‘Better to rescind than be bound by China loans’

MANILA, Philippines — The Philippines would be better off if it rescinds Chinese loan contracts and pay the corresponding penalties if they are found to be disadvantageous, Senate Minority Leader Franklin Drilon said yesterday as he pressed anew for a comprehensive review of official development assistance (ODA) and other financing contracts with China.

He said the review would make sure the country does not fall into a debt trap where its vital resources are taken away as payment.

 “Let’s find out if there are indeed stipulations which are too favorable to China, because many were saying the terms are very disadvantageous to the country,” Drilon told dzBB. “Let us review and expose the terms. We owe it to the public, because it is the public, through their taxes, who will pay the loan.”

Some lawmakers and experts as well as concerned groups have strongly warned against accepting the ODA and other financing schemes being dangled by Beijing especially those that stipulate the seizure of the government’s patrimonial assets in the event the country defaults.

While the Duterte administration insists that the patrimonial assets are well-defined, the loans are allegedly governed by Chinese laws and any dispute will be resolved by an arbitration body in Beijing.

 Supreme Court Senior Associate Justice Antonio Carpio cited the P3-billion Chico River irrigation project where China could reportedly seize oil and gas resources in the West Philippine Sea if the government defaults on the loan based on details of the agreement between the two countries.

The Senate economic affairs committee, chaired by Sen. Sherwin Gatchalian, is currently conducting an inquiry into the Chinese loan contracts.

 Drilon said a review, and possible cancellation of the loan agreements, is not unusual as the country has done it in the past when the government found some financing contracts to be disadvantageous and even onerous.

 He cited the country’s previous experience when then president Benigno Aquino III reviewed the $421-million Northrail project, which he subsequently cancelled when it was found to be grossly disadvantageous to the Philippine government.

 “We paid for some stipulated damages but our judgment call is that it (Northrail) was really disadvantageous to our people,” he explained.

 The senator also added that both Malaysia and the US have separately warned the Philippines against being ensnared by a debt trap arising from huge Chinese loans, noting that Malaysian Prime Minister Mahathir Mohamad in 2018 cancelled two major infrastructure projects by Chinese companies in Malaysia.

 A similar cancellation, he also said, can be done in the country even if the contracts have already been approved by the National Economic and Development Authority (NEDA) and Malacañang.

 Senate President Pro Tempore Ralph Recto and Gatchalian earlier said Congress can block or mandate the renegotiation of loan agreements between the Philippines and China if lawmakers find the terms to be disadvantageous or onerous.

 The senators welcomed the move of the Department of Finance (DOF) to publicly disclose the details of the loan contracts the government entered into with China—including the P18-billion Kaliwa Dam project—but warned that this would not stop the Senate and House of Representatives from scrutinizing the contracts for questionable or disadvantageous provisions.

 “I’m not saying these contracts are onerous. I don’t mind Chinese loans—I’m willing to test them but there have been many concerns from our countrymen and experts as well as disturbing reports on other countries that have been caught in Chinese ODA,” Recto earlier said.

‘Chinese investors to be treated well’

Meanwhile, an official of the Chinese embassy in Manila assured prospective investors that the Philippines would serve Chinese businessmen “well” when they come to the country to invest.

Jin Yuan, commercial counsellor of the embassy, welcomed prospective investors from China during a speech at the Philippines-China Summit on Friday as he urged them to finalize their investment in the Chinese Industrial Park that will be built at Clark, Pampanga.

“Come to the Philippines, and the Philippines will serve you well,” Jin said, noting that the Chinese government actively supports the realization of the Duterte administration’s Build Build Build program.

According to him, government projects funded by China’s grants or soft loans in the Philippines have gradually started. These include two bridges over the Pasig River and the Chico River Pump Irrigation Project.

He also said that other projects—Kaliwa dam, Manila-Bicol railway, Subic-Clark railway, and five bridges over Pasig River—are all prepared for future construction.

Citing statistics from the Department of Finance (DOF), the Chinese diplomat said the Philippines’ current debt from China is less than one percent of its total debt, which is much lower than the amount coming from other countries.

He stressed that China’s loan procedures and standards are strictly in accordance with international practice and that the loan rates and costs are lower than most international organizations and developed countries.

“There is no factual basis for those who advocate China’s debt will trigger the Philippines’ to fall into the so-called China debt trap. Let’s forget about these meaningless nonsense and focus on the real Build Build Build,” Jin declared.

President Duterte will attend the Belt and Road Forum for International Cooperation to be held in Beijing this month.

Philippine Ambassador to China Chito Sta. Romana said the Belt and Road forum is to explore where there can be complementarity between Duterte’s Build Build Build and the Belt and Road initiative, because both focus on infrastructure development.

During the visit of Chinese President Xi Jinping to Manila in November, Duterte and the Chinese leader decided to elevate their countries’ relations to a “comprehensive strategic cooperation” as they “continue to manage contentious issues” in the West Philippine Sea.– With Pia Lee-Brago