A new highway will be constructed between Subic and Tarlac, via Clark. The toll road will better connect Subic’s seaport, Clark’s airport, and Tarlac’s industrial parks, thereby accelerating the development of Central Luzon. In addition, by making Central Luzon more attractive to communities, this project can help decongest Metro Manila, a goal President Arroyo stressed in her recent State of the Nation Address.
The Central Luzon highway project is the 10th Yen Loan project agreed to this year by the government of the Philippines and the government of Japan. The Philippines is one of the largest recipients of Japan‘s ODA ($412.98 million was brought to the Philippines in 1999).
The total amount of ODA that Japan had committed to the Philippines until 1999 was about $8.83 billion, which is the third largest amount after those committed to China and Indonesia. Japan has been the largest foreign donor country to the Philippines since the 1970s.
This project is funded by a special yen loan facility commonly known as the "Obuchi Fund." It carries an annual interest rate of 0.95 percent and a repayment period of 40 years with a 10-year grace period. To date, 116.1 billion yen (roughly P49.4 billion) has been extended to the Filipino people through Japan’s special loan facility.
The average annual interest rate of Japan’s standard yen loan is about 1.3 percent which is very low. The average repayment period is 33 years with a 10-year grace period.
Apart from loan assistance, Japan extended in early September grants totaling 2.7 billion yen (roughly P1.15 billion) to fund efforts like the project for the development of agrarian reform communities in the Mindanao area.
Japanese Ambassador to the Philippines Yoshihisa Ara and Philippine Ambassador-designate to Japan Domingo L. Siazon Jr., signed and exchanged notes of agreement for the project on Sept. 13, 2001. President Arroyo and Japanese Prime Minister Junichiro Koizumi were present when the agreement was formalized at the Prime Minister’s Office in Tokyo. Just prior to the exchange of notes, during a summit meeting, the Prime Minister expressed the Japanese government’s intention to continue to support socio-economic development efforts in the Philippines, including anti-poverty measures.