DOF cites stronger ties between Manila, Beijing

MANILA, Philippines — The Department of Finance (DOF) reported improved and stronger ties between Manila and Beijing following President Duterte’s foreign policy rebalancing towards Asia.

The finance department’s International Finance Group (IFG) reported China has so far committed an estimated $7.34 billion in soft loans and grants to the Philippines.

The loans and grants would be used to bankroll 10 big-ticket projects, construct two bridges in Metro Manila and two drug rehabilitation facilities in Mindanao, and rehabilitate Marawi City.

Aid, concessional financing, and investment pledges made by China after its top leaders met with President Duterte in 2016 have progressed into agreements, several of them to help fund the government’s Build Build Build infrastructure modernization program and its war against illegal drugs.

China was also among the first countries to pledge assistance in helping rebuild Marawi City in Mindanao after its liberation from ISIS-inspired extremists last October.

“The unprecedented pledges of assistance from China that President Duterte had generated for the Philippines in 2017 make up the initial investment dividend from his prescient foreign-policy rebalancing toward Asia,” Finance Secretary Carlos Dominguez III said.

He pointed out China is now among the Philippines’ closest allies as it is committed to help fund the government’s Build Build Build and Marawi reconstruction programs.

“Mutual trust and confidence-building have led to increased interaction on many levels of our two governments. Practical cooperation in many areas is bringing in an early harvest of tangible benefits,” President Duterte said during Premier Li  Keqiang’s visit.

During the four-day state visit of President Duterte to China in October 2016, he harvested a total of $24 billion in investment and aid pledges. Of this amount, $9 billion are grants and other forms of assistance.

These include a financing cooperation agreement signed by Dominguez and Liu Liange, president of the Export-Import Bank of China, for two of the Philippines’ flagship infrastructure projects – the New Centennial Water Source-Kaliwa Dam Project of the Metropolitan Waterworks and Sewerage System and the Chico River Pump Irrigation (facility) project of the National Irrigation Administration – covering 85 percent of the total contract amounts of the projects.

China is also set to provide soft loans estimated at $234.92 million for the Kaliwa Dam and $72.49 million for the Chico River under the first basket of infrastructure projects presented by the Philippines for possible Chinese financing.

Dominguez also inked a memorandum of understanding with China Vice Commerce Minister and International Trade Representative Fu Ziying to “jointly identify and study” an indicative list consisting of the second basket of key infrastructure cooperation projects for possible Chinese financing.

Among the proposed projects under the second basket are the development of the Subic-Clark Railway, Davao City expressway, and Panay-Guimaras-Negros Inter-Island Bridge.

Dominguez and Bank of China chairperson Chen Siqing also signed a renminbi bond issuance underwriting agreement in preparation for the Philippines’ planned Panda bond float this year.

An agreement on economic and technical cooperation providing approximately $23 million Chinese grant to aid the Philippine government’s quick recovery and reconstruction program for Marawi City was also signed.