ZTE issue’s statement

PHILIPPINE NEWS SERVICE — First, as a global enterprise and China’s only publicly listed telecommunication supplier both in Hong Kong and Shen Zhen, ZTE has made great achievements in business growth during the year 2007. The turnover of the first quarter has increased 47%, and the annual profits are expected to increase by 50-70% in fiscal year 2007. ZTE has set its goal of $10 billion for global sales in 2008.

ZTE Corp. will not take lightly its continuing vilification by some quarters before the Philippine media. We reserve the right to seek redress of grievance before all appropriate juridical bodies for the witting or unwitting dragging of the good name of ZTE Corp. into sordid but unsubstantiated tales of corruption and briberies.

Second, ZTE has neither done anything wrong nor has it bribed anyone to get this project. The ZTE NBN proposal stands on its own merit as sufficiently and ably defended by the DOTC before the investigation of the Senate blue ribboncommittee.

ZTE’s proposal was approved by Philippine government agencies like the Department of Transportation and Communications (DOTC) and the National Economic Development Authority (NEDA). That it had to be cancelled due to political noise was appalling to ZTE, which expected sanity, reason and international commercial practices to have prevailed in the end.

This episode has saddened us at ZTE Corp. because, with a clean and proven track record of over 20 years in the international telecommunications industry, ZTE has offered the best technical and financial proposal for the Philippine NBN project.

Third, Mr. LOZADA has no direct relation with ZTE Corp. ZTE’s proposal changed because it was required to cover the whole nation, delivering a nationwide network coverage from the central government to local government agents, ranging from tier 1 cities to tier 6 barangays, namely 17 districts, 81 provinces, 2,295 central government agents and 23,549 local government agents, providing services to all public organizations like school, hospitals, police stations, etc. It has nothing to do with Mr. LOZADA.

We have no doubt that any independent review panel — not the one convened by losing NBN proponent Mr. Jose de Venecia III — can cut through the speculations, half-truths and disinformation.

By simply looking at the comprehensive, itemized and priced bill of deliverables contained in ZTE’s NBN bid, accusations that the project proposal was overpriced would crumble to pieces.

Any independent and unbiased panel would see the ZTE proposal for what it is: A multi-million- dollar project showcasing ZTE’s state-of-the art technologies backed by hundreds of international patents; a project that would have been made very affordable to the Philippines through a government-to- government loan facility with a low interest rate of three percent and a drawn-out repayment period of 20 years, marked by a grace period of five years.

Our unsullied track record speaks for itself: We have been serving more than 500 telecommunication operators in over 120 countries. We have completed and are in the process of completing billions of dollars worth of telecommunication projects worldwide.

In all of these, our only misgiving — aside from the undeserved attacks on ZTE — is that the national broadband network project of the Philippine government, which would have linked all government agencies for the better provision of public service to all Filipinos, had to be sacrificed before the altar of political intrigue.

Fourth, ZTE Corp. has already closed the book on its shelved national broadband network (NBN) project with the Philippine government. As to Senate’s summon for ZTE to appear in the hearing, ZTE cannot allow itself to be dragged into any political circus.

In 2007, China has surpassed the United States to become the biggest trade partner of the Philippines. The bilateral trade volume has exceeded U.S. $300 million with Philippines enjoying the favorable trade balance of around U.S. $150 million.

This episode certainly brings unforeseeable negative influence on bilateral economic cooperations between China and the Philippines. So far, almost every project undertaken by Chinese companies has been put into inequitable suspicion, including agricultural project, tele-education project, railway project, power plant project and elevated highway project in Manila. It will also not only play down the confidence of companies from China but also those from other countries to invest in the Philippines.