Huawei project hits snag in Philippines

Published February 25, 2019, 12:00 AM

by manilabulletin_admin

(The Wall Street Journal)

US pressure on Huawei Technologies Co. is echoing in the Philippines, where lawmakers are pushing back against a $400-million video surveillance project that would use gear supplied by the Chinese company.

The “Safe Philippines” deal – signed during Chinese President Xi Jinping’s visit to the country in November – calls for the installation of 12,000 closed circuit television cameras in the capital, Manila, and in President Rodrigo Duterte’s hometown of Davao. It is intended to help police respond faster to crimes, gather evidence and identify suspects using facial-recognition technology.

Congressional opponents in the Philippines worry the project could enable spying by Beijing, and they blocked its funding with a provision inserted into the country’s annual budget passed in early February. A resolution in the Senate calls for an inquiry into the potential national security risks. Its author, Sen. Ralph Recto, said lawmakers’ fears are heightened by the Philippines’ long-running dispute with China over maritime boundaries in the South China Sea.

“All over the world, there is concern about Chinese technology, about spying and data security,” Mr. Recto said. “If we really need a surveillance system, could we not do it without China?”

Shenzhen-based Huawei is best known for its smartphones and telecommunications gear, but it also has a growing business selling networked video systems it bills as “Safe City” solutions. Huawei says such equipment has been installed in more than 100 countries from Serbia to Mauritius, including the Philippines where it set up a surveillance system in a busy Manila district.

The bulk of the new Philippines project is being funded by Chinese loans. But the country must cover 20% of the cost, or nearly $80 million, which is the amount the Congress has withheld. The only way for the deal to move forward is if Mr. Duterte uses his veto power, officials said.

The debate comes at a time when the US is pushing Western countries to stop using Huawei equipment, saying the company and its staff could be compelled by Beijing to spy for China. Polish authorities last month charged a Huawei employee with conducting espionage on China’s behalf. Huawei fired that person and says it has never spied for China and never would.

The Philippines roadblock shows Huawei’s troubles may be spreading from developed Western countries to emerging markets, which offer the company big growth opportunities. Still, it remains attractive as a supplier because of its competitive prices. Huawei already provides equipment for the Philippines’ telecommunications infrastructure and is likely to play a role in the country’s efforts to build a 5G network.

Huawei spokesman Joe Kelly said the government, businesses and people of the Philippines have nothing to fear from Huawei or its technology. “The security concerns expressed by a relatively small number of people have no basis in fact,” he said.

China’s Foreign Ministry defended the project and urged Manila not to give into unfounded suspicion.

China is separately poised to enter the Philippines telecom market with a new network that will be built by a consortium of local companies and state-run China Telecommunications Corp. It is unclear whether Huawei equipment will be involved.

Contracting Chinese companies for sensitive infrastructure in telecommunications and surveillance risks giving Beijing access to data about the Philippine police, government and citizens, Mr. Recto said. He worried China could have eyes on the streets of Manila to watch certain people or access sensitive official records.

A spokeswoman for China Telecom said the company attaches great importance to following legal and regulatory requirements and would submit network plans to the Philippines government. A spokesman for the consortium said control and management would be in Filipino hands and it wouldn’t allow spying or data theft.