At least 10 loan agreements for infrastructure projects will be signed when Chinese President Xi Jinping visits the Philippines in November, Budget Secretary Benjamin E. Diokno said.
The Philippine and Chinese sides are fast-tracking the financing for the big-ticket infrastructure projects but Diokno told reporters at the sidelines of a press briefing on Wednesday that theDuterte administration was “very careful” in evaluating these projects.
“First of all, there’s a feasibility study, either funded by the Asian Development Bank or the World Bank. After that, the implementing agencies will iron them out and then submit to the National Economic and Development Authority. In Neda, the Investment Coordination Committee will scrutinize them before submitting to the President,” Diokno explained.
“We are very careful in the process. And our rule of thumb is, if the project gives us a rate of return of at least 10 percent or higher, then it’s a go because we can borrow at a much lower cost,” Diokno added.
In a separate statement, Diokno assured that “the Philippine government is exercising due diligence in processing the approval of these projects.”
Current loan from China
A loan from China was already extended for the National Irrigation Authority’s (NIA) P4.4-billion Chico River Pump Irrigation Project.
The Duterte administration had signed a P3.135-billion loan agreement, the only one, so far, with China, for the irrigation facility. It is the first flagship infrastructure project to be financed by China under the Philippines’ ambitious “Build, Build, Build” program.
The $62.09-million US-dollar denominated loan from China will cover 85 percent of the total contract amount of P3.7 billion. It was slapped an interest of 2 percent per annum, maturing in 20 years inclusive of a seven-year grace period.
Aside from the Chico River Pump Irrigation Project, the other projects included in the first basket for Chinese financing were the New Centennial Water Source-Kaliwa Dam, the Philippine National Railways’ South Long-Haul, as well as the Binondo-Intramuros and Estrella-Pantaleon bridges crossing Pasig River.
The two bridges were funded by P6 billion in grants and already broke ground in July as they were targeted to be both completed in 2020.
The second basket of projects, meanwhile, included the Ambal-Simuay River and the Rio Grande de Mindanao River Flood Control projects, five bridges crossing Pasig-Marikina River and Manggahan Floodway, Safe Philippines Project Phase 1, as well as Subic-Clark Railway.
The planned industrial park at the soon-to-rise New Clark City will also be fast-tracked, as the Chinese were “really interested in Clark,” Diokno said.
‘Golden Age of Infrastructure’
Under the Duterte administration’s massive “Build, Build, Build” program, the government will roll out 75 “game-changing” flagship projects while spending a total of up to P9 trillion on hard and modern infrastructure until 2022 to usher in the “golden age of infrastructure.”
Neda documents earlier showed that 18 projects and programs worth a total of P731.7 billion will be rolled out through loans and grants from China.
“With such an ambitious infrastructure program, we need to tap as many development partners as possible, and we are glad that China has lent us a hand in upgrading and modernizing our infrastructure,” Diokno said.
During last Tuesday’s Second Economic Journalists Association of the Philippines (Ejap) Economic Forum, Diokno said the following big-ticket infrastructure projects will be implemented in 2019: P14-billion PNR North 1 (Tutuban to Malolos); P3.6-billion Improving Growth Corridors in Mindanao Road Sector; P2.9-billion Mindanao Railway Project Phase 1; P2.2-billion Metro Manila Flood Management Phase 1; and P1.5-billion Metro Manila Subway Phase 1.
“For nearly two decades, the Philippines has enjoyed uninterrupted economic growth. But even with such remarkable achievement which allowed us to be one of the fastest growing economies in Asia, one in four families continue to be mired in poverty. Inclusivity, in the midst of strong, persistent growth, remains elusive. And the sorry state of public infrastructure is one of the major reasons for that. This is why the Duterte administration prioritizes the upgrade and modernization of public infrastructure through the ‘Build, Build, Build’ program,” Diokno said.
“Without a doubt, our ‘Build, Build, Build’ program will not be a walk in the park. But this is what the Filipino people need. This is what the Duterte administration will deliver,” Diokno added. /vvp