announced yesterday that the entire P3.5 billion 
issue of three-year treasury notes had been sold out over the counter after 
barely a week from its public offering. 

The CB, acting as fiscal agent of the government, said sales of the treasury 
notes were at yields to maturity ranging from 16 to 17 percent based on 
graduated volume. 

The P3.5 billion floatation was earlier authorized by the Monetary Board and 
approved last month by President Aquino on the recommendation of the Minister 
of Finance. The notes were publicly offered last 28 August. 

The CB noted that the brisk sales turnout is significant in view of previous 
investor preference (prevailing since 1984) for short-term securities such as 
treasury bills and CB bills and considering that the notes comprised the first 
publicly-offered medium-term treasury issue which experienced rapid favorable 
market response in recent years. 

The yield scale of the notes was initially perceived as being conservatively 
pegged owing to the withholding of the 20 percent final tax on the 
corresponding discount for the entire three~year term. Under this 
methodology, the pricing mechanism at one secondary market will have to be 
adjusted accordingly and financial intermediaries will have to equate such 
factor against possible market resistance. 

The CB said the brisk sellout, however, indicated otherwise, signalling some 
degree of market optimism toward current development despite the front-load 

Of the total amount sold, banks accounted for P2.14 billion or 61.10 percent 
while non-banks absorbed P1.36 billion or 38.9 percent. 

CSO: 4200/1413 


26 September 109; 


HKO11314 Quezon City BUSINESS DAY in English 1 Sep 86 p 2 

[Text] The Central Bank [CB] has reduced the rediscount rate--the interest 
rate it charges commercial banks for loans--by one percentage point to 11.75 
percent from the previous 12.75 percent. The reduction takes effect today. 

The move is intended to encourage banks to be more active in lending to busi- 
ness and industry by making it cheaper for banks to borrow from the CB in 
order to meet the reserve requirement. 

The Monetary Board, the policy-making body of the CB which approved the re- 
duction last Friday, noted that in the period October 1985 to August 1986, 
rates on borrowing instruments of banks generally dropped. 

This meant that the rediscount rate of 12.75 percent announced under Circular 
No 1086 dated Nov. 29, 1985 was no longer consistent with market rates. 

In particular, the board noted that the weighted average rate on outstanding 

savings, time and demand deposit liabilities and promissory note issues which 
stood at 12.83 percent in October 1985 (which was close to the 12.75 percent 

rediscount rate prevailing then) gradually dropped to 11.23 percent in June, 

to 10.81 percent in July and to 0.35 percent in August this year. 

The CB said the extent of the reduction in the rediscount rate was based 
however on banks’ marginal costs which, in turn, was based on the average 
90-day Manila Reference Rate (MRR-90) and rates on time deposits of 61 to 
90 days, among other considerations. 

The rediscount rate is considered one of the key monetary instruments avail- 
able to the CB in controlling the overall credit condition in the economy. 
It is also considered as a financial barometer which reflects the direction 
of current CB policy. 

A high rediscount rate generally discourages banks from lending in excess of 
the required reserves since it is expensive for banks to turn around and 
borrow from the CB to fill up reserve deficits. 

A high rediscount rate thus has the effect of slowing down overall economic 
activity since business and industry, under normal conditions, rely heavily 
on bank loans. 

On the other hand, a reduction in the rediscount rate encourages commercial 
banks to increase their lending activities since they can easily, if needed, 
borrow from the CB. 

Banks generally go to the rediscount window of the CB only when they are 
really hard pressed for cash since the rediscount rates of the CB are often 
higher than those charged by other sources of funds. 

Since the start of this year, credit demand has remained soft primarily be- 
cause of the slowdown in business activity. 

During the first half of the year, the commercial banking system as a whole 
experienced a decline in its loan portfolio, with interest on loans, which 
constituted more than 48 percent of the total income of the system, contracting 
by a hefty 30.4 percent. 

From the tight credit situation that persisted during 1984 and 1985, commer- 
cial banks this year have seen a gradual increase in their overall liquidity, 
basically as a result of the drop in loan demand. 

This highly liquid condition of banks has been increased further by the deci- 
sion of monetary authorities to loosen their grip on the growth of overall 
money in the system by reducing the banks’ reserve requirement. 

The reserve requirement, or the amount of deposits money banks are required 
to set aside under the law to meet sudden and massive withdrawals, has been 
reduced to 21 percent early last month from 24 percent before September 1985. 

The reduction by one percentage point in the reserve requirement last month 
released some P950 million into the money stream which can be tapped by 
banks for lending. 

Loan demand however remains weak despite a corresponding drop in banks’ 
lending rates as a result of the series of adjustments in the reserve require- 

In fact, the reserve positions of commercial banks, even without considering 
the impact of the latest reserve requirement reduction, is already in excess 
as shown by CB data. 

Latest CB data covering the July 28 to Aug 1 period, showed banks with ex- 
cess reserves of P335 million. This followed the P708-million excess re- 
serves posted for the previous week ending July 25. 

CSO: 4200/1422a 


26 September 1986 


HKO11322 Quezon City BUSINESS DAY in English 1 Sep 86 p 2 

{Text] The Central Bank [CB] reported that the combined assets of the coun- 
try's commercial banking system amounted to P276 billion as of end-July, down 
1.5 percent from the previous month's ending level. 

The CB noted that two component groups of the system--private domestic  anks 
and the local branches of foreign banks--experienced a contraction in their 
assets in July. 

The CB said funds to cover deposit withdrawals, new loans and increases in 
other asset accounts exceeded funds generated from additional borrowings and 
partial liquification of trading account securities and government bond hold- 
ings. The situation resulted in a P2.8-billion slippage in cash position. 

Net outflow in all types of deposits-—-in both domestic and foreign currencies-- 
reached P3.6 billion and was very apparent within the private domestic group. 
The government and foreign sectors recorded dips in demand deposits only. 

The total P3.6-billion decrease in deposits was the second to, but way below, 
the highest P10.1 billion suffered in January this year. 

After a P1.3-billion increase in July, the combined loan portfolio of the 
commercial banking system reached the P127.8-billion level, while investment 
accounts dropped to P29.3 billion from the previous month's P33.1 billion. 

Results of operation for the first semester of 1986 registered a faster pace 
of decrease in gross revenues than in the reduction of expenses. Interest on 
loans, which constituted more than 48 percent of the total income of the sys- 
tem, contracted by 30.4 percent. This slump coincided with the consistent 
downtrend in loan portfolio during the first semester of 1986. Interest on 
deposits, which composed about 40 percent of total operating expenses, 
likewise contracted but at only 20.9 percent. 

CSO: 4200/1422a 


26 September 1986 



HKO31533 Quezon City BUSINESS DAY in English 3 Sep 86 p 2 

["Economic Indicator" column: "Retail Price Index Inches Up in May"] 

[Text] The retail price index (RPI) for all items in Metro Manila grew slighly 
by 0.66 percent in May from the year-ago level, statistics gathered from the 
National Census and Statistics Office (NCSO) indicated. Using 1978 as the 
base year, the RPI last May came to 366.6 index points, 2.4 index points 
higher than the 364.2 index points registered in the same month in 1985. 

The RPI measures the monthly changes in prices at which retailers dispose of 
their goods to consumers and and-users. Its market basket contains approxi- 
mately the same food and non-food items included in the consumer price index 
(CPI) basket. It however includes more construction materials but excludes 
light, water, rentals, wages and other service items. 

The May increase came about despite the 1.15 percent drop in the wholesale 
price index (WPI) during the month from 408.1 index points to 403.4 index ; 

Among the RPI items, mineral fuels, lubricants and related materials regis- 
tered the highest decline in its index, a 16.29 percent drop from 510.7 index 
points in May 1985 to 427.5 index points. The main factor for the decline 
was the rollback in the prices of kerosene and fuel which was approved by 
the government last March. 

Retail Price Index in Metro Manila 
(1978 equals 100) 

Year/ All Food Beverages Crude Mineral 
Month Items & Tobacco Materials Fuels, 
Except Lubricants 
Fuel & Related 
1985 366.4 338.6 346.3 369.0 519.0 
January 365.1 336.6 333.2 359.2 548.9 
February 363.8 333.5 335.6 361.9 548.2 


Year/ All Food Beverages Crude Mineral 
Month Items & Tobacco Materials Fuels, 
Except Lubricants 
Fuel & Related 

March 361.9 333.1 338.7 363.9 519.9 
April 363.9 335.6 341.1 369.7 511.6 
May 364.2 336.5 341.2 365.4 510.7 
June 363.1 334.4 345.6 367.0 511.5 
July 368.4 342.0 350.0 365.4 512.6 
August 367 .6r/ 340.3 353.3 366.7 512.6 
September 367.0 339.1 353.5 375.3 512.6 
October 368.5 340.7 353.1 376.3 512.7 
November 370.8 344.1 354.9 377.8 513.2 
December 373.2 347.4 355.7 379.8 513.2 
January 337.8 354.7 365.1 383.7 505.7 
February 373.4 350.8 369.8 384.2 454.1 
March 373.1 349.5 373.7 382.0 448.8 
April 369.4 344.5 376.9 376.0 433.9 
May 366.6 343.2 379.2 377.7 427.5 
Year/ Chemicals Including Manufactured Machinery Miscellaneous 
Month Animal & Vegetable Goods Classi- & Trans- Manufactured 

Oils & Fats ified Chiefly port Articles 

by Materials Equipment 

1985 411.2 416.7 295.2 404.6 
January 404.1 415.4 293.2 395.1 
February 405.2 416.9 293.1 398.2 
March 407.8 413.8 294.4 401.5 
April 408 .8 416.4 295.3 403.0 
May 412.0 416.1 297.3 402.6 
June 412.6 415.3 297.1 2.8 
July 412.6 417.1 295.2 404.3 
August 413.3 417.7r/ 294.2 404.4 
September 412.6 417.0 294.6 405.4 
October 414.4 418.3 295.1 409.8 
November 415.1 417.9 295.5 2.0 
December 416.5 418.4 297.1 6.3 
January 419.1 416.2 301.9 416.7 
February 422.6 418.1 312.0 421.2 
March 430.5 418.7 317.2 423.2 
April 434.4 418.8 318.9 424.3 
May 428.7 409.1 317.5 419.0 
Source: National Census and Statistics Office (NCSO) 

CSO: 4200/1415 


26 September 1986 

HKO11320 Quezon City BUSINESS DAY in English 1 Sep 86 p 2 
["Economic Indicator" column: “Banks Gross Credits Fall 7.4 Percent") 

[Text] Gross domestic credits of deposit money banks as of the fir: : semester 
of the year fell 7.4 percent from the yearago level, latest date from the 
Central Bank [CB] showed. These credits consist of domestic securities and 
loans and advances extended to the national government, local and semi- 
government entities and private businesses and individuals, as well as credits 
to the CB. 

Indicative of the soft loan demand during the period, gross credits slid 
down to P142,622.1 million from P154,143.7 million in the first half of 1985. 

Credits contracted because of the weak demand for loans and advances which 
accounted for the bulk or P112,893.3 million. This marked a decline of 9.80 
percent from last year's P125,155.4 million. 

Most of the loans and advances were extended to private businesses and indi- 
viduals who borrowed P97,420.4 million this year. Their borrowings, however, 
dwindled 9.19 percent from last year's P107,277.4 million. 

Likewise, credits to the CB decreased 4.15 percent from P8,256.3 million to 
P7,914.0 million this year. 

On the contrary, domestic securities went up 5.22 percent ot P21,814.8 mil- 

lion from P20,732.0 million. All sectors increased their domestic securi- 
ties borrowings from deposit money banks. 

[Table on following page] 


Gross Domestic Credits of Deposit Money Banks 
As of June 1986 and 1985 
(in million pesos) 

1986 1985 
Grand Total 142 ,622.1 154,143.7 
Domestic Securities 21,814.8 20 ,732.0 
National Government 11,498.7 11,302.3 
Local & Semi-government Entity 2,727.8 2,261.6 
Private Business & Individuals 7,588.3 7,168.1 
Loans and Advances 112 ,893.3 125,155.4 
National Government 1,360.1 1,509.7 
Local & Semi-government Entity 14,112.8 16 ,368.3 
Private Business & Individuals 97,420.4 107 ,277.4 
Credits to the CB 7,914.0 8,256.3 
CBCIs 547.8 1,523.8 
CB Bills 7,366.2 6,732.5 

Source: Central sank 

CSO: 4200/1422a 


26 September 1996 


HKO31351 Quezon City BUSINESS DAY in English 3 Sep 86 p 4 
[Article by Manuel S. Satorre Jr. of Depth News (Cebu City)] 

[Text] Exactly 74 percent of the nine cities and 123 municipalities in Cen- 
tral Visayas fall in the category of depressed areas. 

This was among the latest findings of a National Economic and Development 
Authority (NEDA) survey of Cebu, Bohol, Negros Oriental and Siquijor to deter- 
mine actual economic conditions in the region in the face of growing insur- 
gency problen. 

Considered depressed cities and towns are those having an annual income of 
less than P400,000, per capita income at P1,500 and below, and 11 percent and 
above malnutrition rate, and an infant mortality rate of 24 percent or higher. 

Of the 123 towns surveyed, the study notes that a total of 97 municipalities 
or 75.3 percent fall under the depressed area category. At least two cities, 
Canlaon in Negros Oriental and Lapulapu in Cebu, belong in this bracket. 

Of the 10 most depressed towns in the region, the study reveals that seven 
are in Cebu with the two of Poro in Camotes Island as the poorest. The other 
six Cebu towns are Pilar, Aloquinsan, Alegria, Cordova and Samboan. 

Included in the top list are the towns of Vallehermoso and Tayasan in Negros 
Oriental and Duero in Bohol. 

Surprisingly, Cebu city, considered the regional capital of Central Visayas, 
ranks only sixth as the most non-depressed area in the region. Manjuyod, 

a remote town in Negros Oriental, got the top rating as most non-depressed 
area, followed by Cortes in Bohol, Boljoon in Cebu, Dumaguete in Negros 
Oriental and Loboc in Bohol. 

According to NEDA regional director Rey Estanislao Crystal, this is actually 
the second poverty level study conducted by his office. The first was made 
in 1977 which had a different basis in the determination of a depressed arec. 


There were: the number of central place functions found in the town, number 
of noncentral or industrial functions in the municipality, agricultural 
productivity per hectare of land cultivated, and municipal revenue for the 
past fiscal year. In addition to spotting the depressed areas, the earlier 
study also indentified growth centers. 

The results of the first survey showed that out of the then ni.e cities and 
122 towns in the region, 38 or 29 percent were depressed. Particularly 
alarming in the initial finding is the situation in the province of Siquijor 
in which all its six municipalities appeared to be depressed in all four 

In Cebu, 19 out of five cities and 48 towns were depressed. Nine out of one 
city and 46 towns in Bohol and four out of three cities and 22 towns in 
Negros Oriental we - also depressed. In all these municipalities, the study 
found that agricultural proc ctivity and the level of economic activity were 
the lowest in the whole province. 

Crystal explains that the latest survey held in April 1986 was conducted to 
determine whether the number of depressed areas in the region had increased 
and decreased. 

Government also wants to know whether the depressed areas then are 
still the ones considered depressed nine years later, he said. 

Although the results of the 1986 study may not be comparable with the 1977 
study, since both studies use different variables, Crystal says the new 
study clearly indicates an increase in the number of depressed areas. 

Municipalities earlier considered as growth centers have been found to be 
among those areas identified as depressed, he adds. 

He warns that this condition necessitates immediate attention of regional and 
national government officials to redirect priorities for development, parti- 
cularly in the light of the growing insurgency problen. 

If nothing is done by government and even by the private sector to reverse 
conditions in these depressed cities and towns in Central Visayas, Crystal 
says, a more serious social problem can be expected in the near future. 

CSO: 4200/1415 


26 September 1986 


HKO31321 Quezon City BUSINESS DAY in English 3 Sep 86 p 22 

{Text] With a projected 11 percent increase in rice production, the National 
Food Authority (NFA) will face a bigger problem: how to dispose of rice 
surplus next year. 

