Philippines seeks new markets amid sea dispute with China

MANILA (Reuters) - The Philippines needs to develop new overseas markets so that a maritime standoff with China, which has thrown relations into turmoil, does not take a toll on tourism and fruit exports, a senior official said on Thursday.

China has tightened quality controls on Philippine fruit and cut the number of tourist visits to the Philippines, moves which will likely have a limited impact on the economy, Arsenio Balisacan, the new economic planning secretary, told reporters.

He is the first member of the economic team to talk about the impact of the month-long standoff over a shoal in the South China Sea.

The dispute has fuelled concern in the region over China's growing assertiveness in waters believed to be rich in oil and gas. China said on Thursday the Philippines had to send a clear signal if it wanted to repair relations.

"As of now, we are likely to see modest effects (on the economy), but we need to intensify our efforts to diversify our trade with other countries," Balisacan said when asked about the impact of the dispute on trade.

"So whether or not this event with China occurred, we should have been diversifying our exports."

China is the Philippines' third-biggest export market after Japan and the United States, accounting for around 14 percent of total shipments in the first quarter of this year.

It also ranked fourth in foreign tourist arrivals in the Philippines in the March quarter, government data showed.

China stopped a shipment of Philippine bananas in March, a month before the sea spat on the Scarborough Shoal erupted, after it found pests. Since then it has imposed stringent quarantine rules on other Philippine fruit.

Banana exporters were given until June 1 to comply with the new rules, said Steve Antig, executive director of the Philippine Banana Growers and Exporters Association.

The Philippines has been exporting bananas to China for over a decade but it was only this year it had encountered quarantine issues, Antig said.

Clarito Barron, head of the Philippine Bureau of Plant Industry, said he would ask for clarification from quarantine officials, as there were no problems with shipments to Japan and South Korea.

Barron said the country was now looking at other markets for its fruit including Saudi Arabia, Oman, Qatar, Italy, France and Britain.

Last week, Philippine civil society and political groups staged a peaceful but noisy anti-Chinese protest which prompted the Chinese embassy in Manila to advise its citizens to stay indoors. That also led to Chinese travel agencies suspending tour packages to the country.

In the popular resort island of Boracay in the central Philippines, tourism officials said daily arrivals of Chinese tourists had fallen to low double or single digits since Friday's protest from more than 400.

"It is not something that will cripple our tourism industry at this point, but it does not mean we don't have to pay attention to the issue," Balisacan said.

The Chinese Foreign Ministry said on Friday the Philippine government had to show it wanted to repair relations.

"We demand that the Philippines send a clear and unified signal about bilateral relations, creating conditions for an earnest and serious dialogue between our two sides," ministry spokesman Hong Lei told a daily briefing in Beijing.

"We have noted the Philippines' statements about attaching importance to developing bilateral relations, and we hope that the Philippines will take practical steps to create the necessary conditions and a healthy atmosphere for improving relations and protecting cooperation."

(Reporting by Karen Lema and Manuel Mogato in Manila and Chris Buckley in Beijing; Editing by Rosemarie Francisco and Nick Macfie)

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