The Philippines yesterday said that it would no longer pursue Chinese loans to fund three railway projects valued at more than US$5 billion and has started discussions with other Asian countries for alternative financing deals.
“We saw that China appeared to be no longer interested, so we’ll look for other partners,” Philippine Secretary of Transportation Jaime Bautista said in an interview at his office in Manila.
China had agreed to fund three railway projects outside the Philippine capital during the administration of former Philippine president Rodrigo Duterte who sought closer ties with Beijing. The government of his successor, President Ferdinand Marcos Jr, reviewed the deals due to lack of progress from the Chinese side.
Philippine Secretary of Finance Benjamin Diokno last month notified Chinese Ambassador to the Philippines Huang Xilian (黃溪連) in a letter that Manila “is no longer inclined to pursue” Chinese financing for the first phase of the Mindanao Railway Project, a 100km transport system that would traverse Duterte’s southern home region of Davao and which the government had valued at 81.7 billion Philippine pesos (US$1.4 billion).
The Chinese embassy in Manila did not immediately respond to requests for comment.
Bautista said the finance department would also send a formal notification to “terminate” the funding for the 50 billion pesos Subic-Clark freight railway, which links two former US military bases turned commercial zones, and a proposed long-haul commuter railway in the southern part of the main Luzon island valued at 175.3 billion pesos, according to an official list of projects as of May 2021.
Turning to other financing options might delay the projects that are critical to the Southeast Asian nation’s infrastructure push to spur its economy. They are among projects initially listed for completion as early as this year.
There are “at least two Asian countries” that are interested in the Subic-Clark and long-haul railway projects, Bautista said, declining to name them because discussions are still preliminary.
The government is also considering funding the three projects or partnering with multilateral lenders and private companies, he added.
The decision to scrap Chinese loans comes against the backdrop of rising tensions between Manila and Beijing in the disputed South China Sea.
Bautista would not attribute the stalled Chinese loan agreements to the geopolitical tensions.
“Even before these tensions started, the discussions weren’t progressing,” he said, adding that he would still welcome Chinese financing for other infrastructure projects.
“There are a lot of projects that they can support if they want to,” Bautista said.
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