The Philippines eyes more Chinese investment, dismissing debt trap

Updated: March 21, 2019 Source: Global Times
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A delegation of senior Philippine officials from key departments including finance, infrastructure and energy is in Beijing, in a bid to deepen cooperation with China and attract more Chinese investors.

In a keynote speech delivered on Wednesday at the Philippine Economic Briefing, Garlos G. Dominguez, the Philippine Secretary of Finance, who heads the delegation, called on Chinese investors to examine the opportunities for investment in the Philippines.

The administration of Philippine President Rodrigo Duterte kicked off the ambitious Build, Build, Build infrastructure program in 2018 with the purpose of modernizing the country's roads, railways, ports and airports over the medium term. China is expected to play an important role in helping the country realize the program.

Vivencio B. Dizon, chairman of the Subic-Clark Alliance for Development, told reporters that several Chinese companies are involved in the development of the new Clark City, one of the big-ticket projects under the Build, Build, Build program, among which the biggest is China Gezhouba Group. The Philippine side is hopeful that an agreement on developing a 500-hectare industrial park will be signed with the group in the second half of this year. After that, the two sides will jointly conduct an investment roadshow in China to attract Chinese companies to the industrial park, Dizon said.

"The program works in concert with China's much larger and broader Belt-and-Road Initiative. Improved interconnections between the economies in this part of the world will raise all ships," Dominguez said.

China is the Philippines' biggest trading partner and the second largest source of investment. According to the finance secretary, the total trade volume between the two countries reached $43 billion in 2018, 13 percent higher than in 2017 and net foreign direct investments from China grew 244 percent to $479 million in 2018.

The economic and trade relationship between China and the Philippines has definitely moved into a high gear ever since President Duterte visited China in October 2016, when the two countries reached consensus on strengthening bilateral economic ties, Dominguez said . There are wide areas for potential cooperation on government-to-government or sector-to-sector basis.

Dominguez also dismissed rabble-rousing of the so-called China debt trap. "The Philippines will never fall into a debt trap," the senior financial official said. He said that having fallen into a debt trap before in the 1970s and 1980s, the Philippines knows a lot about what to do to avoid it.

The projects that Manila is going to ask for financing from China or any other countries must be economically viable, Dominguez noted, saying that these projects have to go through very rigorous analyses before deciding on borrowing from foreign financiers.

Dominguez also said the Philippines is very careful about the debt structure. "We do not borrow without putting our own capital as well," he stressed, adding that the Philippines mainly borrows from their own sources in the country and only a maximum of 30 percent or 35 percent of financing is borrowed from abroad.

The current debt of the Philippines to China is less than 1 percent of the country's total debt. Even by the end of the Build, Build, Build projects, if all projects with China were realized, the total debt will be only 4.5 percent of the Philippines' total debt.

"That's a very low figure," said the secretary.

Editor: 曹家宁