Philippine foreign minister recommends scrapping deals with blacklisted China firms

MANILA - The Philippines' foreign minister said on Friday (Aug 28) he would recommend the government terminates deals with Chinese firms blacklisted by the United States for their roles in constructing and militarising artificial South China Sea islands.

The US on Wednesday named 24 Chinese companies and targeted individuals it said were involved in such activities, in its first sanctions move against Beijing over the disputed waterway.

"If they were in any way involved in the reclamation, then it becomes consistent on our part to terminate any contract with them," Foreign Secretary Teodoro Locsin told CNN Philippines, without identifying a company or project.

Among those blacklisted was China Communications Construction Co (CCCC), a transport and infrastructure conglomerate which last year got the go-ahead to build a U$10 billion (S$13.6 billion) airport project with a local partner in Cavite, near Manila.

CCCC's subsidiary, China Harbour Engineering Company, along with a unit of Udenna Corp, a conglomerate run by Mr Dennis Uy, a local tycoon with close ties with Philippine President Rodrigo Duterte, has initial approval for a US$1.2 billion reclamation project in Manila Bay.

Cavite governor Juanito Victor Remulla said he would take his cue from Mr Duterte on how to proceed.

"If the President says, if the Department of National Defence says that it's a security risk to enter an agreement with them, then we will terminate the agreement immediately," Mr Remulla told news channel ANC.

Udenna Land, Chinese Harbour's partner in the reclamation project, and Pasay City, which is responsible for Manila Bay reclamation, did not respond to requests for comment.

However, when asked in December if Udenna was concerned about partnering with a company involved in Mischief Reef - a man-made island on which China has installed missiles capable of hitting the Philippines - a representative of Udenna said Mr Uy "is not concerned".

In the December response to e-mailed questions from Reuters, Mr Leo Venezuela, Udenna's Investor Relations Head, added the company has "a very insignificant stake" in the project.

The Philippines won an international arbitration case in 2016 that confirmed Mischief Reef had been built in Manila's 200 nautical mile exclusive economic zone.