A proposed solution is to export some 500,000 metric tons of rice by next year. 
However, this will means losses to NFA which will have to be funded by about 
P2.7 billion to procure 10 percent of the projected harvest of 9.1 million 
metric tons of palay. 

The NFA council last week approved in principle a reduction in the support 
price of palay by 50 centavos or from P3.50 to P3 per kilo. The reduction 
will have to be effected in order to boost NFA's procurement capabilities. 
A much lower support price will enable NFA to procure 10 percent of total 
harvest instead of its traditional procurement volume of 6 percent of total 
production if it maintains the support price at P3.50. 

The NFA is set to buy at P3 per kilo by this month. At 10 percent, NFA will 
procure 910,000 MT of palay or its equivalent of 591,000 MT of rice at a re- 
covery rate of 65 percent. 

This additional volume, however, will add to NFA‘'s growing problem of excess 
rice inventory. As of last month, the food agency is saddled with a huge 
inventory of 540,000 MT of rice, of which 170,000 MT are imported stocks. 

This huge inventory is giving NFA a headache. It cannot dispose of the rice 
stocks in the domestic market since it may be severely disrupted. Selling 
its stock to that market at the rate of 70 MT a day (against a national 
consumption rate of 16,00 MT), NFA will take 21 years to dispose of its 
total inventory. 

The food agency is currently finding ways to dispose its present inventory 
without necessarily disrupting the market. It proposes to supply the rice 
requirements of government agencies, including the military and public school 
teachers. This sector will account for about 27 percent of NFA‘s total in- 
ventory. This scheme, however, will require approval from Malacanang since 
selling the rice stocks to government employes may mean subsidies. 


Another way to dispose of excess rice supply is to donate some of NFA's 
stocks to poverty stricken province of Negros Occidental. Ministry of Agri- 
culture and Food officials told BUSINESS DAY that a working paper is being 
prepared on how to dispose of the rice stocks through donations to the 

A third solution is to export the excess rice stocks. Agriculture and Food 
Minister Ramon Mitra earlier said about 300,000 MT of NFA's present rice 
stocks will have to be exported even at a loss. Prevailing world market 
prices of rice stand at P4 per kilo as against domestic prices of P6 to P8 
per kilo. 

However, even if the government sells its rice stocks at a loss, these seems 
to be no willing takers. Worldwide production of grains is on the upswing 
and at its highest level at the moment. 

Indonesia which exported to the Philippines 100,000 MT of rice last year has 
not responded to the government's notice that it will pay back the rice loans 
with NFA's excess rice stocks. It is stipulated that the Philippines can pay 
its rice loans in cash or in kind. But after about four months of silence, 
Indonesia is deemed uninterested in accepting NFA rice stocks as payments. 

Mitra said last month that some countries like South Korea had expressed 
interest to buy the country's rice surplus. However, MFA sources said there 
has been no fresh development on this matter. 

When Mitra announced the projected 11 percent increase in rice production, 
he qualified that the increase will be sufficient only to "meet our needs.” 
However, he seemed to fail to recognize that the country's total consumption 
is only being taken care of by the commercial traders, and NFA accounted 
for less than 1 percent of the total requirements. 

NFA sources claimed that if the present stock of 540,000 MT is not disposed 
of at the proper time, the incoming stocks of more than 500,000 MT will give 
NFA additional headaches. 

CSO: 4200/1415 


HKO51515 Quezon City BUSINESS DAY in English 5 Sep 86 p 3 
{"Economic Indicator" column: "Production Value Index off 7.7 Percent") 

[Text] The value of production in key manufacturing enterprises, according 
to a monthly survey by the National Census and Statistics Office (NCSO), 
dropped 7.66 percent in May from the year-ago level. 

The NCSO, surveying 500 top manufacturing companies based on Metro Manila, 
registered the production value index at 97.7 points, down 8.1 from 105.8 
in May last year. 

Base year of the index is 1985. 

Declines were recorded in the indices of seven subsectors: petroleum prod- 
ucts, wood and wood products, basic metals, tobacco, beverages, food, and 
miscellaneous manufactures. These decreases more than offset increases in 
eight other subsectors. 

Petroleum products registered the biggest decline of 45.5 percent, from 126.6 
index points in May last year to 69.0. 

The index of value of production measures the cost incurred by a manufactur- 
er in producing goods and services in a particular month as compared to the 
corresponding figure for the base year. Generally, it includes the cost of 
direct labor, raw materials and the sanufacturing overhead. 

Index of value of production of key manufacturing enterprises, by industry 

May 1985-1986 
(1985 :100) 

Sector May June July August 
Manuf ecturing 105.8 96.3 96.6 98.0 
a. Food 99.4 102.3 98.4 96.1 
b. Beverage 109.3 100.5 90.9 92.7 
c. Tobacco 106.1 93.5 102.6 105.1 

May June July August 
d. Textile 92.6 98.7 107.2 102.6 
e. Wearing apparel 100.2 93.9 110.2 107.1 
f. Wood and wood products 112.6 105.9 99.0 95.0 
g- Paper and paper products 92.2 86.6 92.6 96.7 
h. Chemicals 97.5 84.8 93.6 93.2 
i. Rubber products 94.8 83.1 101.2 105.5 
j. Petroleum products 126.6 90.5 86.0 91.1 
k. Non-metallic mineral products 108.2 104.1 111.1 109.9 
1. Basic metals 113.0 86.1 93.1 110.4 
m. Transport equipment 86.6 112.9 115.3 122.5 
n. Electrical machinery 110.4 104.5 92.5 89.9 
o. Miscellaneous manufactures 103.8 106.2 111.2 94.9 
Sept Oct Nov Dec 
88.4 103.4 100.9 108.0 
a. 88.4 97.4 91.3 93.7 
/ b. 92.4 92.6 100.8 106.2 
f c. 99.6 107.4 102.2 97.5 
d. 105.9 118.3 114.1 90.6 
e. 108 .9 108.7 102.2 122.2 
f. 78.2 84.7 86.8 72.4 
g- 99.8 108.6 106.9 97.1 
h. 100.0 99.6 100.9 112.7 
i. 101.9 117.3 86.8 115.3 
4. 62.0 120.8 113.0 121.7 
k. 93.3 71.1 89.8 114.8 
1. 106.1 103.9 103.3 150.5 
m. 98.6 107.3 107.8 124.4 
n. 86.0 89.2 92.7 86.7 
0. 90.5 84.4 82.6 59.8 
Jan Feb Mar Apr May 
Manufacturing 89.0 98.9 95.3 95.7 97.7 
a. Food 99.4 98.5 96.1 93.5 94.4 
b. Beverage 80.9 73.5 76.5 95.0 92.9 
c. Tobacco 107.6 94.0 75.6 81.5 84.2 
d. Textile 109.1 116.6 111.9 128.0 134.2 8 
e. Wearing apparel 88.9 94.4 90.5 113.9 113 8 me 
f. Wood and wood products 42.2 61.3 61.1 66.9 6* 
g. Paper and paper products 83.2 98.5 112.8 118.5 ll, .o 
h. Chemicals 100.4 91.8 103.2 95.9 97.9 
i. Rubber products 93.2 101.8 98.6 98.4 99.6 
4. Petroleum products 93.9 93.1 88.3 75.8 69.0 

Jan Feb Mar Apr May 

k. Non-metallic mineral products 94.1 98.9 111.7 108.7 134.3 
1. Basic metals 74.0 94.8 99.2 119.8 88.8 
m. Transport equipment 81.7 81.2 87.8 98.4 96.0 
n. Electrical machinery 67.3 92.0 98.4 88.7 126.4 
o. Miscellaneous manufactures 91.1 115.5 108.0 123.0 102.2 

Source: Monthly Survey of Key Manufacturing Enterprises 
Economic Census Branch, National Census and Statics 
Office (NCSO) 

CSO: 4200/1415 



HKO81201 Quezon City BUSINESS DAY in English 8 Sep 86 p 2 
[“Economic Indicator” column: “Domestic Liquidity Rises 5.89 percent”) 

[Text] Domestic liquidity (M3) improved 5.89 percent in July to P124,206.5 
million from P117,297.0 million in the same month of last year, according to 
the latest available data from the Central Bank. 

Domestic liquidity consists of money supply, quasi-money and deposit 
substitutes. It roughly determines the availability of credit in the systen. 

The increase in domestic liquidity came mostly from the 14.58 percent rise in 
money supply. Money supply, the total currency in circulation and peso demand 
deposits, went up P4,139 million to P32,532.2 million from P28,393.2 million 
last year. 

Quasi-money, which accounted for the bulk of domestic liquidity, also 
increased 6.19 percent of P84,217.3 million from last year's P79,308.8 

The preference for easily withdrawable deposits over time deposits was 
reflected in the 31.84 percent rise in savings deposits and the 15.69 percent 
decline in time deposits. 

On the contrary, deposit substitutes fell 22.28 percent to P7,457.0 million 
from P9,595.0 million a year ago. Deposit substitutes consist of promissory 
notes, purchase agreements, trust certificates and other debt instruments used 
for the purpose of relending or purchasing receivables and other obJigations. 

Domestic Liquidity 
as of July 1986 and 1985 
(in million pesos) 

1986 1985 
Total Domestic Liquidity 124, 206.5 117,297.0 
Money Supply 32 ,532.2 28 393.2 
Currency in Circulation 21,176.8 18,196 .6 
Currency Issue 24 ,125.2 20 ,974.9 


Less: Inactive Cash 
Peso Demand Deposits 

Local Government 

Semi-government Entities 

Private Businesses 

US Government 

Cashier's, Manager's Checks 

Less: Coci, Others 

Savings Deposits 

Time Deposits 
Deposit Substitutes 

Source: Central Bank 

CSO: 4200/1413 


48 ,138.6 
36 078.7 

10 ,196.6 

79 ,308.8 


HKO31529 Quezon City BUSINESS DAY in English 3 Sep 86 pp 2, 11 
{Article by reporter Gethsemane M. Selirio] 

[Text] Labor and management are in disagreement over the holding of the 
second National Tripartite Conference to review the Labor Code, which is 
scheduled to be held next month. 

In separate pretripartite meetings held with Ministry of Labor and Employ- 
ment (MOLE) officials last week, it became apparent that the reason for the 
disagreement is the mch-delayed ministry guidelines on labor relations. 

Labor groups want the tripartite conference postponed until after the release 
of the executive orders covering the Labor Day announcements of President 
Aquino. Management, on the other hand, wants the conference to go on as 
scheduled before the executive orders are issued. 

The main argument of labor for a postponement of the conference is the lack 
of official [word indistinct] for the May 1 announcements of Aquino. Without 
the executive orders, labor believes the liberalized strike and union [word 
indistinct] would remain mere announcements. 

Labor also wants to protect the gains it won last May 1. The Labor Day 
announcements may be revised when a tripartite conference is held. 

Labor leaders during their meeting with MOLE officials indicated that the 
President may have already reneged on a few of her Labor Day commitments. 
Aquino's order allowing security guards in the private sector to organize 

have been put on hold due to "security risks.” The requirements for a strike 
vote even in union-busting disputes has been reaffirmed by the ministry in its 
draft guidelines, although Aquino said unions can ignore the cooling-off 
period and "take action immediately." 

The MOLE is still in the process of reviewing ite labor relations guidelines. 
There are, however, no definite plans on whether the executive orders will 
be issued ahead of the guidelines, if at all. 


"We want executive orders, not ministry guidelines," said Rolando Olalia, 
chairman of the militant Kilusang Mayo Uno (KMU) [1 May Movement]. The 
legality of the guidelines is questionable unless it has supporting legis- 
lation, he said. 

In contrast to labor's position, management believes that the tripartite 
conference should be held precisely to discuss what provisions an executive 
order amending the Labor Code should contain. 

A member of the Employers Confederation of the Philippines (ECOP) insisted 
that the Labor Ministry should detach itself from the past practice of 
making “instant amendments" througl. presidential decrees. The ministry, he 
said, must utilize tripartism as a medium for genuine consultation. 

"Let us not be pushed by labor. Let us bide our time until consultative 
meetings are held. Labor already knows it has the advantage with the May 1 
pronouncements," another employer said. George Drysdale of the American 
Chamber of Commerce of the Philippines recommended the creation of a small 
tripartite group to review the May 1 announcements and to use the ministry 
draft guidelines as a “working draft." 

The major announcements of Aquino, however, should be immediately implement- 
able, according to the labor sector. Labor was referring in particular 

to the repeal of the 2/3 strike vote requirement, the 15-day cooling-off 
period in union-busting cases and the repeal of Letter of Instructions No 
1458 which authorizes the labor minister to order the replacement of workers 
who defy return-to-work orders. 

Aquino's proposed agenda for the national conference are the amendments to 
Batas Pambansa Blg. [National Law Number] 130 (Strike and Peaceful Picketing 
Law) and 227 (Anti-Scab Law), removal of exemptions from present wage decrees, 
including the integration of the cost of living allowance (COLA) into the 
basic pay, and the exploration of a mechanism for profit sharing. 

Aside from this, Aquiono wants labor and management to sign a Code of Indus- 
trial Harmony which would signify to would-be investors that the government 
is in control of the industrial relations situation. 

In the first tripartite conference held May 28 and 29, labor and management 
groups failed to negotiate such a code. The government could try again at the 
second tripartite conference, if it could get labor and management to meet in 
first place. 

CSO: 4200/1415 


26 September 19% 


HKO90257 Quezon City BUSINESS DAY in English 8 Sep 86 p 2 
[Article by Daniel C. Yu] 

[Text] The national government stands to lose as much as P70.3 billion, de- 
pending on what valuation scheme will be adopted, when the so-called non- 
performing assets (NPAS) of four cash-strapped government financial institu- 
tions are transferred to its account. 

A study made by the Ministry of Finance in connection with the decision of the 
government to absorb these NPAS also showed that the minimum loss to the 
national government will still be hefty, at least P4 billion. 

The study, made available to BUSINESS DAY, also indicated that the total NPAS 
proposed to be transferred to the account of the national government would 
approximate P143.2 billion with the Development Bank of the Philippines (DBP) 
accounting for the bulk with total NPAS worth P72.4 billion. The Philippine 
National Bank (PNB) has P51.9 billion, the National Investment and Develop- 
ment Corp. (NIDC) P13 billion and the Philippine Export and Foreign Loan 
Guarantee Corp. (Philguarantee) P5.9 billion. 

The decision to transfer these NPAS to the nationa . sent was made by the 
Monetary Board, the policy-making body of the Centre. 3 [CB], last July as 
part of the major reforms for government financial insti.utions. 

The transfer is one of the conditions set by the International Monetary Fund 
(IMF) and the Work Bank for reducing government involvement in the banking 
sector while at the same time rehabilitating these state-owned enterprises 
and orienting them toward more productive activities. 

The transfer of the NPAS from DBP and PNB, together with the corresponding 
liabilities, to the national government, will reduce the total resources of 
DBP to about P10 billion and PNB to about P24 billion. Their net worth will 
likewise go down to about P2 billion and P3 billion, respectively. 

The transfer of the NPAS to the national government was prompted by the ser- 
ious adverse impact these accounts have had on the operations of these two 
state-owned banks. 


There are about 260 large companies to which some P142 billion have been 
lent by the two banks. Some of these companies have already been taken over 
by the government. Others will be taken over after the required legal steps 
are completed. 

As a result of these NPAS, the national government has been compelled to 
subsidize DBP and PNB operations through periodic infusions of funds amount- 
ing to P8 billion in 1984, P10 billion in 1985 and P19 billion in 1986. For 
this year alone, the two banks account for 17 percent of the total government 
budget of P113 billion. 

The Finance Ministry study also showed that total NPAS of DBP, PNB, NIDC and 
Philguarantee stood at P205.5 billion as of the first quarter this year and, 
for the moment, the government is considering absorbing 70 percent of this 
total of F143.2 billion. 

The P143.2 billion includes the total exposure of the government financial 
institutions plus unbooked interest (outstanding interest receivables of these 
institutions) and unbooked charges (penalties and other charges). These 

were no longer allowed to be booked by the CB when the accounts were declared 

To top it all, these NPAS have collaterals with an estimated appraised value 
of only P79.1 billion or just half of the total exposure of the government 
financial institutions. 

