PH seeks China financing for $1.9B worth of infra projects
The Philippines has pitched to China four more big-ticket infrastructure projects worth $1.9 billion for financing, to add to the $4.6 billion worth of projects currently being implemented by the government.
Finance Undersecretary Mark Dennis Joven said the Export-Import Bank of China (China Eximbank) was currently evaluating possible commercial loans for the following projects: Davao-Samal bridge, Mindanao flood control, Subic-Clark railway, and three bridges in Metro Manila.
Joven said that last year, $620 million worth of official development assistance (ODA) loans and grants from China were disbursed out of the $4.6 billion in existing projects, which were undergoing procurement.
Among the projects financed by China were bridges crossing Pasig River being built by the Department of Public Works and Highways (DPWH); the Department of the Interior and Local Government’s (DILG) Safe Philippines phase one; Metropolitan Waterworks and Sewerage System’s (MWSS) New Centennial Water Source-Kaliwa Dam; and the National Irrigation Administration’s (NIA) Chico River Pump Irrigation project.
Asked if the Department of Finance (DOF) was satisfied with the pace of these projects’ implementation and the amount of ODA extended by China to the Philippines, Finance Secretary Carlos Dominguez III said: “The Chinese projects, once they get approved, get implemented rather quickly.”
“You can see it in the [Pasig River] bridges and others. We are happy with them, because they are according to terms that are beneficial to us. We pay a very good interest rate, the terms are good, and the projects are okay,” Dominguez said.
The Finance chief said the perception that implementation of Chinese-financed projects had been slow came on the back of a mismatch from the recent “massive” deals with China and bureaucratic red tape. “We did encounter some difficulties in getting approvals and basically understanding each other,” he admitted.
But Dominguez said the amounts of ODAs from China and Japan could not be compared “because we’ve been dealing with the Japanese far, far longer than the Chinese.”
This month, Joven reported that Japan’s ODA to the Philippines from 2001 to 2020 reached $14.14 billion or 72 percent of the bilateral loan portfolio totaling $19.66 billion during the past two decades.
Meanwhile, Chinese ODA in the last 20 years amounted to only $1.19 billion or 6 percent of total.
“With the Japanese, our ODA goes back to the 1950s when there were reparations” post-war, Dominguez noted.
Dominguez said the more than P7 billion in projects which China was financing were “quite deep into the [implementation] process already.”
Joven also pointed out all Chinese loans and grants for the Philippines were project-based, unlike Japanese ODA which also included budgetary support or program-based facilities.
As such, unlike quick-disbursing budget-support and program loans, the project loans extended by China can only be disbursed upon the start of implementation, Joven explained.
“With Chinese loans, we start with procurement, before loan contracting, and before loan disbursement. It’s the other way around with Japanese loans — we start with financing before procurement and implementation,” Joven said.
The different processes in securing Chinese and Japanese financing meant it took a longer time to contract loans with China, Joven added.
But Joven and Dominguez said the process of securing Chinese financing also meant there were safeguards for both the governments of the Philippines and China.
“The advantage is, basically you have better control over the procurement process. We don’t want to cut corners in the procurement of Chinese-funded projects. Hence, we need to start with procurement, and when it’s OK, then we go to financing. So it gives us two levels of protection,” Joven said.
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