MANILA, Philippines — China is evaluating four projects worth nearly $2 billion for financing as part of its infrastructure assistance to the Philippines.
Finance Undersecretary Mark Dennis Joven told reporters that Beijing is looking at extending a loan package of $1.9 billion for four public works projects: two in Mindanao, one in Metro Manila and another in Central Luzon.
“Regarding pipeline projects, basically four projects are currently with China Exim for evaluation. These are the three bridges in Metro Manila, the Davao-Samal Bridge, Mindanao flood control project and the Subic-Clark Railway. So, the total value of the commercial contracts for these projects is around $1.9 billion,” Joven said.
China is also conducting procurement review for $4.6 billion worth of other projects, in which financial assistance will be extended as soon as Beijing concludes the assessment on its end, Joven said.
Unlike Japanese loans, Joven said in Chinese funding, procurement comes first before the amount is issued to the implementing agency. He explained that with this procedure, there is better security in terms of choosing who to contract in completing the project.
“In Chinese loans versus Japanese loans, procurement comes first before loan disbursement. In Japanese loans, it’s the reverse. Financing comes first before procurement, and then the implementation,” Joven said.
“The advantage (from China) is basically you have better control over the procurement process. We don’t want to cut corners in the procurement of Chinese-funded projects. Hence, we need to put them first and if procurement is approved, then we go to financing, so it gives us two levels of protection,” he said.
Finance Secretary Carlos Dominguez said the Philippines would sustain its financial relationship with China as loans extended by Beijing settle within the rates that Manila can pay.
“We are happy because they are according to terms that are beneficial to us. We pay very good interest rate, the terms are good and the projects are okay,” Dominguez said.
In a study by the Department of Finance, Japan emerged as the country’s largest source of external loans for the past two decades. The East Asian partner made up nearly 72 percent, or $14.13 billion, of the $19.65 billion foreign financing received by the Philippines from 2001 to 2020.
The European Union accounted for more than 15 percent of the amount at $3.04 billion. China contributed around six percent at $1.18 billion.