Infrastructure projects get better loan terms from Japan

MANILA, Philippines — The Philippines has secured better financing terms for two big-ticket infrastructure projects funded by the Japanese government aimed at improving public transport and road connectivity.

In behalf of the government, Finance Secretary Ralph Recto signed loan agreements with the Japan International Cooperation Agency (JICA), Japan’s bilateral aid agency, for two projects worth P92 billion.

These are the third tranche of financing for the Metro Manila Subway project worth P55 billion and the first tranche for the Dalton Pass East Alignment Road project (DPEARP) worth P37 billion.

JICA has offered the Philippines highly concessional financing terms for both big-ticket projects under its Special Terms for Economic Partnership (STEP).

Introduced about two decades ago, STEP aims to raise the visibility of Japanese official development assistance (ODA) among citizens in both recipient countries and Japan through best use of advanced technologies and know-how of Japanese firms.

The loan terms for the projects carry an interest rate of 0.3 percent per annum for non-consulting services and 0.2 percent for consulting services.

The loans can be repaid in 40 years, inclusive of a 10-year grace period.

On top of the favorable terms, Recto said the Philippines is privileged to utilize state-of-the-art Japanese technologies, which ensures that taxes are invested in world-class infrastructure projects.

For one, the country’s first-ever underground mass transport system incorporates innovative flood management and advanced seismic technology into its design, ensuring not only efficiency but also sustainability.

Similarly, the DPEARP leverages Japanese expertise in the excavation and construction of the twin mountain tunnels and 10 bridges, guaranteeing resilience against natural disasters.

“The projects will not only enhance mobility but also improve the lives of our people through the creation of more jobs and businesses, as well as drive economic growth,” Recto said.

The Metro Manila subway project involves the construction of a depot and a 33-kilometer railway system consisting of 17 stations that will connect Valenzuela City to Bicutan, with a branch line going to NAIA Terminal 3.

Once operational in 2029, the subway will reduce travel time from Valenzuela to NAIA from one hour and 30 minutes to just 35 minutes. It can accommodate 519,000 passengers per day.

The DPEARP is one of the biggest infrastructure projects in Central and Northern Luzon, which involves the construction of a 23-kilometer alternative road bypassing the existing 77-km Dalton Pass East Bypass Route.

The second tranche of financing for the project worth P14.58 billion is expected to be signed in 2027.

The DPEARP is set to provide safer transport for local communities and smoother distribution of agricultural goods once fully completed in 2031.