Further, the bulk of the collaterals are in the form of machineries and 
equipment whose value would depreciate over time. These appraisal values 
were made prior to 1985 which means that they do not reflect present values, 
particularly in cases where these equipment were not properly maintained. 

The Finance Ministry study also noted that more losses may have to be should- 
ered by the government. Additional losses may be incurred by the government 
in servicing the maturing liabilities that it will assume. Losses will also 
arise from its assumption of foreign exchange risks. 

The study recommended that the government assume the NPAS based on booked 
exposures, composed of government financial institutions’ loans receivables, 
accured interest receivables, equity investments and acquired assets, so it 
could cut its losses. 

This will exclude actual advances made by the government financial [word 
indistinct] for the rehabilitation and maintenance of the acquired assets, 
outstanding interest receivables after they became NPAS and other penalties 
and charges due, both of which were not allowed to be included in the account 
by the CB. 

By transferring these NPAS based on booked exposure, the government will 
lose only P4 billion for the initial P143.2 billion that will be transferred. 


Such a move however is being opposed by the government financial institutions 
which claim they would lose heavily if accrued interest charges and penalties 
are not tagged on to the total financial charges due then. 

The national government would lose as much as 746.9 billion if total exposure 
and up to 70 percent of these charges are included. If the total NPAS are 
transferred eventually to the national government under such a valuation 
scheme, the government loss would come to about P70.3 billion. 

This would exert further pressure on the already strained national budget 
which this year expects a deficit of P27.9 billion. 

Non-performing Assets of Government Financial Institutions 
Proposed To Be Transferred to the National Government? 
(In billion P) 

No. of Booked Total Total 

Accounts re a/ Exposure b/ Claims c/ 
DEP “Yor oe PO.5 STS 
PNB 42 31.5 40. 51.9 
NIDC 26 4.7 6.0 13.0 
Philguarantee 7 5.7 5.9 5.9 
Total 176 P83.1 P113.3 P143.2 

a/ Composed of government financial institutions (GFIS) loans receivables, 
accrued interest receivables, equity investments and acquired assets. 

b/ Booked exposure plus actual advances made by CFIS for the rehabilitation 
and maintenance of acquired assets. 

c/ Total exposure of GFIS plus unbooked interest (outstanding interest 

receivables of GFIS) and unbooked charges (penalties and other charges}. The 
latter were no longer allowed to be booked by the Central Bank when accounts 

were declared non-performing. 
*#This covers the initial 176 accounts. 

Appraisal Value 

(in billion P) 
Land P 3.8 4.9 
Buildings 6.8 8.5 
Machineries and equipment 57.1 72.5 
Others 11.4 14.4 
Total P79.1 100.0 

Source: Ministry ef Finance 

CSO: 4200/1415 


HKO31547 Manila PHILIPPINE DAILY INQUIRER in English 2 Sep 86 p 10 
[Article by Romy Dizon] 

[Text] Camp Olivas, Pampanga--The 45,000 Civilian Home Defense Forces (CHDF) 
will have to be retained because of their vital role in the counter-insurgency 

campaign of the government. 

This was disclosed Friday by Defense Deputy Minister Wilson Gamboa during 
an inspection of military camps to get feedback from the soldiers and offi- 
cers in line with the policy of the New Armed Forces of the Philippines 

Gamboa told local officials led by Pampanga Governor Bren Guiao that the mili- 
tary does not intend to abolish militiamen because they are effective in the 
anti-dissident campaign of government. 

Militiamen know better the tarrain and the political, economic, social condi- 
tions of communities which recently arrived soldiers did not know adequately, 
Gamboa said. 

To prevent abuses, the CHDF members are currently undergoing retraining. 
There is also an ongoing reprocessing to professionalize the militiamen and 
isolate them from control of politicians and other sectors who may employ 
them for their personal interests. 

Under the NAFP plan, the CHDF will be under the direct control and super- 
vision of professional military men Gamboa said. 

The MND [Ministry of National Defense] official also stressed that OICs 
[officers-in-charge] cannot terminate the services of CHDF members who are 
still under the control of the military. 

OLCs, however, may recommend removal or retention of CHDF personnel in their 
respective areas. 


Earlier, OICs and human rights groups recommended to President Aquino the 
abolition of the CHDF because of abuses by militiamen. These included murder, 
salvaging, and violation of human rights. 

During his visits to Camp Olivas and other military camps in Region 6, 3, 
and Mindanao, Gamboa said he discovered that the soldiers are the most 
neglected government employes, especially those assigned to rural areas. 

Many of these soldiers have no shoes, uniforms, and sometimes eat only twice 
a day, instead of three times, Gamboa said. 

He also said that the administration discovered unpaid claims of the soldiers 
amounting to P6.5 million and salary increases and COLA [cost of living allow- 
ance] hikes still unimplemented. 

CSO: 4200/1415 


26 September 1996 



HKO31222 Manila THE MANILA CHRONICLE in English 30-31 Aug, 1-3 Sep 86 

{30 Aug 86 pp 1, 6 Part I] 

["Special Report" by editor-in-chief Amando Doronila: "Spasms of Negros"] 

[Text] Early this month, a mob of about 90 landless peasants, some of them 
armed, descended on rice fields in Bago city, about 20 km south of Bacolod 
City, harvested the ripening grain overnight and took possession of the land. 

The land was part of a sugarcane hacienda and the peasants occupied only the 
rice lands, claiming tenancy rights under existing agrarian reform legislation 
which places rice lands, but not sugar lands, within its scope. 

The Philippine Constabulary [PC] commander in Negros Occidental, Lieutenant- 
Colonel Miguel Coronel], told me that once the peasants had claimed tenancy 
rights, the PC was inhibited from intervening to evict them because juris- 
diction goes to the Ministry of Agrarian Reform. 

This unilateral act of land seizure--which is similar to occupation of vacant 
space by squatters in Metro Manila--is being repeated with alarming frequency 
in several parts of the province that has been socially and economically 
devastated by the collapse of the sugar industry. 

Around the middle of the month, peasants occupied rice lands in Hinigaran, 
further south of Bacolod City. Since last March, according to provincial 
authorities, five cases of land occupation by what planters call the rural 
"squatters" have been reported--two in Hinigaran, two in Bago and one in 
Isabela, in the southeast near the foothills of Mt. Kanlaon, the sanctuary 
of an estimated 1,200 communist New People's Army guerrillas. There, a 
Vietnam-type guerrilla war is going on between the government's armed forces 
and the NPA. 

Even though the scale of war is small, it is nasty. Large mortar shells have 
exploded on peasant villages, thousands have been driven to evacuation in the 
town, thatched nipa homes have been burned, and soldiers have taken undis- 
closed casualties. Engagements are probably in platoon size units in the 
hit-and-run warfare. 


It is not clear whether the Small Farmer Association of Negros, which has 
claimed responsibility for the land seizures, is linked to the communist 
guerrillas. But what seems clear is that their march on the land has opened 
a new dimension of the class war which is now a grim reality in Negros Occi- 
dental, just as it was in Central Juzon during the Huk rebellion in the late 
1940's and in the 1950's. 

The land occupation signals an act of wealth redistribution by the peasantry-- 
another form of rebellion of the poor--a time when landlord power is on the 
wane in a province whose agrarian structure is probably the most glaring 
example of land concentration in the country today. 

One measure of the diminished power of the Negros landlords--who were con- 
sidered the most influential power brokers during pre-martial law politics-—- 
is that when a committee of the Constitutional Commission held hearings in 
Bacolod City last month on land reform, the planters were not invited, 
although they did manage to accredit their representatives. It is a reflec- 
tion of the shift of the balance of forces in the province that there was a 
preponderance at the hearings of organized representation from newly emerging 
militant social groups including unionized farm workers, the tiny Negros mid- 
dle class and Roman Catholic Church groups involved in social action. 

A group of planters I talked to in Bacolod City have expressed anxiety that 
the land marches will continue. Some landowners are already considering 
formation of vigilantes to defend their land. If this goes ahead, armed 
clashes are foreshadowed. 

In northern Negros, yet another type of class conflict is developing--this 
time within the rural proletariat itself. Landlords have organized private 
armies recruited from the large floating rabble of rural jobless and have set 
them upon farm workers on strike against low wages and poor working conditions 
in some haciendas. The workers are paid wages as low as P14 to P18 a day, 
compared with the minimum wage of P32.50 a day for agricultural workers. 

Indeed, poverty and deprivation have not only intensified the conflict between 
the landed and the landless; they have also given opportunities for the rich 
to exploit the poor and pit them against their kind. 

In Cadiz City, also in northern Negros, former Congressman Armando Gustilo 
holds forth with his private army and continues to hurl, through his radio 
station, defiant words against the government of President Aquino. Gustilo, 
a landlord who was one of deposed President Marcos’ principal instruments of 
political control over the sugar industry in Negros Occidental, has refused 
to accept not only the authority of the new central government but also the 
reality of social and political change. 

The instability of the central government which is being pulled apart by 
conservative and populist tendencies represented in the Aquino coalition 
cabinet has somewhat contributed to the paralysis of public authority in 
Negros Occidental Province. 


[31 Aug 86 pp 1, 7 Part ITI] 

[Text] The inability of the National Government ot enforce its political will 
over its rebellious provincial subjects offers a superficial explanation to 
the breakdown of public authority in Negros. The economic and social dis- 
location in the province has deeper structural roots than the weakness of 

the political center in Manila. 

The key to understanding the Negros crisis is sugar--the utter dependence of 
the provincial economy on a monoculture crop upon which the social structure 
was built and polarized between the extremely rich and the extremely poor. 

For a long as sugar fetched good prices in the world market and enjoyed sub- 
stantial quotas in the protected United States market at premius prices, the 
provincial economy boomed from the spin-off of the sugar profits. Although 
wages of farm workers remained wretchedly low, the sugar planters were able 

*o maintain a sort of patronclient relationship in which they supplemented 

low wages with the traditional paternalistic subsistence aid. The maintenance 
of this paternalistic relationship bonded landlord-peasant ties. 

But when in the early 1980's the world sugar prices plunged, the Negros 

sugar industry contracted. The fall of prices came as a severe blow because 
the Philippines no longer enjoyed the shelter of the guaranteed substantial 
US quota (980,000 metric tons) following the expiration of the Laurel-Langley 
agreement in 1974. The ability of the industry to absorb the price shock 
was further impaired by the mismanagement of funds of the industry by the 
monopolistic control imposed by the Marcos regime on sugar trading. 

This disruptive contraction of the sugar industry cut cane acreage by 30 per- 
cent, causing mass unemployment. It is estimated that more than 100,000 
sugarcane workers are either unemployed or underemployed. 

The unemployment problem is particularly serious in Negros island which has 
accounted for more than 50 percent of sugarcane acreage in the country and 
has employed more than 200,000 sugarcane workers. Because the province is 
almost exclusively dependent on sugar, there are few job alternatives in: 
other sectors of the local economy, which itself has shrunk from the sugar 
depression. In the process, paternalistic landlord-peasant relationship also 
snapped, casting workers adrift and making them susceptible to recruitment 

by revolutionary forces. 

The most vivid evidence of the pauperization that has resulted from the crisis 
are the emaciated children facing a joyless future in the malnutrition wards 
of the provincial hospital in Bacolod City. Foreign correspondents never 
miss the chance to visit these wards and portray with horrifying vividness 

the human suffering produced by severe economic and social crisis. 

Hunger and malnutrition continue to ravage the children. The latest statistics 
at the malnutrition ward of the provincial hospital give evidence of the depth 
of the economic depression. A total of 648 malnourished children our of 


5,310 admitted into the ward died in 1985, compared with 370 deaths in 1984 
and 221 in 1983. 

In 1984, 66.7 percent of pre-school children weighed were malnourished at 
varying degrees. Those belonging to the second and third categories--the 
worst cases--represented a quarter of all the children weighed. In 1985, 
Negros Occidental posted the highest second and third-degree malnutrition 
rates in Western Visayas. 

Poverty is also reflected in the infant mortality rate [IMR]. In contrast 
to the declining national IMR between 1980-83, that in Negros rose to 82.3 
per 1,000 live births in 1983, from 71 in 1979. The number of mothers dying 
soon after childbirth is higher than the national average in 1979-83. In 
1979, the maternal death rate in Negros was 89 percent, rising to 1.16 per- 
cent in 1983. The maternal death rate for the country was 0.95 percent in 

There is no need to labor the point with further grim statistics. The shape 
of reality emerged during a visit to the malnutrition ward. I saw a three- 
year-old boy from La Carlota, nearly a skeleton wrapped in dry skin, staring 
blankly at the wall. He was blind from malnutrition. I asked his sister what 
his father was doing. She said he was cutting firewood and selling it. I 
asked what here monther was ning. The mother was insane. I stopped the 
interview and left the ward. One can suffer the truth only so much. 

It is pointless to indulge in the exploration of the cruelty of poverty or of 
agrarian capitalism--unless we place the problem in perspective. True, the 
malnutrition wards are our images of our own Buchenwalds and Auschwitz's of 
poverty in which the young are hopelessly trapped. 

But what is easily being missed is that behind these impassive masks of 
children who are neither dead nor alive is a larger landscape of change 
sweeping the feudal structure of Negros economy and society and transforming 
them into something perhaps more equitable and resilient. 

The conflicts previously cited--the land seizures by the peasants, the war- 
lords’ defiance of central authority, the guerrilla war of the NPA--are merely 
symptoms of disruptive change. They need not bring despair--for no society 
ever dies. Negros society has an immense capacity to renew itself. 

[l Sep 86, pp 1, 6, Part III] 

[Text] The initiative to turn the Negros economy around, to reorient it from 
twoo heavy dependence on sugar and to halt the slide towards social revolution 
comes from concerned planters led by the acting provincial governor. Daniel 

The 39-year-old Lacson is widely seen as a dynamic executive who, under 
crisis, has inspired creative approaches aimed at turning back the revolu- 
tionary tide. His best-known initiative calls for the acceleration of crop 


diversification, use of part of sugarlands for food production projects 
(agri-enterprises), and voluntary land sharing with farm workers. I shall 
discuss details of this plan later. 

Lacson, who is a big landowner himself, wants to channel the process of change 
into the conduits of reform and he knows he is racing against time. In recent 
speeches to private organizations in Bacolod City, Lacson said that "Unless 
we turn the situation around in two years, perhaps we may have to join the 
boat people." 

There is no doubt about the life-or-death intensity of this upper-class led 
campaign to snatch the province from falling into revolutionary hands. What 
is problematic is whether there is time left to reverse the slide and whether 
the initiative from the center offers too little. 

A realistic assessment of the prospects of reformist initiatives succeeding 
requires us to examine the present state ofthe sugar industry's crisis. 

A World Bank study dated 6 March 1986 on sugarlands diversification in the 
Philippines gives an overview, the highlights of which are summarized: 

The sugar industry has been one of the important foreign exchange earners in 
the Philippines. During 1973-82, sugar exports averaged 1.4 million tons 
annually (about 60 per cent of total domestic production) and accounted for an 
average of 12 percent of total value of exports. Following declinign world 
prices, the value of sugar exports fell to about $300 million in 1983 or 

about 6 percent of the total value of exports. 

During 1973-82, sugar contributed about 6.5 percent of the gross value added 
to the agricultural sector in 1972 constant prices. The contribution declined 
to slightly over 4 percent in 1983. In 1983-84, about 500,000 workers were 
annually employed in the industry. On an average family size of six members, 
about three million people depended on the industry. 

About 73 percent of sugarcane workers live and work regularly on farms, 25 
percent live in nearby villages and are employed seasonally and about 2 per- 
cent are migrant seasonal workers called sacadas. 

In 1975-76, the sugarcane area and total sugar production peaked at about 
550,000 hectares and 2.9 million tons. In 1984-85, in response to the fall 
of sugar prices in the world market, both area and production declined to 
385,000 hectares and 1.7 million tons, respectively. Further declines cre 
projected for 1985-86 to 321,000 hectares and 1.3-1.5 million tons, respect- 
ively, or about 28 percent and 36-45 percent below the respective five-year 
averages up to 1983-84. 

About 70 percent of all sugarcane is grown in Negros Island and Panay. The 
heaviest concentration is in Negros Occidental where more than 70 percent of 
cultivated area has been devoted to sugarcane. 


