NEDA vows strong vetting process for China-funded infra projects

MANILA, Philippines -  The National Economic and Development Authority (NEDA) yesterday assured the public there would be a strong vetting process for infrastructure projects that would involve Chinese financing.

Socioeconomic Planning Secretary Ernesto Pernia said the two stages of clearing for infrastructure projects that would be covered by official development assistance (ODA) from China would ensure only companies with good reputation can bid for big-ticket infrastructure projects in the pipeline.

“There will be two clearing mechanisms. On the China side, they have to clear the companies to bid for the project and they have to give us trustworthy candidates, those with good reputation. And for our side, the ICC (Investment Coordination Committee) will serve as a screening process for us to be able to pick the one to undertake the project,” he said during a forum hosted by the Economic Journalists Association of the Philippines yesterday.

In November last year, NEDA said the ICC composed of the main economic managers would be the designated clearing house for Chinese investments. China, meanwhile would create an agency that will pre-screen companies.

Chinese ODA loans would fetch two-percent interest per annum with a grace period of 10 to 15 years for a loan term of 20 to 30 years. This is still more expensive than Japanese ODA loans that fetch interest rates of between 0.5 percent to 0.75 percent.

There were concerns that the utilization of Chinese loans would be disadvantageous to the Philippines as this may result in overpricing of projects, poor quality of infrastructure and employment of more Chinese workers than Filipino workers.

Whether Chinese workers would make up the bulk of workers engaged in infrastructure projects up for China financing would depend on the outcome of negotiations, said Pernia. He believes, however, it is more likely highly skilled Chinese with advanced technical skill will be brought into the country.

“It depends on the agreement between Philippines and China. But I think in projects in Africa and Asia, they’ve brought some labor,” he said. “I think those will be technical level types especially if we do not have those types of skilled labor.”

The requirement for manual labor can be supplied by the Philippines.

“Many of them can be entered into with our local labor force,” said Pernia.

NEDA has so far identified 75 flagship projects for implementation within the Duterte administration. Out of these, 15 have been proposed for Chinese financing and three would be prioritized for the provision of Chinese ODA. These are the $53.6-million Chico River Pump Irrigation Project in Cagayan and Kalinga provinces, the $374-million New Centennial Water Source-Kaliwa Dam Project in Quezon province and the South Line of the North-South Railway Project.