Senators question conditions of foreign infra loans to PH
Robie de Guzman • March 5, 2019 • 1695
QUEZON CITY, Philippines — A Senate Panel on Tuesday questioned several government officials on the conditions of foreign loan agreements taken by the Philippine government for its “Build, Build, Build” program that could be potentially detrimental to the country.
In a hearing conducted by the Senate Committee on Economic Affairs, senators took particular interest in the country’s loan deals with China, wanting assurance from government officials that the agreements are not putting the Philippines into a disadvantage.
According to the Department of Finance, the country as of now has signed and implemented two loan deals with China, four with Japan and two with Korea.
These include the China-funded P3 billion Chico River Pump Irrigation project and New Centennial Water Source Project; the Panguil bay Bridge Project and the new Cebu International Container Port project with Korea; the Pasig-Marikina River Channel Improvement project, the Cavite Industrial Area Flood Management Project, Metro Manila Subway project and the North-South Railway Project with Japan.
But the research group, IBON Foundation claims that the agreement with China on the Chico River Pump Irrigation project contains potentially detrimental provisions if the Philippines fails to pay its obligations.
“We’ve seen that there are void or voidable provisions pertaining to the loss of immunity from arbitration, nililinaw pa natin kung patrimonial assets would be given up,” IBON Foundation Research Head Rosario Bella Guzman told the committee headed by Senator Sherwin Gatchalian.
Gatchalian, however, sees nothing wrong with the stated condition, although he also wants to personally see and evaluate the contents of the government’s infrastructure loan deal with China.
“That’s what I wanted for that loan agreement para mabasa ng mabuti kung ano yung loan agreement. But in my opinion, ang arbitration ay is standard clause ‘yan,” Gatchalian said, adding that this is not enough for the country to fall into a debt trap to China.
Some groups have previously expressed fear that the country will fall into China’s so-called “debt-trap diplomacy” as the government under President Rodrigo Duterte is now more open to accepting Chinese loans.
The Finance Department and Bases Conversion and Development Authority (BCDA) also explained to the Senate Committee on why it has to take out loans from China when it offers higher interest rates than Japan.
China offers a heftier two to three-percent loan interest rate than Japan’s 0.10 percent. The Asian Development Bank (ADB), meanwhile, carries 3.44 percent and World Bank at 3.71 percent loan interest rate.
“You have the technology to consider, currency to consider,” Finance Assistant Secretary Maria Edita Tan said.
“The Philippine government cannot allocate all of the projects to one country, hindi rin naman nila ipa-fund yun,” BCDA President and CEO Atty Vivencio Dizon said.
The DOF previously said that China’s offer to finance government projects is in no way a debt trap for the Philippines, stressing that the Chinese-funded infrastructure projects are seen as a big help in boosting the country’s economy.
DOF added that the country’s loans from China will only account for 4.5 percent of the country’s total debt, which is lower than the debt to Japan at around 9.5 percent, by the end of the Duterte administration when most infrastructure projects have already been funded.
The Department of Public Works and Highways (DPWH), for its part, assured transparency in executing the China-funded loan agreements, and to always prefer to employ Filipinos in foreign-funded projects.
“Like this China grant na Binondo-Intramuros [bridge], Estrella-Pantaleon [bridge], sa on-going po natin. For example, we are taking 200 personnel, Chinese po natin duon ay 20 percent,” DPWH Public Private Partnership Service Director Alex Bote said during the Senate hearing. – Robie de Guzman (with contributions from Correspondent Nel Maribojoc)
The Philippines and Japan are expected to sign a $202.04-million infrastructure loan agreement on the sidelines of a high-level joint committee meeting between the two countries next week (June 18).
In its statement released on Sunday (June 9), the Department of Finance (DoF) said the deal will be focused on the Road Network Development Project in Conflict-Affected Areas in Mindanao.
Finance Secretary Carlos “Sonny” Dominguez and Socioeconomic Planning Secretary Ernesto Pernia will represent the Philippines, while Dr. Hiroto Izumi, special adviser to Japan Prime Minister Abe Shinzo, will lead the Japanese delegation in their meeting in New Clark City, Pampanga.
The Japanese International Cooperation Agency (JICA) said the project involves the building, rehabilitation and improvement of the 178.43-kilometer road network in the Autonomous Region in Muslim Mindanao and neighboring regions.
The DoF also said that in the said June 18 meeting, Philippine and Japanese officials are expected to resume discussions on the progress of Japan-funded infrastructure projects under the government’s “Build, Build, Build” infrastructure program.
They are also expected to deliberate on the other areas of the economic cooperation between Manila and Tokyo.