The five-year avarage of cultivated sugarcane area in Negros Island during 
1979-80 to 1983-84 was 233,999 hectares. 

Of the total 30,000 sugar planters in the country (10,661 are in Negros 
Island), about 77 percent own farms below 10 hectares, 18 percent, own mediun- 
sized farms [words indistinct] to 50 hectares and 5 percent, large farms of 
above 50 hectares. In terms of the total sugarcane area, small farms account 
for only about 22 percent while medium and large farms account for about 

35 and 43 percent, respectively, indicating that land distribution is highly 
askewed. In Negros Island, of the total sugarcane area of 211,456 hectares, 
farms of over 100 hectares account for 44,258 hectares or 41.4 percent. 

Sugarcane yields per hectare are much higher on small and large farms com- 
pared to those on medium-size farms. This has implications for land reform. 

There are 41 sugar mills in the country (14 in Negros) with a total milling 
capacity of about 184,500 tons of cane a day, or an equivalent of 3.5 million 
tons of raw sugar a year. In 1979-80, to 1983-84, capacity utilization 
averaged 70 percent, and fell to about 50 percent in 1984-85. 

The contraction of the sugar industry since 1984-85 can be traced mainly to 
the decline in financing available to the industry since 1984, the deteriora- 
tion of law and order in Negros and since late 1984, the inability of the 
Philippines to export sugar profitably since its cost of production (about 

10 US cents to 12 US cents a pound) exceeds the current world price of raw 
sugar (about 5 cents a pound). 

The financing problem has been severe and made the industry contraction 

very disorderly. The main factors responsible for the decline in financing 
since «arly 1984 include: the cash squeeze in the economy resultirg from 
the ’ :os government's economic stabilization program; the closure of the 
Centcai Bank's rediscounting window which was the largest source of credit 
for the sugar sector; reluctance of some banks to lend for sugar because of 
the instability and uncertainty of government sugar marketing policy. This 
refers to the National Sugar Trading Corporation's [Nasutra] monopoly in the 
marketing of sugar. The failure of Nasutra to account for funds to planters 
aggravated planters’ cash flow. 

Because of the sudden and disorderly contraction in the industry many 

good sugar lands, which could be used for other crops, are lying idle, 
causing either unemployment or underemployment for about 100,000 sugarcane 

The job lay-offs are particularly severe in Negros because they account for 
more than 50 percent of sugarcane area in the country and has employed more 
than 200,000 workers. The almost exclusive dependence on sugarcane has left 
very limited alternative employment opportunities. 

I am quoting the following portions of the World Bank report because of their 
implications for land reform covering sugarlands. 


--A possibility following the approval by the Constitutional Commission of a 
resolution calling for sweeping agrarian reform: 

Because of the impact of the industry's contraction on unemployment, “crop 
diversification has thus become a major issue in Negros. It is not an issue 
in other sugar areas since, overall, sugarlands account fcr less then 5 per- 
cent of cultivated area in the Philippines and, in half of the areas growing 
sugarcane (outside Negros), sugarcane itself can be regarded as a diversified 
crop as these areas formerly grew rice and other crops. In essence, mono- 
cropping in Negros is a problem if it produced largely for the world market 
where prices fluctuate sharply inducing severe instability in production and 


"The unemployment and underemployment problem in Negros and other sugarlands 
has been aggravated by the highly skewed land distributed. If land distri- 
bution has been less skewed, the problem would not have emerged at its present 
scale, despite the financing problem, since small farmers would be mostly 
self-financed. Moreover, given the need for sugar industry contraction, 

crop substitution and the provision of alternative employment opportunities 
would have occurred much faster on smaller farms since, unlike large planters 
who usually have other sources of income, small farmers cannot afford to leave 
their lands idle for long." 

[2 Sep 86 pp 1, 6, Part IV] 

[Text] Im the previous article, it has been demonstrated that land concentra- 
tion in Negros Occidental stands in the way of crop substitution and diversi- 
fication as a means to wean the provincial economy away from excessive depend- 
ence on sugar. 

The World Bank study previous cited stressed that crop substitution and 
diversification be given top priority because of their implications for 
unemployment and underemployment, which are fuelling social unrest. 

The study recommended that limited land reform seemed the practicable option, 
rec gnizing that a general redistribution of sugarlands at this time “would 
create serious instability and merely compound ¢he already severe problems of 
the industry.” 

Land Reform is a dreaded word in Negros. It conjures images of not only 
losing land but also political power and influence associated with land 
ownership, and giving up a sumptuous way of life enjoyed historically by the 
Negros landed aristocracy. Perhaps there are few provinces in the country 
where the notion of private property and the power that lies behind it is more 
sacrosanct and deeply ingrained into the bones of its inhabitants than in 

It is in Negros where one still sees the hacienda whose community centers 
are laid out to depict the dependence of farm workers on and their subser- 
vience to the hacenderos. This pageant of lord and peasant is played out 


every day--just as it has been since the British financed the expansion of the 
sugar industry the 19th century, following the opening of the port of Lloilo, 
across Negros Occidental, to international trade. The haciendas transport 

one back to the past--and time is frozen there. 

Thus, these findings: > World Bank leave little comfort for landowners. 
Neither do they appeai co the revolutionaries who demand drastic land redis- 
tribution. But the World Bank report answers arguments that have been tradi- 
tionally cited to resist land redistribution. According to the report: 

"Experience of other major sugar producing countries of the world shows that 
concentration of land ownership is a deterrent to diversified farming systems. 
This also appears to be the case in the Philippines. The large farmers have 
part on all of their sugarcane areas lying idle and have not opted for crop 
substitution and diversification fast enough due to problems which are mainly 
associated with large farm sizes. 

"The issue is whether land redistribution would help resolve the problems 

of the sugarcane areas, particularly those of unemployment and underemploy- 
ment. When the sugar industry was expanding, planters were protected from 
land redistribution. Now, in a period of industry contraction, continued 
protection is justified only if large planters are more efficient than small 
planters. Available evidence, however, shows that the cost per hectare and 
per unit of sugar output in the Philippines is lower on small farms than 
larger farms. Consequently, there seems to be little basis to believe that 
the breakup of sugar lands into small farms would adversely affect the cost 
of competitiveness of the Philippines in sugar. In particular, there appears 
to be no rationale for exempting sugarlands, which will be taken out of sugar- 
cane as a result of industry rationalization, from land reform. 

"The argument against a general redistribution of pragmatic: 
It would create serious instability in the short term and merely compound the 
already severe problems of the industry.... 

"It appears that a limited land reform would be practicable in the sugarlands 
at this stage. Public support to land reform is likely given the fairly 
widespread concern for the situation of the sugarcane workers in Negros. In 
fact some degree of land redistribution is already in progress. A few socially 
conscious planters, some of whom are supported by private voluntary organiza- 
tions, have entered into land-sharing arrangement with their workers under 
which the latter have been given permission to use plots of land for food pro- 

"Moreover, the banks have already foreclosed on an estimated 10,000 hectares in 
Negros belonging to planters, and government is considering giving these lands 
to workers’ unions. They are also reportedly considering foreclosing on all 
sugar farms with arrears; this could include as much as 100,000 hectares in 
Negros alone. According to representatives of government banks, attempts 

to sell foreclosed properties have generally not been successful. Since the 

banks have no experience in running the farms themselves, most of their fore- 
closed properties are currently unused. Under these circumstances, land 
redistribution seems to be a practicable option. 

The World Bank study recommended that the government consider a land redistri- 
bution policy in sugarcane areas based on four elements: 

1. Voluntary land sharing arrangements (including share tenancy) should be 

2. The lands foreclosed by the banks should be sold to sugarcane workers’ 
unions who had previously worked on those lands. 

3. On mortgaged sugarlands with arrears but which have not yet been fore- 
closed, a land-sharing arrangement with workers should be made conditional 

for any debt rescheduling. (About 80 percent of Negros »lanters are in srrears 
for crop loans with the Philippine National Bank and the Royal Traders Bank. 
They are asking for restructuring of these loans to free some of their funds 
for crop diversification). 

4. Sugarcane lands not planted to any crop at recognized plant densities for 
three consecutive years should be made subject to land reform. This measure 
is likely to put pressure on large planters to accelerate crop substitution 
and diversification. 

The study also urgges the government to give highest priority in the next 
few months to land redistribution and a financing plan to back it because of 

its impact on alleviating poverty. 

Sugarcane workers remain one of the country's main poverty groups. The in- 
dustry’s contraction, as well as the mechanization program wadertaken by the 
Marcos government in 1983 to increase efficiency and productivity so the 
industry could be more competitive in the world market, have worsened the 
unemployment problem. Mechanization was halted because of financial con- 
straints and its social costs but it has displayed thousands of farm workers. 

In 1982, 62.3 percent of Negros families were below the poverty threshold, 
or earning less than P9,387 a year. This meant three out of five Negros 
families would be considered poor. According to Roque Hofilena, planning 
and development coordinator of the Negros Provincial Development Staff, 

as much as one-half of the province's total income goes to just 5 percent of 
the highest income earning families in the province. 

{3 Sep 86, pp 1, 6, Conclusion] 

[Text] Governor Daniel Lacson's vision, as well as that of the forward look- 
ing planters, of the economic transformation of Negros Occidental does not 
align with the World Bank's rather moderate proposal for limited land redis- 



He plans managed change under the auspices of the private capitalist sector 

in which the planters are the agents of economic development while they 

retain most of their land. The concrete expression of this program is the 
so-called 60-30-10 plan. Under this plan, 60 percent of sugarcane lands is 
set aside for sugar production, 30 percent for diversification or agri-business 
and 10 percent for voluntary sharing with farm workers. 

The formula derives from the distribution of the sugar crop. It is estimated 
that distribution of the production for crop-year 1987-1988 would be 950,000 
metric tons for domestic use, 2,000,000 metric tons for the US quota, and 
150,000 metric tons as reserve sugar, totalling 1.3 million tons. This pro- 
duction level is equivalent to only 60 percent of the industry's capacity. 

The Sugar Regulatory Administration has set a production target of only 1.3 
million metric tons for crop year 1987-1988. This quota reduces sugar area by 
as much as 40 percent. A total of 267,000 hectares is devoted to sugarcane 
production in Negros Occidental. The 40 percent decrease leaves 160,000 
hectares to sugarcane and frees 106,700 hectares for other uses. 

This quota also affects milling capacity. It reduces use of the 41 sugar 
mills in the country (14 of which are on Negros Island) by as much as 40 
percent. Rationalization plans of the government on the mills calls for the 
closure cf half of the sugar mills. This would render jobless thousands of 
mill workers. 

Of the 160,000 hectares in Negros freed from sugar production, 30 percent, 
or 80,000 hectares, will be used for crop diversification and agri-business 
(animal husbandry, for example), and 10 percent, or 26,700 hectares, for 
voluntary land use schemes. 

Under the land use scheme, resident farm workers would have access to 10 per- 
cent of the hacienda land in which they may plant crops for food production 
to augment incomes, in addition to wages earned from normal farm work. 

The plan envisages eventual ownership of the 10 percent by the peasant cul- 
tivator. How soon, there is no fixed time. 

The principle, as explained by Lacson, is that “the sugar workers should first 
learn how to be a productive farmer before he can be expected to take care of 
a bigger piece of land." 

He envisages that the 30 percent for diversification and agri-business is a 
potential growth area from which land-based enterprises may develop and cre- 
ate jobs. 

The plan is biased against land refore. Said Lacson: “The experience of the 
land reform program in rice and corn should have driven home the lesson that 
the majority of our rural families are not yet prepared for a sudden trans- 

fer of bigger pieces of land. Besides, it is obvious that the developed land 
resource of Negros Occidental is not enough really to go around. Even if all 

sugarlands were distributed to the landless sugar workers’ families, the net 
result would be a little [words indistinct] hectare per family.” 

He wants to transform the planter into a modern agri-business entrepreneur 
who would [word indistinct] the economic recovery effort within the frame- 
work of free enterprise. 

So far, the unionized workers under the Federation of the Negros Sugar Workers, 
the largest union of workers in the province, have indicated interest in the 
10 percent land use scheme, provided that land title is transferred right 

away to workers’ cooperatives. Landlords resist immediate land transfer. 

It is not disputed that land use in homelots of 500 to 1,000 square meters 

planted to food crops, such as vegetables and fruits, can augment workers’ 

incomes. This has been demonstrated in Gov. Lacson's 120-hectare hacienda 

Otilla in Talisay, about seven kilometers north of Bacolod City. He is one 
of few hacenderos who have adopted the land use concept. Their numbers are 

Crop diversification looks promising on blueprint, but closer examination 
shows that the most likely cash crop substitutes--rice and corn--have limited 
market. The Philippines is nearly sufficient in rice and a shift of acreage 
to rice would result in surpluses which cannot be exported because our cost 
of production is not competitive. Surplus rice could depress local rice 

Some planters have gone into prawn production which fetches profits of about 
400 percent, but capital investments are high for transforming sugar lands 
into prawn ponds. Socially, it does not help much in relieving unemployment 
because it is capital, rather than labor, intensive. 

In diversification, the biggest problem is financing. Planters are short 

of cash and the National Government is not yet financially prepared to bail 
them out with fresh loans. The launching of the emergency employment program 
of the Aquino government may help alleviate unemployment and poverty but 

this is a short-term measure. 

The vagaries of international capitalism--in which world sugar prices batter 
the domestic sugar industry--and the depleted national treasury conspire 
against the planters’ enterprise to turn the local economy around. 

There is no lack of concern on the part of the planters to alleviate the 
suffering of the Negros poor. Concerned organizations, such as the Women of 
Negros, go out of their way to help feed malnourished children or set up wel- 
fare distributing projects. They promote cooperatives that encourage crop 
diversification. Many in these groups are wives of planters. 

But the sugar landlord of today is a vastly diminished social force. He is 
on the run. Deposed President Marcos broke the power of the “sugar bloc” 
with the declaration of martial law in 1972 and the establishment of the sugar 
monopoly in trading through the Nasutra (National Sugar Trading Corporation) 


in 1977-85, and the Philsucm (Philippine Sugar Commission) in 1977-85. The 
latter dictated sugar policy. 

The suspension of the Congress and electoral [word indistinct] during the 
martial law years deprived the landlords of a pwer base through which they 
protected and promoted the interests of the suger industry. They had enough 
power to exclude sugarlands from land reform legislation. 

The sugar monopoly squeezed them of cash, sending them to their knees for 
crop loans. When sugar prices dropped, the economic resources of landlords 
dwindled and even reduced their capacity to hold the loyalty of farm workers 
whom they were no longer able to aid with interest free loans. 


» these events led to the disruption of the social structure of 
Negros and opened the way for realignment of social forces of which landlord 
was onger the dominant group. 

The fall of the Marcos regime ended strong state intervention in the sugar 
industry and the noninterventionist nature of the Aquino government has left 
a vacuum in which interests of the organized peasantry, the mass organiza- 
tions, some of them sponsored by the Roman Cathoic Church, and the landlords 

are competing for supremacy. 

Initiatives from the landlords are emerging from this disequilibrium. Whether 
they will succeed in transforming the provincial economy into a free enter- 
prise agro-economic society is hard to tell. Events are moving rapidly to 
unravel the old social order. So far, only palliatives are being delivered. 
But can the Negros poor wait for the solutions of the planters to trickle 

CSO: 4200/1421 




HKO90253 Quezon City NEW DAY in English 8 Sep 86 p 2 
[By Alex S. Villanueva] 

{Text} Wur Stet Misuari, the leader of the Moro National Liberation Front 
(MNLF), has gone far for a son of a fisherman in Tapul, Sulu. 

When ¥ ‘wari came to Jolo in 1970 after finishing his college at the 

Univer ty of the Philippines in Diliman, Quezon City, he taught at an obscure 
school n Jolo, the Philippine Muslim College, where dropouts at the Notre 
Dame co” ‘olo College enrolled. 

Misuari used to go to the office of the SULU STAR, the lone weekly newspaper 
of Sulu of which I was the editor. My assistant was Nelly Sindayen, now the 
Philippine correspondent of TIME magazine. 

