Contrast in Japan, China ODAs

The Land of the Rising Sun, through the Japan International Cooperation Agency (Jica), has maintained its standing as the top source of official development assistance (ODA) of the Philippines.

In a statement issued last week, Jica said it gave ODAs in 2020 in the equivalent sum of P64 billion. It also extended two loans worth ¥50 billion (or approximately P20 billion) to help the Philippines address the COVID-19 pandemic.

According to its local representative, Japan’s cumulative active ODA as of the end of 2020 had reached $11 billion and that it would continue to give ODAs in the future.

Except for brief media releases, there was hardly any publicity about those ODAs. There were no photos of signing ceremonies or the two countries’ representatives toasting each other before TV cameras.

Executives who have done business in Japan know that contract signing events with their protocol-conscious Japanese counterpart are often low-key. But after the signing, the lunch or dinner that follows is usually of Michelin-star quality!

Jica’s year-end report and commitment to keep the Philippines in its priority list invites comparison to the offer of grants and low-interest loans that China made shortly after the Duterte administration came to power in 2016.

The South China Morning Post, a Hong Kong-based newspaper, reported that in 2016, China promised to extend to the Philippines $9 billion in soft loans and $15 billion in direct investments, or a total of P1.2 trillion. In a public statement, President Duterte thanked China for those funding pledges.

Buoyed by that promise, the administration’s economic managers announced that the expected moolah from China, together with improved revenue collections, would usher in the country’s “golden age of infrastructure.”

With seven months to go in the Duterte administration, the promised soft loans and direct investments (other than Philippine overseas gaming operations or Pogos) have yet to materialize.

To date, less than 5 percent of the promised P1.2 trillion in loans and investments have been fulfilled by China. The employment boom for Filipinos that China-funded public works projects was supposed to generate has not happened because Chinese workers have been brought in to do the work.

As expected, the economic managers did not find fault in China’s failure to live up to its financial commitments and blamed bureaucracy-related reasons, e.g. project study review and contract negotiations, for the hold up in the flow of funds.

Oh, yeah? But the project studies have long been submitted and evaluated by the Chinese engineering staff. With regard to contract negotiation, it is common knowledge in the business community that financial agreements are “template based.”

Meaning, except for the name of the borrowing party or recipient of the grant, the purpose of the loan or grant, its amount, the schedule of the release of the funds or repayment terms, the covering contract contains standard negative or affirmative covenants, representations and warranties.

Since “beggars cannot be choosers,” there is hardly any room for changes in the terms and conditions of those contracts.

To the hard-nosed Chinese finance officials, the supposedly special relations with the Philippines is merely a political slogan. For them, it’s a “take it or leave it” proposition on those financial transactions.

With President Duterte renewing the country’s military ties with the United States to China’s discomfort with what it earlier must have considered as its obedient vassal, it is doubtful if even one-fourth of the promised loans and investments would come to fruition.

As the local saying goes, they might as well be “lista sa tubig (something that would not be paid at all).”

Incidentally, after Japan, the Philippines’ top ODA funders are Asian Development Bank (which is always headed by a Japanese) at $8.5 billion, the World Bank at $5.3 billion and South Korea at $700 million. China is at the fifth spot with its actual ODAs at present still a big question mark. INQ

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