PRESIDENT Benigno Aquino III on Monday ordered Agriculture officials to find other export markets for the Philippinesâ€™ Cavendish bananas after China imposed more stringent quarantine requirements on the fruit.
â€œWe have to look for other export marketsâ€¦ It is important to diversify to ensure our hands are not tied to the decision of just one country,â€ Mr. Aquino said amid speculation that Beijing imposed the stricter rules over its territorial dispute with Manila over the Scarborough Shoal.
The Palace on Sunday insisted the new regulations were unrelated to the territorial dispute, but stocks on Monday slumped to their sharpest loss in two months on fears the Scarborough standoff would hurt trade relations between the two countries.
The President said the government was already helping banana exporters meet the new phyto-sanitary requirements in China, the second biggest export market for Philippine bananas after Japan.
Agriculture Secretary Proceso Alcala said the government was looking at exporting bananas to countries in the Middle East.
He said a delegation of plant quarantine officials will leave for China this week to solve the issue, and invited Beijing to send its own team to the Philippines to check on the sanitary protocols here.
Last week, China denied entry to some P700 million worth of Cavendish bananas from the Philippines and ordered 100-percent inspection on all inbound fruits from Manila after claiming that pests had been found in a randomly inspected shipment.
But Plant Bureau Director Clarito Baron said the pest that China claimed to have found in the banana shipment could only be found on coconuts.
â€œThe insect found in the banana shipment was in fact a kind of scale insect that infects coconuts only,â€ he said.
Philippine fruit exporters expressed concern that the stricter regulations would hurt the P4.75-billion banana industry. They said the bananas in 61 out of the 150 container vans sitting in Chinese ports were already spoiled because of the delay, costing exporters about $760,000.
On Monday, the Philippine Stock Exchange Index sank 1.4 percent to 5,083.62 at the close of trading, its biggest decline since Feb. 27.
Philippine Long Distance Telephone Co., the nationâ€™s largest company by market value, and JG Summit Holdings Inc., owner of the biggest budget airline, led the losses.
Tensions have risen since a standoff began last month between ships from both countries over an island in the South China Sea, called Scarborough Shoal by the Philippines and Huangyan by China.
China might consider economic sanctions against the Philippines if the situation continued to develop, the China Daily reported Monday, citing Zhao Jianglin, an economic expert at the China Academy of Social Sciencesâ€™ Institute of Asia Pacific Studies.
â€œA continued dispute with China may have significant implications,â€ said Allan Yu, who helps manage $9.06 billion at Manila-based Metropolitan Bank & Trust Co.
â€œThere is also renewed fear over Europeâ€™s debt crisis.â€
Tourism-related stocks declined. Alliance Global Group Inc., owner of the operator of Manilaâ€™s largest casino, fell 2.3 percent to P12.60. PAL Holdings Inc., owner of the nationâ€™s biggest carrier, fell 3.5 percent to P7.37.
Chinaâ€™s Xinhua News Agency reported last week that travel agencies in Shanghai and Guangzhou suspended tours to the Philippines. On May 9, Chinese travel agencies Ctrip.com and Beijing Caissa International Travel Service Co. also suspended trips.
China is the fourth-largest market for tourists to the Philippines, behind South Korea, the US and Japan.
Tourist arrivals from China rose 78 percent in the first quarter, more than anywhere else among the top 12 markets, to 96,455, or 8.4 percent of the total, according to government data.Â With Othel V. Campos, Julito G. Rada and Bloomberg
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