The meeting which will be held at New Clark City in Pampanga would be the eighth held by the high-level joint committee since it was first convened in March 2017.
The Finance Department said nine other loan agreements with Japan were signed between October 2016 and January 2019 with a combined amount of 398.82 billion yen (or about P189.92 billion). These include the following:
Maritime Safety Capability Improvement Project for the Philippine Coast Guard (Phase II)
Harnessing Agribusiness Opportunities through Robust and Vibrant Entrepreneurship Supportive of Peaceful Transformation (HARVEST)
Cavite Industrial Area Flood Risk Management Project
Arterial Road Bypass Project (Phase III) in Bulacan
New Bohol Airport Construction and Sustainable Environment Protection Project (II)
Metro Rail Transit Line 3 Rehabilitation Project
Pasig-Marikina River Channel Improvement Project (Phase IV)
MANILA, Philippines – Malacañang has assured that it is ready to disclose the Philippines’ infrastructure agreements with Chinese firms to promote transparency in the bureaucracy.
Presidential Spokesperson Salvador Panelo made the assurance on Monday (March 18) as the Duterte Economic Team heads to Beijing, China this week to tackle the Philippine government’s infrastructure projects.
“Well, that’s pursuant to transparency, yes. Why not?” Panelo said at a press briefing in Malacañang.
In a statement released on Monday (March 18), the Department of Finance announced the trip to Beijing to meet with Chinese Counterparts to discuss possible infrastructure cooperation with China for projects under the Duterte administration’s “Build, Build, Build” program.
Executive Secretary Salvador Medialdea will lead the delegation.
The Philippine Officials are set to meet with top officials of China’s Ministry of Commerce and Vice President Wang Qishan on Tuesday (March 19) to firm up possible new cooperation deals.
“Other members of the Philippine delegation are scheduled to meet separately with officials of the Export-Import Bank of China (Exim Bank) and the China International Development Cooperation Agency (CIDCA), the office in charge of reviewing and implementing Beijing’s foreign aid projects,” the DOF added in a statement.
A Philippine Economic Briefing (PEB) will also be held in Beijing on Wednesday (March 20) “to showcase to potential investors the vast opportunities available to them in the Philippines as it emerges as an economic powerhouse in the region.”
The Duterte government is reportedly planning to spend P8 trillion for its infrastructure projects. At least one-third of these proposed projects will be financed by China, including the Chico River Irrigation Project, which has been hit for its one-sided loan agreement in favor of China.
Malaysian Prime Minister Mahathir Mohammad has earlier cautioned the Philippines against borrowing huge sums of money from China.
“If you borrow huge sums from China and you cannot pay—you know when a person is a borrower, he is under the control of the lender,” Mahathir said.
United States Secretary of State Michael Pompeo also warned other nations in 2018 about the potential dangers of accepting Chinese investments as Beijing expands its development projects to increasingly distant corners of the world.
“When China comes calling, it’s not always to the good of your citizens,” Pompeo said at a press briefing in Mexico City after a meeting with Panamian President Juan Carlos Varela in October 2018.
Pompeo’s remarks came as Washington’s own investment agency is actively competing with China to finance infrastructure projects, particularly in Panama.
Opposition Senator Leila de Lima also called on the Duterte administration to heed warnings from Malaysia and the United States against accepting loans from China.
“This is not the first time that top leaders or experts cautioned us about our dealings with China that could unfavorably affect our country’s future, both in the aspects of financial and territorial security. We need to learn from the unfortunate fate of others who borrowed before us,” de Lima said in a statement.
Despite criticisms and appeal against the move to take out foreign loan deals, Malacañang has repeatedly assured that the country will not fall into a debt trap with China. – Robie de Guzman (with details from Rosalie Coz)
The credit ratings of the Philippines is upgraded from triple B minus (BBB-) to triple B (BBB)based on the latest report of Fitch Ratings.
Fitch Credit Ratings pertain to the opinion on the relative ability of an entity to meet financial commitments.
Based on the statement of the Fitch Ratings, the sentiment of investors remains strong because of continuous solid demand and foreign direct investments.
This indicates that the controversies that administrations anti-drug war is facing do not affect investor confidence.
Fitch is also expecting higher government spending under the “Build, Build, Build” infrastructure program of the administration.
Also, Fitch forecasts GDP growth of 6.8% in 2018 and 2019 which will maintain the Philippines among the fastest-growing economies in Asia-Pacific Region.
Malacañang welcomed the Fitch findings.
Based on the statement of Presidential Communications Secretary Martin Andanar, this affirms that the Duterte Administration is in the right direction of implementing its anti-crime and corruption programs to maintain law and order as well as implementing the economic policies of the government. – Rosalie Coz | UNTV News & Rescue
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