Nur, as his friends call him, was planning to run as a delegate to the 
Constitutional Convention in 1971. Wot having any background in politics, he 
was no threat to the traditional politicians such as the Abubakars, th Annis 
and Sangkulas. Nur was not discouraged. He formed a young group from the 
students of Philippine Community College, the Jolo Community College, and the 
Notre Deme of Jolo College and merged them into an association called 

Paghambuuk which means “untied” in Tausug. 

When martial law wae declared the members of the Paghambuuk were put in jail. 
Those who were not put in jail joined Misuari in the hills. 

During the election campaign, the group toured the seven towns of the Jolo 
mainland and the island towns during the election campaign. In some of the 
election sorties, I was with the group and I had to pay the price for being 
seen with Misuari: when martial law was declared, I was in and out of the 
military stockades eight times. As [words indistinct] lost in the Concon 
election in Sulu in 1971, landing fifth, losing to the fourth placer only by a 
few moes. Sulu was entitled to three seats. But Misuari made a deep 
impression on the Sulu politicos because [word indistinct] in Jolo, Sulu's 
capital town, placing number one among the eight candidates. 

Paghambuuk filed a protest against election frauds, prompting the Comelec 
[Commission on Elections] .sairman Jaime Ferrer to conduct a public 


investigation on the complaint. Ferrer stayed in Jolo for three days and 
conducted public hearings. 

In those hearings, the members of the Paghambuuk testified that there was 
rampant cheating in some island towne- 

A Paghambuuk member, Zenaida Hamada, testified that the voters were more than 
those in the voters list. Hamada was a watcher of Misuari's political party. 

During the testimony of Hamada, the members of the Paghambuuk openly cried and 
pleaded with her to stop testifying because they feared for her life. But 
Hamada went on and Ferrer made a drastic move by annulling the votes of the 
third place winner. The third slot was given to lawyer Benjamin Abubakar, 
former Sulu governor. 

After the election, Misuari was hardly seen in Jolo town anymore. But many 
parents had reported their sons leaving their homes to join the training 
grounds of Misuari somewhere in the hinterlands of Talipao and Panamao towns. 

Most of the political leaders of Misuari's Paghambuuk group were students and 
graduates of the University of the Philippines. Notable among them were the 
Tan Sisters--Desdemona and Leonila, daughters of a rich Jolo businessman, the 
late Tuchay Tan, a former provincial board member. 

Desdemona, who has a master's degree in social work, later on married Misuari, 
while Leonila is reportedly the treasurer of the MNLF. Nijam Abubakar, the 
son of Jolo Mayor Aminkadra Abubakar, became one of the trusted sidekicks of 
Misuari. Abubakar reportedly was active in numerous fire-fights with the 

Dr Farouk Hussein, a trusted man of Misuari, was formerly the municipal health 
officer of Jolo, while Dr Basil Jajurie, was a former Kagawad [official] of 
Jolo, and one of Jolo's best known physicians. 

Since Desdemona's mother is an Abubakar, Misuari could claim affinity to the 
big Abubakar clan in Jolo which also includes a big Ututalum clan. That is 
why in late 1973 before the 7 February burning of Jolo in 1974, only Mayor 
Abubakar could go out of Jolo to negotiate with the MNLF and dissuade it from 
attacking Jolo. 

In 1973, out of the 16 towns of Sulu, only Jolo town was not under the control 
of the MNLF. The MNLF eventually captured Jolo for a day on 8 February 1974. 

Misuari was able to win in Jolo during the Concon election in 1971 because of 
the influence of the family of his wife and the Abubakars. Another factor was 
the backing of the student groups from the three colleges in Jolo. 

While the MNLF made a name for itself internationally and Misuari became an 
international figure, the property damage and the loss of thousands of lives 
in Mindanao the rebellion has caused cannot be replaced. Even today, 
thousands of former Jolo residents have refused to go back home because of 

uncertainties in Jolo. Their primary concern is that fighting can always 
erupt again. 

Many Joloanos now live in Negros Oriental and they refuse to go back. Many of 
them hope and pray that President Aquino can solve the conflict. They are 
banking on Mrs Aquino's courage to meet with Misuari in Jolo and solve the 
problem once and for all. 

Many Joloanos recall the times when deposed President Marcos had gone to Jolo 
twice incognito dressed as an ordinary soldier. They were asking then why 
there was a need for Marcos to go there incognito. 

For me, a long-time Jolo resident, Jolo was the safest place to live among the 
places in the Philippines. We hope that President Aquino will also have that 
feeling and sentiment after her talk with Misuari. 

CSO: 4200/1413 


26 September 1986 


HKO81205 Quezon City ANG PAHAYAGANG MALAYA in English 8 Sep 86 p 4 
{Editorial: “A Giant Leap for Peace”™] 

[Text] Whatever apprehensions wee there before the mest, it has now emerged 
with telling clarity that a giant leap has been scored for the cause of peace 
in Mindanao. Those who have entertained the healthiest skepticisms about the 
talk, the security problem it posed with the President's sally to Jolo, the 
violation of protocol or niceties since Nur Misuari is not a chief of state, 
these were but some of the major hurdles the historic meet had to undergo. 
That is went through without any hitch is a tribute to the sincere desire of 
both parties in their quest for peace and thus offers the biggest hope that 
more steps in the future will be taken and will be forthcoming to complete the 
journey so auspiciously started. Confucius observes that the journey of a 
thousand miles begins with its first step. That momentous first step has been 

The “continued cessation of hostilities,” as contained in the joint statement, 
ig an excellent basis to govern the conduct of future negotiations. 

Certainly, it is the continued hostilities that have exacerbated the situation 
in Mindanao and heightened the bitterness between the warring factions, 
ironically between brother Filipinos. As President Corazon Aquino put it, 
“Mindanao belongs to all, be they Muslim or Christian, who have expanded 
sweat, tears, and blood to make it a home for Filipinos.” And Misuari echoed 
her sentiments with the words: “The message is peace.” 

The President's trip is a success in setting the stage for future talks. A 
lot will depend on implementation of the agreement already forged by the two 
leaders, who have named the officials from both sides who shall carry the 
brunt of the negotiations from here on. If the sincerity and good faith shown 
at that historic meet will mark the conduct of the negotiations, there is no 
doubt that the elusive peace will be achieved. 

The chance of a lifetime is here and waiting for those who like to see peace 
reigning at last in the troubled South. If they are not aware of it yet, the 
negotiators stand at the threshold of history; they either will enter it or 
remain as outsiders looking in. 

CSO: 4200/1413 

26 September 1986 


HKO21536 Manila THE MANILA EVENING POST in English 1 Sep 86 p 1 

[Excerpt] Jose Ma. Sison, alleged leader of the Communist Party of the Phil- 
ippines and Partido ng Bayan founder, has assailed anew the continued pre- 
sence of U.S. bases and foreign domination of the country's economy and 
vital industries. 

Adressing 500 Japanese “Peace Boat" participants and 300 Filipino guests, 
during the reception on board the "Coral Princess" at the South Harbor's 
Pier 15, Sison said the Philippines and Japan belong to the same region, and 
face the same problem on the preservation of peace and the existence of U.S. 
bases with nuclear weapons. 

Sison said the Japanese and Filipinos share the same objectives of seeking 
and banning nuclear weapons and vessels and creating a nuclear free zone in 
the Asian and Pacific region. 

He said "the noble and lofty purposes of the ‘Peace Boat’ are similar to 
the primary aims of Bayan (Bagong Alyansang Makabayan) [New People's Al- 
liance]--to promote peace, understanding, and goodwill, and fight for 
solidarity, justice, freedom, and democracy." 

Sison urged Filipinos and Japanese to unite and work for peace by fighting 
U.S. imperialism and domination. 

He said “our peoples should work for closer links to fight for peace in the 
whole world.” 

Other cause-oriented groups attended the reception to exchange views and with 
their Japanese counterparts. These groups included Bayan, the National 
Alliance for Justice, Freedom, and Democracy, and Nuclear-Free Philippines 
Movement, and the Anti-Bases Coalition (ABC). 

CSO: 4200/1415 



HKO81229 Manila PHILIPPINE DAILY INQUIRER in English 6 Sep 86 p 14 

[Text] Camp Evangelista, Cagayan de Oro City--A captured NPA member disclosed 
that the rebel movement in the Agusan Provinces and Surigao del Norte is still 
reorganizing after many of its members deserted or surrendered to government 
after the people's power revolution last February. 

The rebel leader identified as Narcisco Albacite alias “Commander Mike", 
also said the February revolution that installed President Corazon Aquino 
was a great setback for the rebel movement. 

The NPA has practically lost face among the people in these areas, making 
it even difficult for the movement to recruit new members, Albacite said. 

Albacite was captured during an encounter Aug. 2 in Tagbina, Surigao del Sur 
with government troopers from the 28th Infantry Battalion. 

Albacite, who was wounded during the encounter, is being treated at the 
army station hospital in Camp Fvangelista upon order of Brig. Gen. Mariano 
Adalem, RUC [Regional Unified Command] 10 commander. 

According to the captured rebel leader, he does not intend to go back to the 
rebel movement after his hospitalization because he would be a dead man if 
he returns. He also said there are more opportunities under present leader- 


Albacite said he did not expect to be brought to a hospital for treatment by 
the government troopers, adding that many of the teachings of the rebel move- 
ment are all fabricated. 

CSO: 4200/1415 


HKO11440 Hong Kong AFP in English 1428 GMT 1 Sep 86 

[Text] Manila, Sept 1 (AFP)--Three people were killed when communist guer- 
rillas attacked a town hall and a house occupied by the military in the 
northern Philippines, the official PHILIPPINE NEWS AGENCY (PNA) reported here 

Twenty New People's Army (NPA) guerrillas raided a military “safe house” or 
hideout in Atimonan Town Saturday but were driven. [sentence <s received] 

Two of the attackers and a government militiaman were killed in the gunfight 
in the center of the town, 120 kilometers (72 miles) south of the capital 
in Quezon Province, PNA added. 

In Mindoro Island south of Manila, some 30 NPA rebels seized nine firearms, 
briefly abducted three policemen and commandeered a jeep during a raid Friday 
on Calinton Town, the agency said. 

The insurgents met no resistance, and freed the policemen when they were 
far away from the town, it added. 

Military spokesmen here could not immediately confirm the two reports. 

The NPA is the 16,500-strong armed wing of [words indistinct] Communist Party 
of the Philippines. Both belong to the underground coalition National Demo- 
cratic Front how holding peace talks with the government of President 

Corazon Aquino. 

The Armed Forces Monday denied reports that government troops had torched 12 
houses inside an experimental ceasefire zone in the south Philippines. 

Retreating NPA men who ambushed an army patrol Wednesday set fire to the 
houses, PNA quoted deputy Armed Forces Chief for Logistics Brigadier General 
Antonio Lukman as saying. 

An official panel monitoring the two-week-old ceasefire reported after an 
inspection of the village near San Vicente Town Saturday that residents had 
told them soldiers burned their houses and exevuted three farmers. 

The PNA report made no mention of the alleged casualties. 

/6662 6s 
CS0: 4200/1422a 


HKO21534 Manila MANILA BULLETIN in English 2 Sep 86 p 6 
[Colum by Orlando F. Aquino: "Back to Square One?" 

[Excerpt] It is most unfortunate that the Communist Party of the Philippines 
(CPP) has chosen to take a hard, uncompromising position in virtually reject- 
ing attempts by the Aquino administration for a ceasefire so that peace talks 
can begin between the government and the Marxist rebels. 

That is the inevitable impression given by the CPP announcement that it does 
not recognize the truce forged by military authorities and rebels in the 
Davao provinces--and then adding that “the NPA in Mindanao as in other parts 
of the country are under orders to counter all attacks by the AFP [Armed For- 
ces of the Philippines] and defend the people.” 

Stripped of all the communist rhetorics and demagoguery, one can only con- 
clude that the CPP is trying to pressure the government into giving in to 

its terms for the start of ceasefire negotiations ostensibly from a position 
of strength--at least that is the impression it wants to convey to the people. 

To our mind, the CPP is testing how far the government is willing to compromise 
to obtain a ceasefire although one is made to believe from the published state- 
ment that the CPP is not giving any concession. And if any concession is 

to be given it should come from the government. 

The optimistic view, of course, is that the CPP is still open to bargaining. 
But in our book, it seems that everything is back to square one because good- 
will and good faith--basic elements in ceasefire talks--are missing. 

CSO: 4200/1415 

HKOS1111 Manila MANILA BULLETIN in English 6 Sep 86 p 6 
{[Editorial: "Mindanao's Other Voices") 

[Text] Neither the administration nor the Nur Misuari faction of the MILF 
should forget that there are many powerful groups and voices in Mindanao. 
While it is the time of Misuari to be heard, the others must also be heard 
and their sentiments taken into account. That would be abiding by the 
democratic spirit. 

What destroyed the peace early in the last decade was the lack of communica- 
tion between the government and many of the Muslims as well as among the 
Muslims themselves. The false impression created by the lack of communica- 
tion was that the government was fighting the Muslims on religious grounds, 
which was far from the truth. This mis-impression was dashed but only after 
thousands of lives were lost. 

"Disinformation" may rear its ugly head and sow destruction in the South. One 
of the ways to prevent its occurrence is to give a chance to each of the dis- 
parate groups to air its side. If that is done, the picture that is likely 
to emerge is that the Filipinos in the South are not as radica! as they are 
sometimes portrayed to be. 

If it were true that some provinces in the South are dominated by extremist 
elements, those provinces would not have participated in past elections and 
their leaders would not have participated in the government. Those provinces 
would have been constantly in turmoil. 

Except for a few sporadic incidents, peace reigns in the souchern islands 
and we think that the arrival of Nur Misuari on the invitation of the admin- 
istration will not put an end to peace. 

CSO: 4200/1415 


26 September 1986 


HKO31412 Quezon City BUSINESS DAY in English 3 Sep 86 p 4 
[ere and Now" column by Francisco S$. Tatad: “The President as Negotiator") 

[Text] The military is apprehensive that some “naifs" in the Cabinet, hope- 
fully not the President herself, are incapable of appreciating the implica- 
tions of the National Democratic Front demand for legal recognition as a pre- 
condition for the ceasefire negotiations. They seem ready to accede to 
anything just to get on with the talks. This touches a raw national secur- 
ity nerve, and could create a flashpoint. 

The CPP [Communist Party of the Philippines]/NPA/NDF [National Democratic 
Front] are now in a non-loss position, whatever happens to the talks. They 
did not seek this meeting. This was purely Mrs. Aquino's inspired initiative. 
She seemed convinced that even without a clear negotiating strategy or posi- 
tion, she could set down with the CPP/NPA/NDF and get them to give up their 
revolutionary movement. 

Presidential naivete has seeped down to the lower echelons, at great cost to 
the government. For instance, using taxpayers’ money, government TV has pro- 
duced more propaganda for the communist-led insurgency than for itself. In 
addition to government TV, which need not be classified as an NDF organ, the 
NDF has been allowed to run unhampered a very active press office, which 
regularly floods the media with more information than one eve gets from the 
combination of Minister Teddy Boy Locsin, spokesperson Rene Saguisay and 
deputy spokesperson Alice Villadoli. 

Now, the NDF gets infinitely better propaganda mileage and has bee. able to 
project itself as better organized and more coherent than Mrs. Aquino's 
government. Though its chief leaders may not be as popular as Mrs. Aquino 
herself, its negotiators Satur Ocampo, Tony Zumel and Bobby Malay are likely 
to be quoted by the press and hounded by autograph seekers instead of the 
government's Ramon Mitra and Teofisto Guingona. 

Thanks to Mrs. Aquino'’s charistmatic and unplanned initiative, they have the 
absolute upper hand in the propaganda war against the government. They prob- 
ably deserve to have the edge, having worked so hard at it for years. But 
they have the edge, not only because they have developed their skills over 


the years, but also because the government seems to have so many babe-in-the- 
woods notions about politics. 

In Marcos's time, the government negotiated a settlement with PKP (Partido 
Kemunista ng Philipinas), the old communist party, in whcih the latter laid 
down its arms in order to help Marcos implement land reform. Eventually, 
Marcos described the settlement as a surrender, and critics of the PKP ac- 
cused it of having capitulated. There is no danger of anything like that 
happening to the CPP/NPA/NDF. 

