MANILA – The Philippine government is securing financing from China for its infrastructure projects in an effort to fast-track their implementation, according to the country’s chief economist.
During the joint membership meeting of the Makati Business Club and Philippine Chamber of Commerce and Industry on Wednesday, Socioeconomic Planning Secretary Ernesto M. Pernia said China charges the loans with an interest rate of 2 to 3 percent, while Japan’s impose interest of only 0.25 to 0.75 percent.
“We cannot get all the loans from the ODA (official development assistance) of Japan. They have to give to other countries as well… Between 2- and 3-percent interest rate is still much better than commercial (loans),” he told reporters.
While the Philippines has long-standing good relations with Japan, Pernia noted Japan’s slowness in the processing of projects.
“We don’t want to be left behind,” he said, stressing China has been aggressive in financing Philippine projects.
But Pernia, also Director-General of National Economic and Development Authority (NEDA), stressed that the country has not signed yet any loan agreement with China.
He gave assurances that mechanisms would be put in place for Chinese companies keen on participating in the government’s infrastructure program.
“We have that screening system on the Chinese side and on our side to make sure that we do not get involved with a company that is questionable or that has a bad record,” said the NEDA chief.
“They are not already blacklisted, for example, with the World Bank or ADB (Asian Development Bank) or the AIIB (Asian Infrastructure Investment Bank), that the Chinese government can vouch for them, and from the three (bidder companies) we are going to select on our side what we consider the best,” added Pernia.
Meanwhile, Pernia said three projects so far have been prioritized by the Chinese Embassy and the concerned Philippine government agencies for loan financing from China.
These are the Chico River Pump Irrigation Project of the National Irrigation Administration; the New Centennial Water Source–Kaliwa Dam Project of the Metropolitan Waterworks and Sewerage System (MWSS); and the North-South Railway Project (NSRP)–South Line of the Department of Transportation.
“The Philippines and Chinese governments continue to conduct consultations on the implementation status of the first batch of projects proposed for Philippine-China development cooperation, the indicative list of the second basket of projects, and other development and economic cooperation activities,” he said.
Pernia further said NEDA is currently updating the indicative list of priority projects for possible development cooperation with the Chinese government, in coordination with the Department of Finance (DOF) and the concerned government agencies.
“Infrastructure development is important for the government to reduce the cost of doing business and encourage both foreign and local investments in the country. We need adequate infrastructure to connect the country’s outlying regions to the mainstream economy. As well, we need infrastructure to raise productivity in the agriculture, industry, and services sectors,” he added.