China expects $ 1.9 billion in loans for 4 PH infrastructure projects



China expects $ 1.9 billion in loans for 4 PH infrastructure projects

PHOTO: China Eximbank is evaluating loan options for four major infrastructure projects in the Philippines. REUTERS / Dado Ruvich / Illustration

MANILA, Philippines – The Philippines has unveiled four more major infrastructure projects worth $ 1.9 billion to China, in addition to the government’s current $ 4.6 billion.

Deputy Finance Minister Mark Dennis Joven told reporters that the China Eximbank is currently evaluating possible commercial loans for the following projects:

• Davao-Samal Bridge
• Flood control in Mindanao
• Subic-Clark Railway
• three bridges in Metro Manila

Joven said last year $ 620 million in Chinese loans and official development assistance (ODA) grants were disbursed out of $ 4.6 billion in existing projects that were in the procurement process.

China-funded projects include bridges across the Pasig River being built by the Department of Public Works and Highways (DPWH); the first phase of the Safe Philippines program of the Department of Home Affairs and Local Government (DILG); New 100-year-old water source – Kaliva Dam – from the Metropolitan Water Supply and Sewerage System (MWSS); and a National Irrigation Agency (NIA) pumping irrigation project for the Chico River.

Asked if the Treasury is satisfied with the pace of project implementation and the amount of ODA China is providing to the Philippines amid warmer relations between the two countries under the Duterte administration, Finance Minister Carlos Dominguez III replied: “Once approved, Chinese projects are being implemented quite quickly.”

“You can see this in [Pasig River] bridges, etc. We are happy with them, because they meet the conditions that are beneficial to us. We pay a very good interest rate, the conditions are good, the projects are good, ”said Dominguez.

The CFO said the perception that China-funded projects are slow arose due to a mismatch between recent “big” deals with China and bureaucratic red tape. “We did run into some difficulties in getting approvals and mainly in understanding each other,” he admitted.

But Dominguez said that the amount of ODA from China and Japan cannot be compared to apples, “because we have been dealing with the Japanese for much longer than with the Chinese.”

Joven reported earlier this month that Japan’s ODA to the Philippines reached $ 14.14 billion between 2001 and 2020, or 72 percent of a bilateral loan portfolio totaling $ 19.66 billion over the past two decades.

Meanwhile, over the past 20 years, China’s ODA totaled just $ 1.19 billion, or 6 percent of the total.
“For Japan, our ODA dates back to the 1950s, when there were reparations,” Dominguez said.

Dominguez said that China has already funded projects worth over 7 billion pesos, so they are “pretty deep in [implementation] process already. “

In addition, Joven pointed out that all Chinese loans and grants to the Philippines were project-based, as opposed to Japan’s ODA, which also included budget support or programmatic funds.

Thus, unlike quick budget support and program loans, project loans provided by China can only be disbursed after a quick start of implementation, Joven explained.

“In the case of Chinese loans, we start with purchasing, before entering into the loan, and before repaying the loan. With Japanese loans, the opposite is true – we start from financing to purchasing and selling, ”Joven said.

The difference in the procedures for obtaining Chinese and Japanese funding led to an increase in the time frame for concluding contracts with China, Joven added.

But Hoven and Dominguez said the China financing process also provides guarantees for the Philippines and China.

“The advantage is that you have better control over the procurement process. We do not want to cut corners when purchasing projects funded by China. Therefore, we need to start with purchasing, and when everything is in order, we move on to financing. So it gives us two layers of protection, ”Joven said.

It is also important for the Chinese government to pre-select private Chinese contractors to protect the Chinese Eximbank’s investment.

“He cannot finance a project that is not profitable. For our protection and the protection of the Chinese government, all projects underway must be bankable projects; otherwise, we will pay for the loans for the White Elephant projects that we don’t need and they don’t want either, ”Joven said.


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