If any capitulation is being packaged, it seems to be the capitulation of 
the Aquino government. And the damming thing is that Mrs. Aquino seems to 
have decided to take a beauty sleep in the middle of it, leaving it in the 
hands of some of her human rights lawyers to fend off objections from the 
military as obstructionism from the right. One hopes she will wake up in 
time and seize the initiative. 

But this is not all. On the Moro National Liberation Front, Malacanang has 
announced that Mrs. Aquino would soon meet with Nur Misuari, MNLF chairman. 
The pianned venue is not the Malacanang guesthouse where she holds office 
and normally receives dignitaries, but somewhere in Jolo. This would be 
Misuari’s first time to come home since the outbreak of hostilities in 
Mindanao in the seventies had compelled him to establish his headquarters in 
the Middle East. For Mrs Aquino, this would be--in the words of BULLETIN 
columnist Joe Guevara--her "third official foreign visit." 

The announcement came after a meeting between Misuari and the President's 
brother-in-law, Agaptio "Butz" Aquino, in Damascus. What the two discussed 
there, and what Mrs. Aquino and the MNLF chief will later discuss in Jolo are 
well-guarded state secrets. So well-guarded in fact that Malacanang decided 
to ban the reporter of the INQUIRER for breaking the embargo on the announce- 
ment of Jolo as the meeting place. While it is safe to speculate that the 
talks will focus on the MNLF question, it remains a mystery what Mrs. Aquino 
has already committed to Misuari through Butz, and what formal agreement, 

if any, she is prepared to sign when they meet. 

The need for a just settlement of the "MILF problea” demands ar. open rather 
than a secret agreement. But a secret meeting in Jolo invites all sorts of 
speculation. Everything becomes suspect if the meeting is held without any 
public indication of what was discussed in Damascus and what the government 
can not legally and formally concede at the meeting. 

There are other wiestions. If the President's purpose in going to Jolo is to 
give her seal of approval to whatever accord had been reached in Damascus, 
then Misuari should be received in Malacanang, not elsewhere. If, on the 
other hand, the purpose is simply to continue talks started in Damascus, 

then this is another person's job, not the President's. One can do with the 
office of brother-in-law as one pleases. But one needs to be a little sore 
careful about the Office of the President. 

CSO: 4200/1415 



HKO31531 Manila MANILA BULLETIN in English 3 Sep 86 p 6 
{Column by Melchor P. Aquino: "Ceasefire Problems") 

{[Text] The continuing failure of the government to impress the fact upon the 
general public that there are no ceasefire talks in progress between govern- 
ment and rebel negotiators is sowing confusion in certain sections of the 
news media, and compounding the psychological problems facing the state. 

Certain news reports tend to create the impression that there is an impasse 
in negotiations between the state and the communist rebels. In point of 
fact, there have never been any ceasefire talks. 

Certain problems have to be resolved between the government and the communist 
rebels before ceasefire talks could formally start. As pointed out by our 
distinguished colleague, Mr. Jesus Bigornia, the communist rebels are demand- 
ing 1) issuance to their negotiators of transferable safe cor luct passes, 
with stipulation of untrammelled movement anywhere in the country, 2) the 
right to designate areas “under the control of the National Democratic Front 
(NDF)" as supplementary sites for negotiations, Manila being accepted as the 
principal venue for talks, and 3) the right to fly the red communist flag 
alongside that of the republic whenever and wherever negotiations are held. 

The rebels, according to Mr. Bigornia, insist on the registration of all 
agreements and under-takings reached in the talks, with United Nations. 

(t is extremely doubtful if the New Armed Forces of the Philippines [NAFP] 
would ever consider issuing transferable safe conduct passes to the commun- 
ist negotiators. In fact, the passes that have been issued by General Fidel 
Ramos, NAFP chief of staff, are personal to Messrs. Antonio Zumel and Satur 
Ocampo. There absolutely is no precedent, in law and practice, for the 
issuance of the type of the safe conduct passes demanded by the communist 
rebels. Transferable passes would be prolific instruments of mischief and 

Pending the conclusion of a peace settlement, the government would hopelessly 
be in error to ensure to the communist negotiators untremmelled movement 


within the country. Cabinet ministers who talk about such a concession to 
the communist negotiators are ignorant of, or oblivious to, the requirements 
of law and practice. 

The government should make short shift of second and third demands of the 
rebels. The only venue for the talks should be Manila--of any other city 

or place outside the area or areas of hostilities. In terms of propaganda 

and psychological warfare, holding talks in supplementary areas under commun- 
ist control would be, for the state, a horrendous giveaway. Flying the red 
communist flag alongside that of the republic would be an unspeakable affront 
to national dignity and honor. Equating the communist banner with the national 
flag would be a legal and moral monstrosity too vast for words. 

We agree with Mr. Bigornia that the registration of agreements and under- 
takings reached in the negotiations with the United Nations, would unduly 
accord belligerent status to the New People's Army (NPA). 

The biggest problem facing the government with respect to ceasefire negotia- 
tions is that the cabinet has not defined any terms of reference for the 
government negotiators. One grievously underestimates the intelligence of 
the communists who thinks that he can negotiate with them simply on the ad 
hoc basis. The communist know their trade, they are at home in their craft, 
and they do their homework. 

If there are any such terms of reference, they should be made know to the 

But how can the cabinet define guidelines and objectives for the state 
negotiators when there apparently is no agreement among its members as to 

how to seek a solution to communist insurgency? Opposing counsels of accommoda- 
tion, appeasement, and resistance do not make for common approaches and 


In fine, whose councel should prevail, that of Defense Minister Juan Ponce 
Enrile and General Ramos or that of such cabinet ministers as would supinely 
yield to communist demands for the sake of achieving a modus vivendi with 
the rebels? 

The national leadership could well lose the battle against communist insur- 
gency through inept handling of the ceasefire talks. 

CSO: 4200/1415 



HKO30944 Quezon City BUSINESS DAY in English 3 Sep 86 p 22 

[Text] Armed Forces deputy chief Maj Gen Salvador M. Mison said yesterday 
the military can secure every inch of territory in the country “if we want to.” 

Mison said the military remains on top of the insurgency situation despite 
recent ambushes staged by the New People's Army (NPA) in some parts of the 

The latest was in San Vincente, Davao del Norte, where 15 Army Rangers vere 
killed and 15 others wounded. 

He said the military is only holding its firepower in view of President Cora- 
zon C. Aquino’s current peace talks with the rebels. 

But, the military is always prepared to deal with any eventuality that may 
arise, Mison said. 

He admitted that people are apprehensive about the ongoing peace talks 
between the government and the National Democratic Front (NDF), the political 
arm of the Communist Party of the Philippines (CPP). 

“This is because people really do not know the outcome of the dialog,” Mison 

While others hoped that the dialog will end the bloody 1/)~year insurgency, 
many ere unsure how the conflict will end, he said. 

"If the communists are really that good as they claimed, they should not 
employ terrorism,” Mison said. 

Unfortunately, the NPA rebels have resorted to all kinds of violence to 
intimidate the people, be said. 

He said commmist liquidation squads are roaming the countryside, killing 
not only soldiers or policemen but also innocent civilians who refused to 
cooperate with thes. 


He said communist killings continue unabated every day in the hinterlands 
but many of the incidents are not reported in the media. 

A report received by his office yesterday said a policeman of Lopez, Quezon, 
Monday was assassinated by a four-man NPA Sparrow unit in barangay Talolong, 
Poblacion, Lopez, Quezon. Killed was P/Cpl Florencio Espejo. 

Espejo's firearms, a point 45 caliber pistol and M-16 rifle, were taken by the 

Last Saturday, four members of a family were aroused from their sleep and then 
shot to death by NPA rebels in baragay Sinawilan, Matanao, Davao del Sur. 

The victims were identified as Arnold Dipalobos, 22; Silfredo Dipalobos, 27; 
Roland Dipalobos, 21; and Rodolfo de los Santos, 28. 

The military also said heavily armed NPA rebels burned last Thursday several 
residential houses in sitio Banahaw, barangay Central Mati, Davao Oriental. 

Meanwhile, chs iscal military command has warned against a pousible attack by 
communist 1tevels in Metro Cebu either to rescue their comrades holed up in 
Balamban, Cebu. 

CSO: 4200/1415 


26 September 1986 


HKO81225 Manila MANILA BULLETIN in English 6 Sep 86 pp 1, 12 

[By R.G. Panaligan] 

[Text] The Supreme Court warned the military yesterday against human rights 
violations in its fight against rebellion and insurgency. 

In a decision acquitting a suspected member of the New People's Army (NPA), 
the Supreme Court said that utter disregard of constitutional rights and 
protections “will only fan the increase of subversive activities instead of 
containing and suppressing thea.” 

Acquitted on the ground of reasonable doubt was Ruben T. Burgos, a farmer of 
Tiguman, Digos, Davao del Sur, who was arrested by the ailitary on 13 May 

Based on the evidence presented by the ailitary and the police and the 
testimony of a lone witness, Burgos was convicted by the Davao del Sur 
Regional Trial Court of illegal possession of firearms in the furtherance of 
subversion. Burgos was sentenced to a prison term ranging from 20 years to 
life. He elevated his case to the Supreme Court. 

In a decision written by Justice Hugo Gutierrez Jr., the Supreme Court found 
that Burgos was arrested without a warreat of arrest and that a firearm and 
alleged subversive materials were confiscated without a warrant. It also 
found thet Burgos was not assisted by a lawyer during his custodial 
investigation by the military and the police. 

With the extrajudicial confession, the firearms, cnd the alleged subversive 
documents declared in admissible in evidence against Burgos, the only proof to 
sustain the charge was the testimony of Cesar Masamlok, the lone witness. 
Masemlok's testimony prompted the silitary to arrest Burgos. But the Supreme 
Court found that Masamlok's testimony was uncorroborated and “considering that 
he surrendered to the silitary, certainly hie fate depended on how eagerly the 
he cooperated with the authorities.” 

Masamlok was considered an interested witness by the Supreme Court. 


The Supreme Court said: “Violations of human rights do not help in overcoming 
a rebellion. A cavalier attitude toward constitutional liberties and 
protections will only fan the increase of subversive activities instead of 

containing and suppressing thea.” 

CSO: 4200/1413 



HKO90641 Manila THE MANILA JOURNAL in English 6 Sep 86 p 8 

[Text] A human rights group yesterday accused the military anew of human 
rights violations as it reported 76 cases in Bicol] including salvaging and 
torture, strafing and looting. 

The incidents took place in the period of March to July of this year, the Task 
Force Detainees [TFD] said. 

Two persons listed as killed in a strafing incident were identified as Delia 
Bacoloy, 46, and Arthur Aloquin, 12. 

The strafing of Enriquito Aloquin's house in Pawican, the TFD report said, was 
done by a combined force of police and ailitiamen, two of whom were identified 
as Patroleea Banaag and Cabisilla. 

Six days later, on 16 July, the residence and store of Francisco Albarina in 
Sitio Busay, Saa Isidro, Palanas, Masbate was razed to the ground allegedly by 
constabulary and Integrated National Police elements. The arsonists were not 
identified since they were no nameplates [as published], the TFD said. 

Both strafing attacks were due to suspicions that the houses were being used 
as New People's Army headquarters, the TFD said. 

Other victias of strafings were brothers Jose, 51, and Gerardo, 36, and 
Antonio, 29, Macadonia, all of Gogo, Dugcal, Camaligan, Camarines Sur. TFD 
reported that the alleged perpetrators, were CIC Antonio Asico of the PC 
[Philippine Constabulary, his brother and cousin identified only as Noel ara 
Melchor respectively. Asico was allegedly drunk when he shot up, with an M16 
rifle, the house of the Macadonias. The victias suffered serious injuries. 

Torture victias were also reported. A victim identified as Eusebio Gache, 23, 
panner, farmer, of Sto. Domingo, Vinzon, Camarines Norte, who positively 
identified his tormentor as Nemesio Tribuna of the Philippine Army PA 
{Expansion unknown], claimed he was heavily tortured with fist blows and kicks 
when he failed to present his Res! ‘*oce Certificate when apprehended by the 
suspect who was allegedly drunk. Aetle added that he was hogtied and 
submerged in the gudpool nearby w being interrogated by the PA trooper and 


his companions who were members of the Scout Rangers based in a military 
detachment at Mabilo II. 

Dioscoro Llanilo, 48 and Diego Altabano, 40, both farmers, were also heavily 
tortured with fist blows allegedly by Sgt. Prudencio, Sgt. Fongo, and Sgt. 
Vargas of the PC based at the 257th PC company at Barangay Ezperanza, Pilar 

Llanilao narrated that he was hit with fist blows at the back and on his chest 
and that one of the alleged perpetrators shoved a fragmentation grenade into 
his mouth causing lacerations on his lips. 

Another torture victim was identified as Laduvice Fernando, 16, farmer, of 
Maypangi, Castilla, Sorsogon, who was arrested and hogtied allegedly by the 
same troopers who tortured Llanilao and Altanbao on 22 August. 

CSO: 4200/1413 


26 September 1986 


HKO21522 Manila THE NEW PHILIPPINES DAILY EXPRESS in English 2 Sep 86 p 3 
{Article by Proculo Maslog] 

[Text] Cagayan de Oro City--A newly-formed organization of military officers 
called Integrees and Reserve Officers Group (IROG) yesterday denounced dis- 
criminations in the military resulting in demoralization among some members 
of the officers’ corps. 

An officer of the newly-formed group said the fraternity was organized to 
protect the interests of its 200 members, who claimed being at the losing end 
in terms of promotions and other benefits in the armed forces. 

The source, who requested anonymity for fear of being persecuted, claimed 
members of the Reform the Armed Forces Movement (RAM), who are mostly grad- 
uates of the Philippine Military Academy [PMA], get promoted faster and 
corner most of the choice assignments. 

"The PMA graduates are lording it over in the officers corps, and cornering 
all choice positions while the crumbs are assigned to non-regular officers," 
their spokesman said. 

For as long as the AFP [Armed Forces of the Philippines] cannot correct dis- 
criminations within the organization, we can expect factionalism to continue 
within its ranks," the spokesman said. 

The group was formed in this city two weeks ago following the adoption of its 
constitution and by-laws during a meeting attended by more than 200 charter 
members coming from the different major commands of the AFP. 

The new organization is particularly bitter about the implementation of 
Presidential Decree 1638 which establishes a new system of retrenchment and 
separation for AFP personnel, which they claimed is grossly unfair to most of 
IROG members, the spokesman said. 

He was referring to provisions under Section 10 of the decree which calls for 
the separation of all commissioned officers from captain to lieutenant colonel 
unless they get promoted over a prescribed period of time. 


If we go by this particular provision, most of the IROG members will be at the 
losing end, since many of them have been in their present ranks longer than 
those specified [in the] timetable for promotions to the next higher rank,” 
the spokesman said. 

IROG is the third fraternal organization in the AFP. The two others are the 
RAM, and the Guardians, which was also organized in this city. 

CSO: 4200/1415 


26 September 1986 


HKO21458 Manila THE NEW PHILIPPINES DAILY EXPRESS in English 2 Sep 86 pp 1, 2 

{Text} Brig. Gen. Antonio Lukban, acting deputy chief of staff for logistics, 
yesterday sai“ “he ambush of government troopers in San Vicente, Davao del 
Norte was se: ip by the NPAs. 

In his report to Gen. Fidel V. Ramos, AFP [Armed Forces of the Philippines] 
chief of staff, Lukban said based on his ocular inspection and interviews 
at the ambush site, the incident was a well-planned trap which extensively 
used land mines planted along the route to be taken by the soldiers. 

In that incident, which happened in the ceasefire area concluded recently 
between CPP [Communist Party of the Philippines]-NPA representatives and the 
local officials of Davao del Norte, 15 soldiers were killed and another five 
more were wounded, mostly from shrapnels and explosions triggered by the 
claymore mines. 

Lukban said before the ambush, there were about 200 NPAs who were strategic- 
ally deployed in several huts of families living along barangay Sta. Josefa, 
San Vincente. The mines, it was gathered, were also placed in 15 nipa huts 
where the soldiers would likely seek cover in the event of an ambush. 

