PH eyes P140-B loans from China for infra projects

The government plans to borrow P140 billion from China on top of securing P6 billion in grants for infrastructure projects, Finance Secretary Carlos G. Dominguez III said Tuesday.

Dominguez told the House appropriations committee that the government will also sell $200 million in so-called panda bonds in China by October or November.

National Treasurer Rosalia V. de Leon told reporters last week that the Monetary Board, the Bangko Sentral ng Pilipinas’ highest policymaking body, already approved in principle the planned issuance of three-year panda bonds, while the Philippine government is in the process of also securing approvals from the People’s Bank of China.

Panda bonds are yuan-denominated debt paper issued in China by foreign governments or companies.

As for loans, Dominguez said they were eyeing official development assistance (ODA) to finance the bulk of the costs of three projects worth a total of P164.9 billion, namely: the P2.7-billion Chico River Pump Irrigation Project; the P10.9-billion New Centennial Water Source-Kaliwa Dam Project; and the P151.3-billion Philippine National Railway South Commuter Line.

Dominguez said they were negotiating that the Chinese government slap the loans with an interest rate of lower than 2 percent per annum.

Also, Dominguez said negotiations were ongoing for the grants that the Chinese government will provide to two bridge projects along the Pasig River: the P4.6-billion Binondo-Intramuros bridge, as well as the P1.4-billion Estrella-Pantaleon bridge.

Since grants will not be paid back, these will not be slapped any interest, Dominguez pointed out.

But Dominguez clarified that the Philippine and Chinese sides were still “firming up the commitments” made by the latter on a project-to-project basis.

The Finance chief noted that Chinese President Xi Jinping in October last year committed about $9 billion in ODA as well as commercial loan financing for the Philippines.

“Normally, it takes some time for feasibility studies to be completed. After the plans are in place, the loans will be negotiated. Financing always follows the plan,” Dominguez said.

When asked if Chinese contractors as well as workers will be prioritized for projects to be funded by China, Dominguez replied: “Our protocol with the Chinese for the tied financing portions is for the Chinese government to propose three qualified bidders to us from whom we will conduct the bidding.”

As for construction workers, Dominguez said “we will strictly follow Philippine laws which require that any foreign worker in the Philippines get permits, and these work permits are only limited to highly skilled or highly technical or managerial positions.”

Pressed further if Chinese contractors may bring their own workers, Dominguez said: “With regards to the grant financing, that is certainly possible. But with regards to the local, we will have a minimum of 65-percent local manpower.”

Also, in light of news of substandard Chinese-built projects in Africa, Dominguez said “we have discussed that matter with the Chinese government and we have had assurances from them that they will make sure that the bridges they construct here will be of robust and international quality.” JE