THE Department of Finance (DOF) has signed a memorandum of understanding (MOU) with the Bank of China that aims to enhance Philippine-Chinese economic relations and bring more renminbi-denominated funding to the Philippines, initially said to reach 6 billion RMB (about P45.465 billion if computed based on today’s exchange rate).
Finance Secretary Carlos G. Dominguez III and Bank of China Chairman Chen Siqing forged a new partnership by signing the MOU on Tuesday at the Malacañan Palace, with Chinese President Xi Jinping and Philippine President Duterte serving as witnesses.
“This new partnership aims to further facilitate cross-border opportunities by bringing more Renminbi funding to the Philippines that will make foreign investments more convenient and cost-efficient. With these funds readily available, we hope to spur investments between the Philippines and the Mainland that will contribute to the economic growth of our two countries,” said Deng Jun, country head of Bank of China Manila branch.
The DOF said the MOU also provides assistance from the Bank of China in line wit the country’s future issuances of Panda bonds in the Chinese debt-capital market.
The MOU covers the Philippines’s plan to return to the China Interbank Bond market in 2019, with a possible application for a multi-tranche RMB 6 billion bond issuance.
The Bank of China had served as one of the lead underwriters for the Philippines’s first Panda bond float of RMB 1.46 billion in March 2018.
Aside from being the lead underwriter for the “Panda” bonds, Bank of China also acts as the Philippines’s joint global coordinator for its upcoming global dollar-bond transaction, and is involved in establishing a direct currency conversion platform between the Philippine peso and the Chinese renminbi.
In October the Bank of China along with 13 partner local banks signed a memorandum of agreement (MOA) forming the Philippine RMB Trading Community, which provides a local platform for direct RMB-peso foreign exchange.
The platform and the new RMB funding are both in line with the government’s plan to diversify its currency basket and attract greater cross-border trade and investment.
Meanwhile, the DOF reported that the Philippines and China exchanged documents on Tuesday on three economic agreements covering the cooperation arrangements in implementing key infrastructure projects in Mindanao under the “Build, Build, Build” (BBB) program, and Chinese funding support for feasibility studies on priority development projects.
The three accords were among the 29 agreements exchanged between the two countries to cap President Xi Jinping’s historic state visit to the Philippines, the first by a Chinese leader in 13 years.
Dominguez and Commerce Minister Zhong Shan of China signed an MOU on “Jointly Promoting the Cooperation in Key Infrastructure Projects in the Davao Region.”
The MOU outlines the cooperation arrangements between the Philippines and China in implementing big-ticket infrastructure projects in Davao including the Davao City Expressway Project; the Davao-Samal Bridge; the Bucana-Davao River Coastal Bypass Road of the Department of Public Works and Highways; and the Mindanao Railway Project of the Department of Transportation.
The finance chief also exchanged with Wang Xiaotao, the chairman of the China International Development Cooperation Agency (Cidca) an MOU that provides the framework for China’s support for the feasibility study of the Duterte administration’s major projects as agreed upon by the two countries.
Cidca also exchanged with the DOF the document that provides financing for new projects covered by the Philippines-China Agreement on Economic and Technical Cooperation. These new projects covered by the 500 million RMB (about P3.788 billion) accord includes financing for the Davao River Bridge (Bucana) Project and the donation of x-ray machines and scanning technologies to the Bureau of Customs and other projects to be mutually agreed upon by the two governments.
Zhong signed a handover certificate that served as the Philippines’s acknowledgment of the receipt of China’s $1-million humanitarian cash assistance for the victims of Typhoon Mangkhut, locally known as Typhoon Ompong.