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 Wednesday.
While the Philippine and Chinese sides fast-track the financing for big-ticket infrastructure, Diokno told reporters on the sidelines of a press briefing that the government was “very careful” with its evaluation of 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 the public that the Philippine government was exercising due diligence in processing the approval of the projects.
A loan from China was already extended to the National Irrigation Authority’s P4.4-billion Chico River pump irrigation project.
So far, the Duterte administration has signed only one Chinese loan agreement, worth P3.14-billion agreement for the irrigation facility, the first flagship infrastructure project to be financed by the mainland under the ambitious “Build, Build, Build” program.
The $62.09-million US-dollar denominated loan will cover 85 percent of the total contract amount of P3.7 billion and carried an interest of 2 percent a year, maturing in 20 years inclusive of a seven-year grace period.
Besides the Chico River irrigation, the other projects included in the first basket for Chinese financing are 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 are funded by P6 billion in grants and already broke ground in July as these are targeted to be both completed in 2020.
The second basket of projects included the Ambal-Simuay River and 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 the 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.
Neda documents earlier showed that 18 projects and programs worth a total of P731.7 billion would be rolled out through loans and grants from China.
Under the Duterte adminstration’s massive Build, Build, Build program, the government will implement 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.”