We will be very careful with China projects–Pernia

Socioeconomic Planning Secretary Ernesto Pernia sought to allay fears that the Duterte administration’s bid to secure financing from China for its ambitious infrastructure program could lead to the entry of Chinese firms with questionable records.

“We certainly are going to be very careful in our dealings in terms of project financing from the Chinese government,” said Pernia, head of the National Economic and Development Authority (Neda).

He said concerns over questionable sources of funds from China could be premature since “we haven’t yet signed any loan agreement with China except oral commitments or some written memoranda of understanding.”

The Duterte administration, heeding the “Build, Build, Build” mantra, has identified dozens of infrastructure projects for implementation and  possibly completion during President Duterte’s term, which ends in 2022. The projects are worth an estimated total of P8.2 trillion.

Former President Benigno Aquino III had cautioned against acquiring high-interest loans from China.

Pernia said companies that would take part in the infrastructure program would have to be vetted by the Chinese government, which would help eliminate the risks of a company with questionable records getting contracts from the Philippine government.

‘Optimal mix’

He said massive investments in the medium-term infrastructure program would come from an “optimal mix” of sources—the government, official development assistance and the private sector.

“The idea is to always find the most cost-effective and optimal mix of funding sources,” Pernia said.

There was no need to worry about Chinese companies with questionable records being able to secure contracts because there would be two “clearing mechanisms” for Chinese firms taking part in the program.

The first mechanism would be vetting by China. “We want the Chinese side to certify to us that the companies that will be involved in the projects will be truly competent and with impeccable integrity,” Pernia said. This applies to private and state-owned Chinese firms, he added.

The Chinese government would submit names of three companies that had passed the vetting process and the Philippine government “also has a clearing mechanism to pick” the firms recommended by China.

“That’s the best we can do to ensure we are not going to get into problems,” he said.