South Korea processing ODA faster than China, says Pernia

MANILA, Philippines — South Korea is now processing official development assistance (ODA) for the Philippines at a faster pace compared with China, said Socioeconomic Planning Secretary Ernesto Pernia.

Last week, the country’s chief economist commented on the slowness of the provision of ODA from China compared with Japan, which is currently the country’s top ODA provider.

Pernia attributed this to the lack of regular meetings with their Chinese counterparts as well as the languid pace in the screening process for Chinese companies on the Philippine side. 

Interviewed on The Chiefs current affairs program on One News Thursday night, Pernia said South Korea is now following through faster with commitments compared with China.

“I wouldn’t say China is one of the biggest (providers of ODA), the biggest is Japan. In fact, in terms of the speed of implementation, Korea is faster. So far, we have a  number of projects for which China has committed but they have not been moving as fast as we wanted,” Pernia said.

He noted that other than the reasons earlier mentioned, the glacial pace of processing of ODA assistance for the Philippines may stem from the shortage of dollars in China as it it engaged in a trade war with the US.

“I think that is because they are short of US dollars,” he added.

So far, only two projects under the government Build Build Build program have obtained funding from China: the Chico River Dam Irrigation project and the Kaliwa Dam project. 

Last month, the Department of Finance exchanged loan documents with the Export-Import Bank of Korea for the $50 million loan for the Philippines-Korea Project Preparation Facility (PKPPF), which will help facilitate the study and planning of projects under the Build Build Build program.

Last December, Pernia said the Philippines will be stepping up the negotiations for ODA to fund its ambitious infrastructure program within the grace period allotted for countries graduating to upper middle income (UMIC) status.

The country is currently classified as a lower middle income economy having a gross national income (GNI per) capita of $3,830 as of 2018. This year, it is expected to become an upper middle income country with a GNI per capita income range of $3,996 up to $12,375.

A three year grace period will be in effect before the country becomes ineligible for concessional loans or borrowings with interest rates that fall below market rates.

Pernia said that as the Philippines and its top ODA partner, Japan, accelerate the processing of assistance for priority infrastructure projects, the government will also reach out more to other development partners to shore up more funds for its ambitious infrastructure program.

“Well, Japan is still willing to lend more funds at very low rates. We are going to be reclassified as an upper middle income country by next year and the downside to that will be less access to concessional loans so we really have to make sure that we finish our major infrastructure projects that are big ticket projects in terms of cost by 2023. Because after that, we will be classified as an upper middle income country,” he said last December.

“We will have to accelerate getting loans. Korea, for example is also an open partner so we shall be getting loans from Korea faster so that we do not hit the deadline which is 2023,” he added.

Next to Japan other top ODA providers to the country are the World Bank and the Asian Development Bank.