China firm’s 40 percent stake in Dito ‘immaterial’ in fears for PH national security—Lorenzana

MANILA, Philippines–Defense Secretary Delfin Lorenzana on Monday (Oct. 12) again played down national security concerns over the involvement of a Chinese state company in the Philippines’ so-called third telco, Dito Telecommunity Corp, saying it was “immaterial.”

At a Senate budget hearing, Lorenzana said the 40 percent stake of China Telecom in Dito Telco doesn’t make Dito Chinese-owned. Dito, said Lorenzana, is owned by Filipinos and he believed that it won’t be Chinese citizens who would build Dito towers inside military camps.

“I think it’s immaterial if the investor is Chinese or not,” the head of the Department of Defense (DND) said. Lorenzana added that if China wanted to gather intelligence on the Philippine military, Chinese spies would just use listening bugs so they have access to sensitive information.

Lorenzana said the Philippines’ two biggest telcos currently, Globe and Smart, use equipment made by Huawei, another Chinese state company widely suspected of deploying hardware and software for espionage.

“So what is the difference between them and Dito?” said Lorenzana. “If the equipment being used is both Chinese. We single out Dito but not the other two just because there’s a Chinese investor there,” he said.

Dito is a conglomerate led by Davao-based businessman Dennis Uy, which included Chelsea Logistics and Infrastructure Holdings Corp., Udenna Corp. and China Telecom.

Some Philippine government officials and security analysts have earlier raised concerns over the Chinese stake in the consortium, pointing to reports of China’s use of cyber surveillance in other countries.

Chinese state-owned firms are obliged by Beijing laws to follow orders, like divert or intercept internet traffic, or access state secrets, when required.

Opposition Sen. Risa Hontiveros argued that Smart and Globe, while using Chinese technology, are not owned by China, which is in a dispute with the Philippines over the West Philippine Sea.

“As I mentioned at the start, it’s a big issue that 40 percent of Dito is China-owned because we know that companies in China are effectively under the control of the Chinese Communist Party, by the Politburo itself,” Hontiveros said.

“These points are not at all immaterial,” said Hontiveros in reaction to Lorenzana. “They are very material,” she added.

She cited the case of advanced countries which are banning the use of 5G technology being deployed by China because they worry about their IT capability being unable to fight off China’s intrusion into their information systems.

Lorenzana said if there were concerns against the use of Chinese technology in the country, then a law must be passed for these to be banned.

“The investment of China Telecom is authorized by the Constitution,” Lorenzana said. “Now, if we don’t want them and the franchise we gave them.”

“If we really do not want them, we should follow the lead of some of the countries all over the world that ban Chinese technology from coming in,” Lorenzana said.

“We should pass a law not to allow their entry because if their entry is legal, I think what we’re doing is after the fact when we question it but when they invest we don’t say anything,” he said partly in Filipino.

TSB