Taiwan Drills Mark Turning Point With Aquino Over Sea Death

Taiwan held military exercises off its southern coast and told people to avoid traveling to the Philippines in what Premier Jiang Yi-huah called a “turning point” in relations with the Southeast Asian nation.

The Philippines violated international law when a patrol boat crew shot and killed a Taiwanese fisherman in disputed waters on May 9 and its response has been “inappropriate,” Jiang said in a statement today. Taiwan has rejected Philippine President Benigno Aquino’s attempts to apologize on behalf of his nation.

“This incident reflects the difficulties we have faced with the Philippines over the last 10 years,” Jiang said in the statement. “Based on past experience a swift response from the Philippines isn’t expected soon and the Premier doesn’t rule out further measures.”

The stand-off threatens to disrupt economic ties and stoke tensions in an area rich in natural resources that’s beset by competing territorial claims. Taiwan President Ma Ying-jeou is battling a 14 percent approval rating, while Aquino must weigh the fallout if Filipino workers lose jobs on the island.

The Philippines is prepared for Taiwan’s actions and asked the nation to treat Filipinos decently, Edwin Lacierda, a spokesman for Aquino, told reporters in Manila today. It has pledged to conduct a full investigation into the death of the 65-year-old fisherman.

Markets Shrug

“We have acted uprightly and decently as a respectable member of the international community,” Lacierda said.

Two Mirage 2000 jets and an E-2K Hawkeye early-warning plane took part in drills today after a Kidd-class destroyer was deployed earlier, said Liu Hsun-chen, a Taiwan defense ministry spokesman. Four Coast Guard ships will join the exercise in the Bashi Channel, spokesman Shih Yi-che said by phone yesterday.

Investors largely shrugged off the dispute. The benchmark Philippine Stock Exchange Index fell 1.3 percent from a record after valuations reached a nine-year high and a technical indicator suggested the rally may reverse. Taiwan’s Taiex index rose 0.9 percent to the highest since August 2011.

“The central scenario is we’re assuming this calms down and the impact will be negligible,” said Robert Prior-Wandesforde, Singapore-based head of Southeast Asia economics at Credit Suisse Group AG.

Worker Freeze

Earlier yesterday, Ma recalled his representative from the Philippines and froze the hiring of workers from the nation. Additional measures approved last night include a travel warning and a halt to airspace negotiations and economic exchanges, the Taiwan Cabinet said in a statement.

The U.S., which is an ally of the Philippines and helps Taiwan maintain its defense, is concerned about the escalating tensions, State Department spokesman Patrick Ventrell told reporters in Washington yesterday.

“We urge the Philippines and Taiwan to take all appropriate measures to clarify disagreements and prevent recurrence of such tragic events,” he said.

Ma’s actions against the Philippines will prevent about 35,000 Filipino workers a year from finding work, Taiwan’s Council of Labor Affairs said on its website. About 88,000 Filipinos worked in Taiwan as of end-April, it said.

Group Travel

The Travel Agent Association of R.O.C., the largest in Taiwan, said it would suspend group trips to the Philippines after the government issued a warning against visiting the country. The group agreed to support Ma’s sanctions against the Philippines, it said in a faxed statement.

Sixteen Taiwan-based exhibitors withdrew from the International Food Expo in Manila, said Lorie de Guzman, an assistant to Director Robert Lang at the Taipei Economic and Cultural Office in the Philippines.

About 54,000 Taiwanese traveled to the Philippines in the first three months of the year, the fifth-biggest market representing 4.2 percent of total arrivals, according to the Philippines Department of Tourism.

Ma, re-elected in January 2012 with 52 percent of the vote, had an approval rating of 14 percent in April, down from 15 percent in March, according to a poll by Taipei-based television network TVBS. His approval rating between September and December 2012 stood at a record low of 13 percent.

“This is an opportunity for him to shore up some confidence,” Alexander Huang, a professor at Tamkang University’s Institute of International Affairs and Strategic Studies in Taipei, said of Ma. “The general public here demands actions -- they want to see punishments.”

Deep Regret

After Ma’s decision, Lacierda announced that the Philippine leader had appointed an envoy to “convey his and the Filipino people’s deep regret and apology” to the fisherman’s family and Taiwan’s people “over the unfortunate and unintended loss of life.” The Philippines also planned to compensate the fisherman’s family.

Aquino’s approval rating rose 4 percentage points to 72 percent in March, polling body Pulse Asia Inc. said last month. His allies appeared set to control a majority in the 24-member Senate after legislative elections three days ago.

Taiwan was the eighth largest buyer of Philippine goods last year, according to the Philippines’ National Statistics Office. Taiwan exported $3.2 billion worth of goods to the Philippines in the first four months of this year, while importing $675 million, Taiwan’s finance ministry said.

Limits on Filipino workers, the third-largest group of foreign workers in Taiwan, may slow Aquino’s push to cut a jobless rate that climbed to 7.1 percent in January, with about 660,000 positions lost since October 2011. The Philippines’ overseas workforce accounts for about 10 percent of its gross domestic product.

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