Manila | Fri, October 27, 2023

The Philippines will no longer seek financial aid from China for a package of ambitious railway projects, the transportation secretary said, adding that officials were confident the projects could move ahead with funding from interested sources.

According to officials, China was supposed to construct the third rail line on the southern island of Mindanao and the first two on the main Philippine island of Luzon.

Days after two minor incidents between ships and boats from both countries in disputed waters, and amid tensions between Manila and Beijing in the South China Sea, the Marcos government announced its intention to stop the Chinese loans.

Territorial disputes, according to Philippine Transportation Secretary Jaime Bautista, were unrelated to this choice. “The Chinese government will no longer be funding three of our projects.

In the Makati financial sector on Wednesday, Bautista addressed a group of German and Philippine businesspeople, saying, “We can’t wait forever and it seems like China isn’t that interested anymore.”

“Therefore, our government is searching for additional funding sources.” The initiatives, which are expected to cost a combined US $4.9 billion, were a part of the “Build, Build, Build” program, which was supported by former President Rodrigo Duterte as a spinoff of his administration’s conciliatory approach toward China.

The projects that Bautista named were the first phase of the Mindanao Railway Project, a 71-km railway connecting the Subic Bay Freeport Zone to the Clark Freeport Zone, and a 380-km railway from Laguna province, south of Manila, to Bicol province, on the southern end of Luzon. US military bases were located in the Subic Bay and Clark Freeport Zones for many years until the 1990s.

The train projects were to be built by Chinese companies employing Filipino labor, but officials stated that other contractors would be chosen if finance from other countries and sources was obtained.

Ernesto Pernia, who had been Duterte’s secretary for socioeconomic development, stated that the Philippines would be wise to abandon the three Chinese-backed projects less than a month after the latter departed office in mid-2022.

At the time, Pernia told BenarNews, “Much better to deal with ODA with Japan, South Korea, Australia, the US, and the EU.” ODA is an acronym for official development assistance.

Senators make statements Sens. Sherwin Gatchalian and Grace Poe pushed President Ferdinand Marcos Jr. and his government to look for alternative funding sources on Thursday. “The implementation of our infrastructure programs should not be derailed by China withdrawing its official development assistance for a railway project,” Poe told reporters.

With delays in the country’s loan applications, Chinese banks have the Philippine government “in suspended animation,” according to Poe, who also noted that “despite appearing attractive, the loans are not exactly that benevolent as they come with hefty interest rates and other strings that could be detrimental to the country in the long run.”

In comparison to funding from South Korean or Japanese ODAs, rates offered by the China-based Asian Infrastructure Investment Bank (AIIB) were “much higher,” according to Gatchalian. He told reporters, “You have to keep in mind that even though ODAs are concessionary in nature, they are still considered loans.”

“The cost will be borne by taxpayers.” When Pernia voiced her opposition to Chinese funding in July 2022, the Beijing embassy in Manila released a statement attributing some of the delays on the COVID-19 outbreak. China has a strong infrastructural base that is renowned for its swiftness and quality.

China will take advantage of its unique position and help the Philippines develop its infrastructure. The embassy stated at the time, “Our two sides have been negotiating technical issues and made positive progress to move the projects forward.”

Sea of South China Regarding the mishaps at sea on October 22 involving coast guard ships close to Ayungin (Second Thomas) Shoal, where Manila retains a rusty World War II-era ship as its military outpost, the Philippines and China have exchanged allegations.

US President Joe Biden sent a warning to China on Wednesday when hosting Australian Prime Minister Anthony Albanese in Washington. According to a White House transcript, Biden chastised Chinese ships for behaving “dangerously and unlawfully as our Philippine friends conducted a routine resupply mission within… their own exclusive economic zone in the South China Sea.”

“I want to be very clear: There is no question about the United States’ defense commitment to the Philippines,” stated Biden. We shall invoke our Mutual Defense Treaty with the Philippines in the event of an attack on Filipino military forces, ships, or planes.

The Chinese Embassy in Manila stated on Thursday that the “escalation of activities has been inflated by the US actions,” seemingly in response to Biden. It used the Chinese name for the shoal to say, “Since the beginning of this year, the US has been blatantly emboldening the Philippines’ acts of infringing upon China’s sovereignty and inciting and supporting the Philippines’ attempts to repair and reinforce its warship that was deliberately grounded on Ren’ai Jiao.”

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