Failed Sangley airport deal unhinges China’s ambitions?

Chinese Ambassador to the Philippines Huang Xilian may have downplayed the recent cancellation of talks between Cavite and a Beijing-backed consortium and its Filipino partner for a new international gateway on Manila Bay, but the developments could as well impact China’s ambitions in the region.

Huang said the project was “not relevant” to the Chinese government’s expansive Belt and Road Initiative, noting the cancellation pertained only to the feasibility study for the planned P500-billion Sangley Point International Airport (SPIA) project.

But the SPIA auction documents, which included the draft joint venture agreement and request for proposals that were provided to interested bidders in late 2019 and reviewed by the Inquirer, showed otherwise.

“Obviously, some reports were not accurate,” Huang told television reporters during a chance interview on Thursday, adding that “some people politicized this issue based on their speculation, whose purpose is totally unknown.”

His full comments were also posted on the official Facebook page of the Chinese Embassy Manila.

They represent the Chinese government’s first official statements since Cavite, which is implementing the mega project, canceled on Jan. 26 the award granted to state-run China Communications Construction Co. Ltd. (CCCC) and taipan Lucio Tan’s MacroAsia Corp. for the first phase of the SPIA.

Cavite Gov. Jonvic Remulla had said that even with several extensions granted, the venture failed to correct documentary defects in their submissions. Remulla said they planned to rebid and award the project before the October 2021 deadline for the filing of certificates of candidacy.

Debt traps

During the interview, Huang maintained the joint venture with the Cavite government was a “pure commercial project and not related to the Central Government of the Philippines or the Chinese Government.”

He said the project was also “not relevant to the Belt and Road Initiative or any third party.”

China’s Belt and Road Initiative is an ambitious $1-trillion cross border infrastructure program, which critics contend can lead to debt traps and allow Beijing to seize strategic assets.

The airport project’s own request for proposals issued to bidders made it clear financing would be under a framework “set forth in the memorandum of understanding and cooperation on the Belt and Road Initiative which was signed by the two countries on 20 November 2018 in Manila, Philippines.”

This document also indicated project financing was being raised through “development financial institutions and policy banks of the People’s Republic of China.”

Those provisions indicating preference for Chinese lenders are among several reasons that other bidders flagged when they decided to back out of the project, leaving CCCC-MacroAsia as the only participant.

Multiple references to the Belt and Road Initiative were again mentioned in the more than 400-page Detailed Project Proposal and Feasibility Study for the SPIA dated July 2019. The study, which was also provided to bidders, was prepared by the Cavite government alongside international and local consultants, including United Kingdom-based Nats.

Huang also stressed the entire project was not canceled, just the feasibility study. He said the latter was not launched “due to the impact of COVID-19.”

Huang is referring to what is called the project preparation stage, which would outline the scope, design, feasibility and financial viability of the project.

The draft joint venture agreement, which would serve as the basis for the final contract had the project with CCCC-MacroAsia pushed through, also covered the project implementation stage.

The latter involved a phase 1, or the construction of SPIA, as well as a phase 2. Phase 1 refers to the first runway and construction of terminal capacity for an initial 25 million passengers annually.

The draft agreement also stated the parties would need to first make a “final investment decision” on whether to proceed to the project implementation stage.

The project lured scrutiny beyond its questionable terms due to the national security risk it poses given its proximity to the Philippine capital.

On Aug. 26, 2020, the United States included subsidiaries of CCCC in a sanctions list for building militarized islands in the West Philippine Sea.