Warm Philippine welcome for Koizumi


Koizumi and Arroyo are expected to discuss how to strengthen economic ties

MANILA, Philippines (CNN) -- Japanese Prime Minister Junichiro Koizumi was received with full military honors as he began his two-day official visit to the Philippines.

It's the beginning of a five-nation Southeast Asian tour for the Japanese premier.

And it has already produced results, yielding progress on a key business deal between Kirin and San Miguel.

Philippine President Gloria Macapagal Arroyo warmly received Koizumi as he arrived at the presidential residence of Malacañang.

Koizumi, dressed in light gray suit, arrived at 3:20 p.m. local time, escorted by Finance Secretary Jose Isidro Camacho.

His visit is first and foremost about trade and economic ties. Koizumi's Asian spin comes as his economics minister, Heizo Takenaka, visits Washington, New York and London.

Tension as demonstrators decry brutalities

In Manila, members of the Arroyo cabinet also lined up to honor Koizumi and the members of his official delegation.

Koizumi arrived at the country's Ninoy Aquino International Airport, then proceeded to central Manila Park where he laid a wreath by the monument of national hero Jose Rizal.

There he was greeted by a group of protesters decrying Japanese wartime atrocities.

Anti-Japanese sentiment still runs strong in Manila, which suffered harsh treatment after Japan's troops seized the city from U.S. forces in World War II.

Economic ties the main focus

Despite that tension, the main focus of Koizumi's visit with Arroyo will be strengthening economic ties, presidential spokesperson Roberto Tiglao told local media.

Koizumi and Arroyo are also expected to tackle security issues, piracy, terrorism, drug trafficking and human smuggling during their meeting.

Koizumi is eager to dispel accusations that he has been ignoring Southeast Asia, focusing instead on tighter ties with the United States.

Business analysts also expect the two leaders to discuss a big Japan-Philippines business deal.

Kirin Brewery, Japan's second-largest brewery, has drawn up a deal to buy 15 percent of San Miguel Corp.

San Miguel is the biggest food and drink company in the Philippines, and the country's most famous brand.

Government will vote in favor of Kirin deal

But the deal has run aground on political tensions with San Miguel's board, most of whom were picked under Arroyo's ousted predecessor, Joseph Estrada.

The Arroyo government has been threatening to hold up or even scupper the Kirin investment.

On Wednesday, the Philippine government struck a deal with the chairman of San Miguel Corp. in time for Koizumi's arrival.

The government will now support the sale to Kirin, Tiglao told Reuters news agency.

The government, which has a dominant stake in San Mig, will now ratify that sale at a special stockholders' meeting on February 27, Tiglao said.

"There's already an agreement in principle," Tiglao said.

In return for support of the $540 million San Miguel-Kirin deal, San Miguel chairman Eduardo Cojuangco will not block the nomination of Arroyo appointees to his company's board and San Mig's subsidiaries.

Arroyo's government had been concerned that the transaction with Kirin might dilute the country's interest in San Miguel.

San Miguel A shares closed 1.15 percent higher on Wednesday.

The Philippines sequestered 47 percent of San Miguel in 1986. The government claimed the shares were bought with money illegally collected from coconut farmers under late dictator Ferdinand Marcos.