He said the members of the lst Scout Rangers regiment were badly outnumbered 
and taken by surprise but retaliated, causing the NPA to withdraw under cover 
of darkness. 

Much of the bodies of the slain soldiers, he said, were badly mangled and 
peppered with shrapnels of the claymore mines. 

Meanwhile, 30 heavily armed NPAs, led by Commanders Ka [Comrade] Warren and 
Ka Nestor, attacked the municipal hall and the INP [Integrated National 
Policy] police station of Calintaan, in Occidental Mindoro, Saturday and kid- 
napped three policemen. The policemen, identified as Pfc. Bautista and 
Carlitos and Patrolman Perigrino were used as human shield in their retreat 
but were later released outside of the town proper. 


CSO: 4200/1415 


HKO21523 Manila MANILA BULLETIN in English 2 Sep 86 p 6 
[Editorial: "The Democratic Attitude"] 

[Text] Democracy will remain flawed as long as the rebellion is of a signi- 
ficant magnitude, for it hinders elections and compels people to take the law 
into their hands. 

The natural reaction of those who would like to see the reflowering of demo- 
cracy is '.o hope and work for the end of the conflict. 

In a few short months, we have seen how the administration has prepared the 
way for an early settlement of the conflict. It has been releasing political 
prionsers and minimizing rights violations by military personnel. 

It has not obstructed the access of suspected communists to the mass media 
and has allowed them to travel abroad. 

It has allowed the peaceful political activity of people who could not 
move freely during the previous administration. And now the administration 
is well on the way to formal talks with rebel leeders on a ceasefire. 

The general approach taken by the new aaministration should be compared with 
that adopted by its predecessor. The old administration went mercilessly 
after the rebels but succeeded only in enlarging the mass base of the rebellion. 

The new administration acts more like a father of the family. And while it 
preserves its fighting arm, it does not close the door to reconciliation. 

The administration's attitude toward the rebellion is typically democratic. 
Without waiving the right of the state to act in its defense, the democratic 
attitude is tolerant of political differences. This may be seen in the 
guarantees to the civil and political rights in the Constitution. People 
should get used to those rights and freedoms. 

CSO: 4200/1415 



HKO31014 Manila THE MANILA CHRONICLE in English 3 Sep 86 pp 1, 6 
[Article by Lito Mangaser] 

{Text} Three senior military officials broke their silence yesterday on accu- 
sations that military troops had violated the cease-fire agreementin Davao 

del Norte, saying that the cease-fire agreement forged August 14 between local 
government officials and New People's Army commanders in that province was 

not officially in force yet. 

Their statements came three days after Prospero Amatong, Davao del Norte 
of ficer-in-charge and a signatory to the August 14 agreement, had accused 
the military of fielding two companies of Scout Rangers which were con- 
sequently ambushed, Aug. 27, in a ceasefire zone resulting in the death of 
at least 15 government troops. 

Although some military officers had expressed their disgust over Amatong's 
accusation, they had not allow the media to quote them until yesterday. 

Brig. Gen. Romeo Recina, senior commander in the region and the main target 

of the charge, criticized yesterday the Aug. 14 agreement for violating the 
polictes laid down by President Aquino on cease-fire negotiations. 

Quoting the President, Recina said that “there will be no cease-fire with 
return of the troops to the barracks that will leave the insurgents a 
free zone within which to operate with impunity.” 

Earlier, Amatong had said the agreement provided that "there would be no 
patrols whatsoever and the military must stay in the barracks." 

Brig. Gen. Antonio Lukban, AFP [Armed Forces of the Philippines] logistics 
officer sent by AFP chief Fidel V. Ramos to the ambush site, told the 
CHRONICLE Monday that the ».+t»rn portion of Davao del Norte which was sup- 
posed to be the cease-fire s, was virtually being run by the communist 
rebels since the Aug. 14 agrees:.4*. 

He said that the rebels could just be taking advantage of the informal cease- 
fire to effectively control the area. 

Brig. Gen. Luis San Andres, AFP civil relations service chief, criticized 
Amatong for allowing himself to be used by the communist rebels. 

"It appears by his (Amstong’s) pronouncements and actuation that he is the 
office in charge of the shadow government and the office in charge of the 
present government in Davao del Norte,” he said. 

Major Gen. Eduardo Ermita, AFP deputy chief of staff, said that the soldiers 
in Davao del Norte and the rest of the country would continue to patrol their 
areas. He said there was no way the military troops would be kept to their 

“The Davao incident,” he said, “should serve as a lesson for the silitary 
not to lower its guard.” 

Other military officers who had been interviewed by the CHRONICLE since the 
start of the cease-fire negotiations in June had expressed disappointment 
over the exclusion of the uwilitary from the cease-fire and peace negotiations, 
a condition which the communist rebels had demanded before they agreed to sit 
down with gover’aent negotiators. 

The officers felt that it was unfair to exclude the military because it was 
the counterpart of the New People's Army in the negotiations. 

CSO: 4200/1415 



HKO11448 Manila THE MANILA CHROWICLE in English 1 Sep 86 pp 1, 6 

["Philippine News and Features’ Analysis” Wy Luis V. Teodoro: “Frustrations 
Erase Euphoria”) 

[Text] Manila--Six months after the Aquino government came to power, frustra- 
tion levels are fast rising among Filipinos who thought the overthrow of 
Ferdinand Marcos last February would usher in a new era. 

Although the Aquino government has restored civil liberties, released politi- 
cal prisoners and appointed a number of liberal ministers, few Filipinos 
today would be as hopeful as they were last February that the problems of 

the country could still be adequately addressed. 

The political instability Marcos left behind is still very auch in evidence. 
The Aquino government is nowhere near the kind of stability that could inspire 
the confidence of even its most ardent well-wishers. An event normally 
routine for other governments--presidential state visits to the Philippines’ 
ASEAN neighbors and to the United States--became the occasion for debate in 
government circles and has put the country on virtual war-footing, with its 
250 ,000-man armed forces on red alert. 

There are fears that Mrs Aquino's absence from the country could tempt the so- 
called Marcos “loyalists” to try another grab for power similar to the July 6 
Manila Hotel incident. In addition, even Mrs Aquino’s liberal government 
ministers are privately leery of the loyalties of the anti-communist officers’ 
corps, some of whom, they fear, could launch a coup attempt with the knowl- 
edge if not approval of Defense Minister Juan Ponce Enrile. 

These officers have not hidden their disgruntlement over what they insist is 
the Aquino government's "kid-glove” policy towards the 15-year guerrilla war 
being waged by the communist-led New People's Army. 

Mrs Aquino'’s assurance that the populace has no reason to fear that 4 coup 
is forthcoming did little to halt coup jitters in Manila. The persistence of 
coup rumors, and their embellishment by those who pass them on, of course 
suggest a perception that the Aquino government is unstable. 

The main threats to its stability, however, have come from within it: from 
Enrile's supposed disaffection with the government for example, and Vice 
President Salvador Laurel's resurrected presidential ambitions. 

Earlier hopes pinned on the Aquino-appointed Constitutional Covmission also 
appear to be waning. At one time expected to enshrine in the Constitution it 
is drafting a state commitment to economic and social reforms, the commission 
has so far been reformist only in the Bill of Rights it has approved. 

The Constitution it is completing is almost certain to have only a minimal 
commitment to land reform, and none to nationalist industrialization, the 
dismantling of US military bases, and state control over mltinational corpora- 

A consensus is developing among Filipino nationalists that the commission 

has taken a generally conservative position on key issues. This perceived 
conservatism resulted in the resignation of six commissioners belonging to the 
nationalist bloc. Although five of the resigned commissioners were persuaded 
to return to the Commission, the conservative majority is nevertheless still 
doing all it can to give a constitutional mandate to foreign interests and 
dominance in Philippine affairs. 

CSO: 4200/1422a 

26 September 1986 


HKO51521 Quezon City BUSINESS DAY in English 5 Sep 86 p 26 

{Text} Baguio City--A new political party is currently being organized by 
activist-feminist Maita Gomez. Tentatively called the Women's Political 
Party (WPP), Gomez's group is scheduled so hold a founding congress on 
September 28 in Manil-. 

Gomez, who was here recently to organize the party's Baguio chapter, ex- 
plained to a group of women the need for WPP. 

"If there are gore women in government, there might be more democracy,” she 

The WPP's organization, however, doesn't mean that it will work exclusively 
for women's rights; it will also advocate the rights of both sen and women, 
she added. 

Gomez claimed that WPP is feasible because about half of the population in 
the country is women and “there's now a need [words indistinct] for women's 
rights in our society.” 

Gomez said forsing WPP at this time is “just right” because of the current 
political situation in the country where qulti-party system is emerging. 

"No single party dominates the country's politics hence, the impending birth 
of WPP is just right. If you do it next year, it wight not be successful,” 
Gomez said. 

The WPP will be independent from other political parties, although a coalition 
with other parties is not ruled out, she said. Such a coalition will depend 
on the strength of the other party and on commonality of stand on crucial 

The proposed women's party will seek to change or redirect traditional 
Philippine politics from patronage, personalities and promises to one which 
is based on issues or programs, Gomez said. 

According to Gomez, if the WPP will succeed in organizing Filipino women, 
then it will set a precedent of sorts, since no countryin the world has a 
successful political party of women. 

Gomez said organizers of the WPP founding congress are targeting about 500 
women participants as charter founding members. 

The name of the party and the constitution will be approved during the congress, 
she added. 

Gomez has been traveling all over the country to organize local chapters of 

In each place, she has urged women to unite and organize from the barangay 
level, since as a political party WEP has to start from the grassroots. 

CsO: 4200/1415 


26 September 1095 


HKO21509 Manila THE NEW PHILIPPINES DAILY EXPRESS in English 2 Sep 86 p 4 

[over a Cup of Coffee" column by Teodoro F. Valencia: "Partido ng Bayan: 
an Analysis"] 

[Excerpts] The formation of the Partido ng Bayan [People's Party] was per- 
fect as to timing and objective. Whatever happens to the ceasefire talks, 
the left-of-center people are assured a political arm. The communists have 
an army (NPA), a central executive arm (NDF) [National Democratic Front}, and 
now a political organization that will fight it out with other parties for 
the favor of the masses. The PNB initiative caught everybody by surprise-- 
some were shocked. 


The hundreds of foreign correspondents must have gone to town to report the 
Partido's birth. Minister Augusto Sanchez is now assured of political 
backing. The leftists in government no longer are orphans--they have solid 
support where it counts. There will be many more reactions to this political 


Now that the leftists have formed their own political party, the Partido ng 
Bayan and the Laurels have sworn to revitalize the old Nacionalista Party, 
the President's leaders want to put up their own party. The trouble is that 
we have too many political parties and they are all dedicated to achieving 
power. What we need is a party with a program of government, a party that 
can offer us a solution for our problems. 

Tae Partido ng Bayan had to be formed to stop people from branding its lead- 
ers as communists or leftists. Now that they have a party, they won't mind 
the label anymore. For unionists who are not leftists or even left of center, 
the Partido ng Bayan must be most welcome. This party separates the left 
from the non-left. 

If you remember how many political parties there were before the 1986 presi- 
dential election, you'll understand what is going on. This is a mere re- 
assertion of leadership by those who banded together to fight the KBL. Now 
it seems they want to reassert their identities. If at all they will stay 
with the President's group, they want to keep their individual personalities 
so that when they move out of the Aquino orbit, they still have their own 


The Partido ng Bayan, of not outlawed at a later date, will force all the 
non-left parties to coalesce for their own protection. Divided, the right, 
right-of-center and the non-left will be snowed under by the Partido ng Bayan 
unless they band together and put up their own program of government. The 

left definitely has its own ideas to push. They have discipline which the 
rightists don't have. 

CsO: 4200/1415 


26 September 1986 


HKO11250 Hong Kong AFP in English 1238 GMT 1 Sep 86 

[Text] Manila, Sept 1 (AFP)--A presidential commission opened hearings here 
Monday on Ferdinand Marcos’ alleged ill-gotten wealth, with the government 
presenting evidence on how he allegedly set up fronts for diverting money 
into Swiss banks. 

Some documents, signed by Mrs. Marcos, dated as far back as 1968 and allegedly 
showed that the deposed president already maintained a Swiss bank account, 
government lawyer Eduardo Montenegro told the Presidential Commission on 

Good Government hearing. 

The commission is acting as state prosecutor on a cowplaint filed by the office 
of the Solicitor General alleging that Mr. Marcos and his associates had used 
public funds for their personal benefit during his 20 years in power. 

Under Philippine law, state prosecutors decide whether a complaint is backed 
u. by evidence before elevating the dispute to a court. 

President Corazon Aquino, who came to power following a popular revolt that 
toppled the Marcos regime in February, created the five-man commission to 
track down and recover the Marcoses' alleged ill-gotten wealth. 

Mr. Marcos, now living in exile in Hawaii, and his associates were repre- 
sented by their lawyers during Monday's hearing. But they did not make any 
statement to the panel and only asked for transcripts of the proceedings. 

The documents shown to the commission, which the government said they dis- 
covered at the presidential palace after the Marc.» family fled into exile, 
show the first couple allegedly setting up va ious foundations. 

These were then allegedly used as conduits in the transfer of funds to 
secret Swiss bank accounts under the name of William Sauders of Jane Ryan, 
allegedly aliases used by Mr. Marcos and his wife Imelda. 

The commission was told that the documents included letters, statements of 
accounts, and deeds of trust all supporting the government's contention that 
Mrs. Marcos committed graf.. 


i Ü. ————————7 

"We keep coming across foundations," Mr. Montenegro said. He added that he 
did not know how much the Swiss accounts actually contained but said it 
could be “billions of dollars." 

Press estimates of the Marcoses' worldwide empire come up to 10 billion 

Mr. Montenegro said they were still going through a "roomful of documents." 

"Without these exhibits...I think it would be impossible" to trace all the 
Marcoses' money, the lawyer told the commission. 

CSO: 4200/1422a 



HKO90825 Manila THE MANILA CHRONICLE in English 8 Sep 86 pp 1, 2 
{[Article. by correspondent Lito Zulueta] 

{Text] Banned from rallying at Rizal Park, 3,000 loyali::s yesterday massed 
at the Quezon Memorial Circle in Quezon City to praise former fiscal Felizardo 
Lota as a “champion of constitutionalism" and hear a taped interview with de- 
posed president Ferdinand Marcos. 

The loyalists have not held a rally for the past three Sundays, breaking a 
promise to hold continuous demonstrations until President Aquino steps down. 

They have been barred from Rizal Park since July 27, when goons mauled to death 
Steve Sa) cedo whom they spotted wearing a yellow T-shirt. 

Yesterday the loyalists listened as Marcos warned that the Philippines may 
become another Vietnam and raised the spector of a Third World War starting 

The taped interview with the ousted president was aired by loyalists radio 
station DZEC and played at yesterdzy's rally. 

The 15-minute interview was preceded by the reading of a letter from a 
"concerned citizen of the Philippines" to Marcos asking him to return and 
save the country from communism. 

Marcos said that with the present government's policy of conciliation with the 
insurgents, a “communist takeover is inevitable." 

He said the United States might in the end be forced to involve itself in 
the insurgency problem. 

"This time," he said, “not only would the American Navy be involved as it 
was during the Vietnam war, but also U.S. foot soldiers, pilots, etc." 

He said the entry of the U.S. in the war would force the other superpowers 
to take sides, signaling the outbreak of World War III. 


At the same time, he stressed that “survival is in our hands with the half of 
our ally, the U.S." 

He concluded the interview with a prayer: "I hope to God that I will be 
allowed to return to the Philippines with the blessing of our ally, the United 
States, of the Filipino people, and the military to avert the crisis of 1986 
which may be jotted down in history as the year of the outbreak of the Third 
World War." 

Yesterday's rally was dedicated to Lota who was shot to death Aug. 19. 
Police have charged another loyalist leader, Fernando Diaz, for Lota's murder. 

Former MP Rafael Recto who also spoke yesterday, said he had intelligence 
information that President Aquino had already signed orders for the arrest 
of several loyalist leaders. 

