Gov’t warned vs relying on Chinese ODA, urged to strengthen PPPs instead
MANILA, Philippines — A geopolitical and geo-economics expert has warned against relying on Chinese Official Development Assistance (ODA) as it could lead to substantial debt, and instead encouraged the government to strengthen Public-Private Partnerships (PPP).
According to the Stratbase ADR Institute (ADRi) on Saturday, its president Dindo Manhit said that safeguard mechanisms against corrosive capital are needed.
“Lacking transparency and accountability, these have the potential to incite debt dependencies,” he stated during their think tank’s Revitalizing the Philippines’ Infrastructure Development through Public-Private Partnerships Forum on Friday.
“Without proper oversight, investments in infrastructure flagship projects, particularly those funded by Chinese ODA or through the Belt and Road Initiative (BRI), could be exploited to circumvent Philippine laws. These could then undermine the country’s democratic institutions and make it vulnerable to political and economic manipulation,” he added.
In partnership with the Center for International Private Enterprise, ADRi also released the result of their study which is a comparative assessment regarding two infrastructure flagship projects which are the Kaliwa Dam Project and the Wawa Bulk Water Supply Project-Upper Wawa Dam.
Kaliwa Dam was funded by a concessional ODA loan from China, while Wawa Dam was funded through PPP.
Manhit noted that the heavy reliance on ODA in financing infrastructure and development projects presents risks of accumulating substantial debt as it can make the country vulnerable to external shocks.
“The sudden changes in global economic conditions can jeopardize economic stability. The Philippines has experienced this vulnerability during times of global economic uncertainty, highlighting the risks associated with dependence on foreign capital,” he said.
According to Manhit, the nature of the loan that funded the project may be unfavorable to Filipinos. He cited that although the Kaliwa Dam project has a comparatively shorter repayment period, it has a hefty two percent interest rate which all Filipinos will bear repaying – whether they will benefit from the project or not.
In contrast, it was pointed out that tapping the private sector is a more strategic move.
Manhit said that while the government finances large-scale infrastructures, PPPs can already start developing ones that the country urgently needs.
“Public-Private Partnerships hold the potential to accelerate infrastructure development and bring innovative solutions to the table. It is not just about building bridges. It is also about building trust between the public and private sectors, as well as the Filipino people,” he stated.
Meanwhile, the author of the said study pointed out that to improve transparency and accountability in infrastructure projects, the public has to be provided with more access to its details, including documents involved in the matter.
“Notably, transparency is central to empowering people: when citizens can easily obtain the public information that affects their well-being, especially the direct stakeholders, they are better equipped to hold their leaders accountable and to participate in the decisions that affect their lives. Lack of transparency and accountability leads not only to potential corruption but also to conflict of interest, and favoritism,” Stratbase ADR Institute Non-Resident Fellow Dr. Rizal Buendia said.
In the same forum, Senator Grace Poe, in her keynote speech, also emphasized the need to focus more on PPPs as they can better help revitalize the country’s infrastructure growth.
“Through PPPs, this government can do more with less. PPPs offer stable funding for capital-intensive infrastructure projects with the promise of efficient and innovative services,” she said.
“PPPs can provide parallel, if not better, advantages than official development assistance. By requiring value-for-money proposals, the better quality and longer life cycles of PPP projects make it more cost-effective than those solely financed by the national budget or ODA,” she continued.
She further added that these PPPs offer smart solutions through innovative and technology-driven projects and that sustainable and climate-responsive design should be the norm in the country’s infrastructures.