China open to talks on government-to-government projects

MANILA, Philippines — The Philippines and China have been negotiating “technical issues” on infrastructure projects, the Chinese embassy in Manila said yesterday.

The embassy said China has “comprehensive strength and is well-known for its quality and speed.”

“China will tap its own advantage and support the Philippines to improve its infrastructure,” the embassy said in a statement.

The Duterte administration requested for loan for three major railway projects, the Subic-Clark Railway Project, the Philippine National Railways (PNR) South Long-Haul Project, and the Davao-Digos segment of the Mindanao Railway Project (MRP) but the Chinese government did not act on the request.

Transportation Undersecretary for railways Cesar Chavez said the projects were considered withdrawn and have to be renegotiated by the new administration.

“There was a policy discussion on three China ODA Rail Projects in last Tuesday’s Cabinet Meeting during which the President commented that as a matter of policy, we should encourage more investments in rail and that we should focus more on rail transport,” Chavez said.

The contract for the P142-billion PNR South Long-Haul Project or the “Bicol Express,” was awarded to the joint venture of China Railway Group Ltd., China Railway No. 3 Engineering Group Co. Ltd., and China Railway Engineering Consulting Group Co. Ltd. last January, he said.

The P83-billion Tagum-Davao-Digos segment of the MRP was also halted after China failed to submit a shortlist of contractors for its design-build contract, Chavez said.

Meanwhile, the Department of Transportation (DOTr) said the P51-billion Subic-Clark Railway Project was awarded to China Harbour Engineering Co. in December 2020.
“Our two sides have been negotiating technical issues and made positive progress to move the projects forward,” the Chinese embassy said.

“China is open for technical discussions over our G-to-G projects, and is ready to carry our cooperation forward, in close communication with the Philippine new administration,” it added.

The embassy said 17 projects in total have been completed and more than 20 projects are under implementation or in progress.

“Over the past two years, COVID-19 has impacted implementation of some projects, hindering the site availability, causing delays of procurement, affecting goods mobility, and so on. Despite those difficulties and challenges, our two sides have worked tirelessly to push the projects forward and yielded rich outcomes, spanning from anti-pandemic response, disaster relief to infrastructure, agriculture, and other fields,” it added.

But former foreign affairs secretary Albert del Rosario, who led the country in bringing the case on the South China Sea against China before an arbitration court, said the six years that passed have been less than ideal for the Philippines.

Del Rosario blames the Duterte administration for pursuing a policy of appeasing China in exchange for economic benefits that he says never materialized.

‘Auspicious opportunity’

In Congress, Sen. Grace Poe welcomed President Marcos’ directive to the DOTr to halt China-funded railway projects pending renegotiation on their financing terms.

Poe, who is expected to chair the Senate committees on economic affairs and on public services, said the directive presents an “auspicious opportunity” to go back to the drawing board and craft deals that are fair and will produce tangible benefits for the Filipino people.

“Renegotiation should iron out issues that saddled the previous agreements, including interest rates and payment terms,” she said.

“The need to boost our infrastructure should not compromise the best interest of our country,” she added.

Ultimately, these loans would be paid by the Filipinos so it is the government’s job to ensure that they are not on the losing end, Poe said.

Find other fund sources

Her fellow lawmakers in the House of Representatives believe the government still has a lot of international funding sources for the railway projects apart from China.

The consensus among President Marcos’ allies in the House – among them former deputy speakers Rufus Rodriguez and Mikee Romero of 1Pacman party-list and Reps. Joey Salceda of Albay and Teodorico Haresco Jr. of Aklan – is that the DOTr could explore funding from other countries and foreign lending institutions.

“The old saying ‘beggars cannot be choosers’ cannot apply to us in this case and other projects. We have other funding options, which the new national leadership should explore,” Rodriguez, of Cagayan de Oro City’s second district, said.

The options include multilateral institutions like the World Bank and Asian Development Bank, international assistance agencies such as the US-AID, JICA of Japan, Korean agency and EU Fund, the local banking and business community and even the annual national budget.

“The problem with loans from China is that there will be strings attached which will sacrifice our full sovereign rights over our West Philippine Sea,” Rodriguez said.

Salceda, who used to head the House committee on ways and means, said Marcos and Transportation Secretary Jaime Bautista can still explore “alternative financing options” for the 380-kilometer Calamba-Bicol railway line. – Paolo Romero, Delon Porcalla