Gov’t defends terms of China loans

Even as the relationship between the Philippines and China still have rough patches, the head of the Duterte administration’s economic team said the two countries were focusing on boosting trade and investments in the near term.

“I believe that China and the Philippines’ leadership have come to the realization that despite the unresolved issues between us, there is much room for expanded trade and tourism cooperation,” Finance Secretary Carlos G. Dominguez III told reporters.

Dominguez was responding to a query why he deemed that the Duterte administration was able to secure “better” financing for its ambitious “Build, Build, Build” infrastructure projects compared with previous administrations.

Last week, Dominguez said the Chinese loan for the P12.2-billion New Centennial Water Source-Kaliwa Dam project had terms that were “at least 30-percent better than the loan secured by the Arroyo administration and wholeheartedly accepted by the [Benigno] Aquino [III] administration” for the Angat Water Utilization and Aqueduct Improvement Project Phase 2.

Citing Department of Finance (DOF) data, Dominguez noted that the $211.2-million, US dollar-denominated loan for Kaliwa Dam had a lower interest rate, longer grace period, lower commitment fee, lower management fee and had no prepayment penalty fee, compared with the borrowing approved by then President Arroyo in 2010 for Angat.

Besides funding for the Kaliwa Dam, the government also borrowed from China for the P4.37-billion Chico River Pump Irrigation Project, the first flagship infrastructure project financed by Beijing under the Duterte administration’s massive “Build, Build, Build” infrastructure program.

Based on the latest National Economic and Development Authority documents, of the 37 “Build, Build, Build” projects already approved by the Neda Board chaired by President Duterte as of Jan. 31 this year, 12 big-ticket infrastructure would be rolled out through loans and grants from China.

The “Build, Build, Build” pipeline included a total of 75 projects aimed at ushering in “the golden age of infrastructure.”

The other projects to be financed by loans from China are the P50.03-billion Subic-Clark railway project; P39.22-billion Ambal-Simuay River and Rio Grande de Mindanao River flood control projects; P1.59-billion Palanca-Villegas Bridge; P1.39-billion Beata-F.Y. Manalo Bridge; P1.1-billion Blumentritt-Antipolo Bridge; P1.54-billion East-West Bank Bridge 1; P8.03-billion North and South Harbor Bridge, and the P175.31-billion Philippine National Railways (PNR) South song-haul project that will connect Manila and Bicol.

Meanwhile, the P4.61-billion Binondo-Intramuros and P1.37-billion Estrella-Pantaleon bridges crossing Pasig River will be built using Chinese grants.

Chinese investors’ pledges to the country’s seven investment promotion agencies (IPAs) also surged by 2,073 percent to P50.7 billion in 2018 from only P2.3 billion in 2017 as P48 billion in commitments were approved during the fourth quarter of last year alone.

To recall, China President Xi Jinping visited President Duterte in Manila in November last year, tagging along interested Chinese investors to the Philippines.

But Dominguez himself in recent weeks sought to collect at least P3 billion a day in foregone revenues on income taxes from foreign workers in the Philippine offshore gaming operators (Pogo) industry, the bulk of which were Chinese nationals.

“If there are some Chinese, some Ethiopians or whatever, they should pay tax. We want it to be fair because Filipinos working abroad also pay tax. We’re not asking anything special, just follow the law,” Dominguez had said.

Also, ties between Manila and Beijing remain hampered by the maritime dispute over the West Philippine Sea, even as critics assailed President Duterte for his “soft” stance against alleged Chinese occupation of disputed areas.