The Philippines’s economic relationship with China is expected to improve further this year, mainly due to the Duterte administration’s foreign-policy rebalancing toward Asia, the Department of Finance (DOF) said.
The DOF said the Philippines’s economic relations with its neighbors in the region, foremost of which is China, showed improvement in 2017 following President Duterte’s foreign-policy rebalancing with aid, concessional financing and investment pledges from Beijing last year.
Several agreements made by the Philippines and China are aimed to support the administration’s “Build, Build, Build” program that will usher in the “golden age of infrastructure” in the country.
“The unprecedented pledges of assistance from China that President Duterte had generated for the Philippines in 2017 make up the initial investment dividend from his prescient foreign-policy rebalancing toward Asia,” Finance Secretary Carlos G. Dominguez III said.
According to the DOF’s International Finance Group (IFG), China has so far committed an estimated $7.34 billion in soft loans and grants to the Philippines for the implementation of 10 big-ticket projects, the construction of two bridges in Metro Manila, as well as two drug-rehabilitation facilities in Mindanao, and as aid to rehabilitate war-torn Marawi City.
In October 2016, during the four-day state visit, President Duterte harvested a total of $24 billion in investment and aid pledges. Of this amount, $9 billion are grants and other forms of assistance.
The 14 accords forged between Manila and Beijing during Premier Li Keqiang’s visit in the country partly fulfills this commitment from China. On behalf of the Philippines, the finance chief had signed four of the 14 agreements with China.
Topping this list is a financing cooperation agreement signed by Dominguez and Liu Liange, president of the Export-Import Bank of China, for two of the Philippines’s flagship infrastructure projects. This includes the New Centennial Water Source-Kaliwa Dam Project of the Metropolitan Waterworks and Sewerage System, and the Chico River Pump Irrigation Project of the National Irrigation Administration that will cover 85 percent of the total contract amounts of the projects.
China will provide soft loans estimated at $234.92 million for the Kaliwa Dam Project and $72.49 million for the Chico River Pump Irrigation Project under the first basket of infrastructure projects presented by the Philippines for possible Chinese financing, according to the IFG.
According to the DOF, among the proposed projects under the second basket are the development of the Subic-Clark Railway, Davao City expressway and Panay-Guimaras-Negros Inter-Island Bridge.
“There are a number of other projects there [in the second basket],” Dominguez said.