CapCom [Philippine Constabulary-Integrated National Police Capital Regional 
Command] soldiers and policemen were deployed at Rizal Park to prevent any 
loyalist rally there. Entrances to the Malacanang Palace were also barricaded. 

CsO: 4200/1415 


26 September 19% 



TRADE ZONES’ EXPORT EARNINGS--Export earnings of the existing export 
processing zones in the country amounted to $171.4 million during the first 
six months of the year, Export Processing Zone Authority (EPZA) administrator 
Jaime Guerrero said. The amount was 20.66 percent more than the $142.05 
million realized by the existing enterprises in the zones in January to June 
last year, Cuerrero said. Based on the EPZA figures, about $93.57 million of 
the total export earnings recorded during the six-month period came from the 
three regular zones in Bataan, Baguio City and Mactan. The bulk of increase, 
however, was accounted for by the special zones, whose earnings reached $77.84 
million during the period as against the previous year's $50.38 million. 
[Text] [Manila MANILA BULLETIN in English 8 Sep 86 p 21 HK] /12913 

NEW POLITICAL PARTY FORMED--Lucena City--Members of the Kilusang Bagong 
Lipunan (KBL) in vote-rich-Quezon province have started regrouping themselves 
and forming a new political party in preparation for the local elections. 
Former Vice Governor Hobert R. Dator said the new political party will be 
composed of KBL members, Marcos Loyalists and other oppositionists. He said 
the new party will put up its own candidates in the local elections. Lawyer 
Pedro Pujalte Jr., another KBL stalwart and former member of the Quezon 
Sangguniang Panlalawigan, said there is an urgent need for a new political 
opposition in this southern Tagalog province. “It is only fair and proper 
that the province of Quezon be represented in the national leadership,” 
Puljante said, “and this can be attained by forming a new party composed of 
honest, tested and dedicated leaders who are pepular with the masses.” 

Dator said the name and composition of the new party will be made known after 
the arrivai of former Governor Eladio Caliwara, who is at present vacationing 
in the United States. It will be recalled that the KBL suffered two 
successive electoral defeats in the 14 May 1984 Batasan Polls and 7 February 
1986 snap presidential elections. [By Noel Magturo] [Text] [Manila THE 
MANILA JOURNAL in English 7 Sep 86 p 8 (tentative) HK] /12913 

MILITARY PARTICIPATION IN PEACE TALKS--lloilo City--Former Member of Parlia- 
ment Homobono Adaza has called for the participation of the military in the 
current peace negotiations between the government and the rebels. "The mili- 
tary knows the real insurgency situation in the country," he said. Adaza, 

an erstwhile vocal fiscalizer of the government, said the participation of 
top military or Ministry of Defense officials should be considered because 
negotiatore in the rebel side are themselves top officials of the democratic 
front. The government should not rely on politicians alone to negotiate with 
the rebels as the current peace and order situation is very cluid, Adaza 
said. Adaza, director of the San Miguel Corp., was in Iloilo City Friday 

as guest speaker of the government public information officers of Western 
Visayas. [Text] [Quezon City BUSINESS DAY in English 3 Sep 86 p 23 HK) /6662 


CSO: 4200/1415 


GDR, Hungarian, Other Messages 
OWO80805 Hanoi VNA in English 0723 GMT 8 Sep 86 

[Text] Hanoi VNA 8 September--Vietnamese leaders have received more greetings 
from ebroad on the recent Vietnam's 4lst National Day. 

The joint message from Erich Honecker, general secretary of the Socialist 
Unity Party of Germany (SED) Central Committee and president of the State 
Council, Willi Stoph, chairman of the Council of Ministers, and Horst 
Sindermann, chairman of the People's Chamber of the GDR says: 

“The Socialist Republic of Vietnam has made important contributions to the 
struggle for peace and against the policy of confrontation and the arms race 
of imperialism. The constructive policy of dialogue of the SRV aimed at 
making Southeast Asia a zone o* peace, stability and cooperation is a factor 
of increasing importance.” 

The message jointly signed by Janos Kadar, general secretary of the Hungarian 
Socialist Workers’ Party Central Committee; Pal Losonczi, president of the 
Presidential Counci! of the Republic; and Gyorgy Lazar, chairman of the 
Council of Ministers of Hungary, reads: 

“Our people have followed with interest and sympathy the great efforts made by 
the Vietnamese people under the leadership of their party with the view of 
developing economy and social welfare, settling by political means all 
regional problems and consolidating peace. The friendship and cooperation 
between our countries and peoples based on the principles of Marxism-Leninism 
and Internationalism are widening in all fields.” 

From Mongolia, J. Batmonh, general secretary of the Mongolian People's 
Revolutionary Party and chairman of the Presidium of the People's Great Hural, 
and D. Sodnom, chairman of the Council of Ministers, say in their message: 

“Actively implementing its external policy of peace, the Socialist Republic of 
Vietnam is making worthy contributions to the common struggle of the socialist 
community and all progressive forces to preserve and consolidate peace and 
security of all nations. 


“The Mongolian People's Republic now as before supports the constructive 
initiatives and tireless efforts of the fraternal Indochinese countries aimed 
at seeking a political solution to the urgent questions in Southeast Asia to 
turn it into a region of peace, stability, and cooperation.” 

The joint message from Czechoslovak President Gustav Husak, who is also 
general secretary of the Communist Party of Czechoslovakia Central Committee, 
and Prime Minister Lubomir Strougal “highly appreciates the SRV's principled 
external policy of peace, in its international unity with the People's 
Democratic Republic of Laos and the People's Republic of Kampvchea, with a 
view to making Southeast Asia a zone of peace, stability and cooperation. 
These countries’ peace proposals are an important contribution to 
consolidating peace and security in the whole Asia-pacific region as well as 
to the world's struggle to avert the danger of nuclear conflict.” 

From Albania, Ramiz Alia, first secretary of the Central Committee of the 
Albanian Party of Labour and president of the Presidium of the People's 
Assembly, and Adil Carcani, chairman of the Council of Ministers, note in 
their message: 

“The Vietnamese people are marking their National Day with substantial 
achievements in national reconstruction and all-sided development. The 
Albanian people are following with interest these achievements and sincerely 
wish the fraternal Vietnamese people still greater successes in socialist 
construction for the sake of progress, prosperity, and national defence.” 

The message from Nicolae Ceausescu, general secretary of the Romanian 
Communist Party Central Committee and president of the Republic; C. 
Dascalescu, prime minister; and N. Giosan, chairman of the Grand National 
Assembly, says: 

“The Romanian people are following with sympathy the great efforts made by the 
Vietnamese people in building socialiem in their homeland, and are sincerely 
elated at the achievements recorded by the latter under the leadership of the 
CPV in all domains of socio-economic development, and in taking the country to 
socialism aad improving the people's living standard both material and 

In his message Kim Il-song, general secritary ot the Workers’ Party of Korea 
Central Committee and president of the Democratic People's Republic of Korea, 
says: “I am convinced that the friendship between our two countries will 
further develop, and wish you and the Vietnamese people still greater 
achievements in the struggle for the prosperity of your country.” 

On this occasion Korean Premier Kang Son-san has sent greetings to his 
Vietnamese counterpart. 


26 September 1986 

Polish, Nicaraguan Greetings 

0WO081940 Hanoi VNA in English 1506 (4T 8 Sep 86 

[Text] Hanoi VNA 8 September--The Polish Ministry of Culture and Art gave a 
film show in Warsaw on 2 September in celebration of Vietnam's 4lst National 
Day. The same day, a photo exhibition on Poland's assistance to Vietnam ‘n 
restoring historic relics was opened in the capital city of Poland. 

The Nicaraguan Society of Friends ip with socialist countries held a meeting 
in Managua on 2 September in commemoration of Vietnam's 4lst National Day. 
Mrs Leticia Herrera, member of the Central Committee of the Sandinista 
National Liberation Front, vice chairperson of the National Assembly and 
president of the Sandinista Commission of Defence, addressed the meeting. 
She praised the Vietnamese people's arduous and valiant struggle, under the 
leadership of the Communist Party of Vietnam and President Ho Chi Minh, for 
national independence and freedom. She reiterated the Nicaraguan people's 
resolve to promote the unbreakable militant solidarity between Vietnam and 

A talk on Vietnam was held by the Nicaraguan Ministry of Interior in Managua 
on 3 September in the presence of the revolutionary commander Luis Carrion, 
member of the National Leadership of FSLN and first Vice Minister of Interior. 

HODOLMOR, and ULAN BATOR NEWS, have run articles praising the Vietnamese 
people's achievements in national defence and socialist construction over the 
past 41 years. They expressed high appreciation of Vietnam's foreign policy 
of peace and its active contributions to making Seutheast Asia a region of 
peace, etability and cooperation. 

On this occasion, the Mongolian radio and television broadcast special 
programmes on Vietnam's land people. 

Many exclusive articles have been released on the Ethiopian people's firm 
support to and solidarity with the Vietnamese people in national defence and 

Praise From Afghanistan 

0WO70741 Hanoi VNA in English 0710 GMT 7 Sep 86 

[Text] Hanoi VNA 7 September--A mass meeting was held in Kabul on 2 September 
to mark the 41st National Day of Vietnam. 

Addressing the meeting, jointly sponsored by the peace, solidarity and 
friendship organization of Afghanistan, the Afghanistan-Vietnam Frierdship 
Association and the Vietnamese Embassy in Kabul, president of the Host 
Association N. Mohammad praised the Vietnamese people's struggle for 
independence and freedom as well as the three Indochinese countries’ important 
contributions to maintaining and consolidating peace in Southeast Asia and the 
rest of the world. He reaffirmed the Afghan people's support for Vietnan, 
Laos, and Kampuchea in their efforts to turn Southeast Asia into a region of 
peace, cooperation, and stability, and expressed his wish for further 
consolidation and development of the militant colidarity between Afghanistan 
and Vietnan. 


26 September 1986 

In celebrations of Vietnam's National Day, meetings were arranged in Baghdad 
(Iray) on 31 August by the Iraq-Vietnam Friendship Society and in London 
(Great Britain) on 2 September by the Britain-Vietnam Association. A film 
sbow was given in Maputo, Mozambique, on 28 August by the Vietnamese Eabassy 
to Mozambique. Many leading officials of the Mozambican committee for 
friendship and solidarity with other peoples and representatives of mass 
organizations attended. 

Bulgaria, Poland, Cuban Greetings 
0W06U929 Hanoi VNA in English 0746 GMT 6 Sep 86 

[Text] Hanoi VNA 6 September--Party General Secretary and State Council 
President Truong Chinh and chairman of tlhe Council of Ministers Pham van Dong 
have received messages of greetings from Polish, Bulgarian, and Cuban leaders 
on the 4let National Day of Vietnan. 

The message jointly signed by Wojciech Jaruzelski, first secretary of the 
Polish United Workers’ Party Central Committee and president of the Council of 
State and Zbigniew Messner, chairman of the Council of Ministers says: 

“The Socialist Republic of Vietnam enjoys a true international prestige. 
Vietnam's constructive initiatives on international issues are concrete 
contributions to preserving peace, stability and cooperation in Southeast 

The message praises the Vietnamese people for their past struggle against 
imperialism and their present national economic restoration and development in 
line with the Communist Party of Vietnam's orientations. 

The message from general secretary of the Central Committee of the Bulgarian 
Communist Party and State Council President Todor Zhivkov and chairman of the 
Bulgarian Council of Ministers Georgi Atanasov praises the victories of the 
Vietnamese people in their struggle for national reunification, socialist 
building and the defence of their revolutionary achievements, and against 
interventions of imperialist and international reactionary forces. 

“We fully support the continuous struggle of the Socialist Republic of 
Vietnam, together with the Lao People's Democratic Republic and the People's 
Republic of Kampuchea, to consolidate peace in Asia and restore the good 
neighbourliness among the countries in Southeast Asia, thus turning it into a 
zone of peace, security, and cooperation,” the message stresses. 

from Cuba, Fidel Castro, first secretary of the Communist Party and president 
of the State Council and chairman of the Council of Ministers, says in his 


“On the international scale Vietnam, together with the Socialist community and 
other progressive forces, has always united with other nations in the just 
struggle for national independence and sovereignty. In Asia, Vietnam's 
efforts in sveking a peaceful way to solve regional conflicts continue to play 
an important role.” 

26 September 1986 

Japanese, Otxers Mark National Day 
0W060919 Hanoi VNA in English 0742 GMT 6 Sep 86 

[Text] Hanoi VNA 6 September--The Japan-Vietnam Friendship Association 
organized in Tokyo on 4 September a meeting to celebrate Vietnam's 4lst 
National Day (2 September). 

Speaking on the occasion, the Association president, Professor Makoto 
Kandateu, reaffirmed the continued support of the Association and other 
progressive forces in Japan for the cause of national construction and defence 
in Vietnan. 

In Afghanistan the leading paper KABUL NEW TIMES runs an article aighly 
praising the Vietnamese people for their struggle against foreign invasions in 
the past as well as their national construction and defence at present. The 
paper reiterates Afghanistan's total support for the Vietnamese people's 
present struggle to preserve independence and build socialisa. 

The Swedish paper NORSKENS FLAMMAN carries an editorial entitled “41 Years 
After August Revolution” to mark the event. It praises Vietnam for their 
assistance to Laos and Kampuchea's struggle for peace, social progress and 
socialism. The article expresses its conviction that the Vietnamese people 
will certainly overcome the present difficulties to build a prosperous and 
happy life. 

UK Amity Group Marks Day 
BKO70349 Hanoi Domestic Service in Vietnamese 2300 GMT 6 Sep 66 

[Text] The British-Vietnamese Friendship Association [BVFA] and the 
Vietnamese Embassy in Britain joiutly held a solemn ceremony in the grand 
meeting hall of the London City Council's headquarters on the afternoon of 2 
September to commemorate the August Revolution and the SRV National Day and to 
mark the BVFA's 35th anniversary. 

Representatives of the embassies of various socialist countries and nonaligned 
nations, national liberation movements, and British political parties, 
friendship associations, and trade unions attended the ceremony. Also sm hand 
were members of the British Parliament, journalists, and sesbers of the 
Foreign Diplomatic Corps. 

After the opening speech delivered by Member of Parliament Robert, president 
of the BVFA, Lord (Rockway), member of the House of Lords and honorary 
president of the BVFA, made an address. He pointed out: Our relations with 
the Vietnamese people are more special than with any other people in the world 
because Vietnam is the most heroic nation on the globe. 

CSO: 4200/1412 


26 Septerber 


0WO82007 Hanoi VNA in English 1713 GMT 8 Sep 86 

[Text] Hanoi VNA 9 September--Vietnamese party and state leaders today 
extended warmest greetings to their Bulgerian counterparts on the 42nd 
National Day of Bulgaria (9 September). 

The message of greetings, jointly signed by Truong Chinh, general secretary of 
the Communist Party of Vietnam Central Committee and president of the State 
Council, Pham Van Dong, chairman of the Council of Ministers, and Nguyen Huu 
Tho, chairman of the National Aceeably, was addressed to their Bulgarian 
counterparts: Todor Zhivkov, Georgi Atanasov, and Stanko Todorov, 

After hailing the great achievements recorded by the Bulgarian people under 
the Bulgarian Communist Party's leadership, the message says: 

“These brilliant achievements, together with the Bulgarian partr and state's 
peace and dynamic policies, have raised the international prestige and 
position of the People's Republic of Bulgaria, thus making considerable 
contributions to consolidating the strength of the socialist community and 
safeguarding peace and international security. The Vietnamese people greatly 
rejoice at these achievements of the fraternal Bulgarian people, and wish 
them, and the leadership of the communist perty headed by esteemed Comrade 
Todor Zhivkov, ever greater successes in the implementation of the resolutions 
adopted at the l3th Party Congress, with a view to taking Bulgaria to new 
heights in building developed socialism. The Vietnamese communists and people 
always treasure the close friendship ard the aultifaceted cooperation between 
the two parties and peoples on the basis of Marxism-Leninism and socialist 
internationalism. We are resolved to do our best to constantly consolidate 
and strengthen this reiationship.” 

On this occasion, Foreign Minister Nguyen Co Thach has sent his greetings to 
Bulgarian Foreign Minister Petur Mladenov- 

CSO: 4200/1412 END 



Vv. SK