Philippines, China to explore hybrid financing of projects

MANILA, Philippines — Beijing agreed to Manila’s proposal to implement proposed big-ticket Philippine projects through hybrid financing arrangements with multilateral institutions, the Department of Finance said on Thursday.

Finance Secretary Carlos Dominguez III said that Gao Hucheng, China’s Commerce minister, welcomed the proposal of the Philippines to finance projects submitted to Beijing with multilateral lending institutions such as the Asian Development Bank (ADB), the World Bank and the China-led Asian Infrastructure Investment Bank (AIIB).

Dominguez said that China would want to clarify first the “operating procedures” that would govern such arrangements.

China would also want to ascertain that this financing scheme would lead to a more efficient and smooth implementation of projects, the Finance chief said.

Dominguez said that China agreed with the Philippines on the urgency of implementing the projects the country submitted for possible financing during the administration of President Rodrigo Duterte.

Both parties also emphasized the need to be open and transparent in their talks on the memorandum of agreements signed last year during Duterte’s visit to China and in the implementation of the said projects.

Philippines and China also agreed to regularly hold bilateral meetings to ensure that the projects to be implemented are the priorities of the two countries.  

During the January 23 to 24 visit, the Philippines submitted 40 “large” and “small” infrastructure projects to China for possible financing and assistance in conducting feasibility studies.

Of the 40 projects, 15 are for financing while 25 are for support for the conduct of feasibility studies.

Three of the large projects have a combined worth of $3.4 billion. These are the Chico River Pump Irrigation Project in Cagayan and Kalinga ($53.6 million), the New Centennial Water Source-Kaliwa Dam Project in Quezon ($374.03 billion) and the South Line of the North-South Railway from Manila to Legaspi City ($3.01 billion).

The nine other projects submitted for help in conducting feasibility studies aim to interconnect the country’s main island groups, boost tourism, construct a flood-control system and ensure a stable power supply in Mindanao.

Trade Secretary Ramon Lopez said that Duterte’s state visit to China last year yielded $24 billion worth of aid and investment promises from China. Of this amount, $9 billion is for soft loans while $15 billion was for other economic deals.