Politics

Marcos gov’t told to turn to Japan for infra funding

3 Mins read
PHILIPPINE STAR/ MIGUEL DE GUZMAN

By John Victor D. Ordoñez, Reporter

THE GOVERNMENT of President Ferdinand R. Marcos, Jr. should turn to Japan for funding assistance to fast-track stalled infrastructure and development projects initially designed for funding by Chinese loans, according to economists.

“The Japan International Cooperation Agency (JICA) remains the nation’s top development partner in the last few years, providing loans and aid to various projects,” Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said in a Facebook Messenger chat.

“As long as JICA’s interest rates remain competitive for future projects, there should be no impediment to broadening our development relations,” he added.

The Marcos government has withdrawn from loan negotiations with China for three major railway projects worth at least P228 billion amid worsening tensions over their sea dispute.

These were the P142-billion South Long-Haul Project in the Bicol Region, the P50-billion Subic-Clark Railway Project and the first phase of the Mindanao Railway Project worth P36 billion.

Last month, the Philippines and JICA signed loan deals worth ¥250 billion (P93 billion) for the construction of the Metro Manila Subway and the Dalton Pass East Alignment, which will link San Jose City in Nueva Ecija to Aritao in Nueva Vizcaya, both in northern Philippines.  

The government is also banking on the Asian Development Bank’s (ADB) technical know-how to bankroll the South Long-Haul Rail Project after Chinese loans failed to materialize, National Economic and Development Authority (NEDA) Assistant Secretary Jonathan L. Uy said last month.

During a congressional oversight hearing looking into projects funded by official development assistance (ODA), the NEDA official told congressmen the agency was in talks with the ADB to start the design-build phase of the 639-kilometer rail line connecting Metro Manila to southeastern Luzon.

Only the Department of Agriculture’s Philippine Solar-Powered Irrigation Project has been lined up for Chinese funding assistance, he added.

“All development partners and multilaterals such as the ADB should be allowed to determine the viability of both projects for ODA funding,” Mr. Ridon said.

At least four Chinese ODA-funded projects have been completed. These are the P4.5-billion Chico River Pump Irrigation Project in Kalinga province, the P1.8-billion Estrella-Pantaleon Bridge and P3.4-billion Binondo-Intramuros Bridge both in Metro Manila and P65 million worth of firetrucks donated to Marawi City in southern Philippines.

Based on 2022 JICA data, the Philippines got P109 billion in ODA from Japan from April 2021 to March 2022, the biggest among Southeast Asian beneficiaries.

The government might have no choice but to seek Japanese funding because China is unlikely to fund projects such as the Metro Manila Subway, Calixto V. Chikiamco, president of the Foundation for Economic Freedom, said in a Viber message.

“From an economic perspective, the halting of China’s assistance should be considered sunk cost and we should move on,” Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said in a Facebook Messenger chat.

“Not allowing the Japanese investments in and sticking with China will only lead to opportunity costs.”

Transportation Secretary Jaime J. Bautista has said the government is considering seeking ODA from Japan, South Korea or India to replace Chinese funding for stalled infrastructure projects.

The government should streamline preparatory stages for foreign-funded projects to avoid delays, the Congressional Policy and Budget Research Department said in a report last month.

Procurement delays, budget flow and institutional support are among the major hurdles in implementing ODA projects, the think tank said, citing NEDA reports.

Japan is keen on investing and providing grants for the Philippine government’s big-ticket investments this year, former Japanese Ambassador to the Philippines Kazuhiko Koshikawa told a business conference in Manila in October.

“JICA loans are cheaper than Chinese loans, but country limits on JICA lending is hitting a ceiling as subway (construction) has nearly doubled in cost, with the likelihood of further going up,” Rene S. Santiago, former president of the Transportation Science Society of the Philippines, said in a Viber message.

Finance Secretary Ralph G. Recto in February said NEDA is looking into implementing the Mindanao Railway Project as a public-private partnership.

In February 2022, the Duterte government awarded a contract to China Railway Design Corp. to build the South Long-Haul Project. State-owned Export-Import Bank of China failed to confirm whether it would approve the loan request.

Mr. Marcos has ordered agencies to boost coordination on maritime security to confront “a range of serious challenges” to territorial integrity and peace, as a sea dispute with China worsens.

China claims almost the entire South China Sea, through which more than $3 trillion of annual ship-borne commerce goes through. Its claims overlap with those of the Philippines, Vietnam, Indonesia, Malaysia and Brunei.

A United Nations-backed tribunal in 2016 voided China’s expansive claims for being illegal.