‘PRAGMATIC’ PHL-CHINA COOPERATION CITED
FINANCE Secretary Carlos Dominguez III and China’s Commerce Minister Zhong Shan seal with a handshake their commitment to continue discussions on Beijing-funded flagship projects at the fifth Philippines-China high-level meeting on infrastructure and economic development cooperation on March 19 at the Diaoyutai State Guesthouse.
By Rea Cu
@ReaCuBM
& Bianca Cuaresma
B
OTH the Philippines and China have expressed optimism the “pragmatic cooperation” between the two countries would further strengthen in the coming years, underscoring the progress made in enhancing bilateral relations between Manila and Beijing under the Duterte administration. In a statement issued on Sunday, the Department of Finance (DOF) said Finance Secretary Carlos G. Dominguez III and Chinese Commerce Min-
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DEPT. OF SCIENCE AND TECHNOLOGY
PHILIPPINE STATISTICS AUTHORITY
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@BcuaresmaBM
ister Zhong Shan underscored the remarkable progress made in enhancing bilateral relations between the Asian neighbors, despite their differences over Beijing’s aggressive moves in the West Philippine Sea. In Beijing, Philippine economic managers had tried to woo over 500 investors in China, fronting the Philippines’s ability to generate high growth and sustain its solid infrastructure ramp-up in the next few days. The country’s economic and infrastructure officials went to Beijing to talk about the country’s growth prospects and economic potential in the Philippine Economic Briefing recently. The Philippine delegation, led by
Dominguez, addressed an estimated 500 investors based in Beijing and nearby areas during the Philippine Economic Briefing (PEB) held on March 20.
Closer and closer
MEANWHILE, in his statement on Sunday, Dominguez pointed out that over the past two years under the leadership of President Duterte, the Philippines has seen its relationship with China growing “closer and more comprehensive.” “We look forward to implementing more strategic infrastructure projects supported by highly concessional financing from China,” Dominguez said Continued on A2
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Monday, March 25, 2019 Vol. 14 No. 166
DOF bares loan pacts as Senate sets review T
By Butch Fernandez @butchfBM & Bernadette D. Nicolas @BNicolasBM
WO Senate committees are expected to open next week a review of the foreign loan agreements forged by the Duterte administration for dozens of projects, and the head of the Economic Affairs panel said on Sunday they will be looking for provisions that could partake of a “debt trap” as feared by critics, especially of China loans. Sen. Sherwin T. Gatchalian said he expected the review, however, to be expedited by the move of the Department of Finance (DOF) to upload online two days ago all accords covering the Duterte administration’s flagship projects,
including controversial ones like the Chico River Dam and the Kaliwa Dam. Gatc h a l i a n con f i r med t he review starts next week even as “we are still internally vetting the documents uploaded
by the DOF.” He praised the latter for boosting transparency and allowing independent analysts to do a “realtime” review of the fine print that could lead to problems later. The Economic Affairs Commit-
“[We’re] doing [an] internal review of the loan documents.... We’re doing our own internal due diligence.” —Gatchalian
tee chairman indicated that the Senate review is meant to avoid what was feared to be a China debt trap. “If borrowers don’t pay, what happens?” he asked aloud, alluding to cases of other debtor nations that were stuck with unconscionable terms that resulted in “surrendering” a part of their “assets or sovereignty.” See “Loan,” A8
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Bad play: Changing pivot in mid-game Dr. Jesus Lim Arranza
Make Sense
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MONG the more popular legislations passed under the administration of President Duterte is Republic Act 11223, or the Universal Health Care Law.
To be funded mostly by the additional taxes on cigarette and liquor, the law will automatically enroll every Filipino in the National Health Insurance Program. Thus, even as cigarette and liquor products have already been slapped with additional taxes based on the first tax-reform package of the Tax Reform for Acceleration and Inclusion or the TRAIN law that would raise tobacco tax to P60 per pack from P30, and the annual excise tax to 9 percent from 4 percent, while alcohol would be raised to P40 per liter, other bills raising tobacco and alcohol taxes have been pending in the Senate since 2017. Continued on A11
Reservoirs bill pitched as 30-yr-old law unenforced
“The administration’s intent to borrow as much as $14.4 billion from China, disadvantageous loan agreements, and established overaggressiveness by China to assert its self-interest combine to create a Chinese debt trap for us.”—Africa
paying for the loan with government property and the confidentiality clause. Despite the repeated assurances from the DOF that there is nothing to worry about these loan agreements, Africa said they are still worried that loan agreements do not do enough to prevent the creditor from demanding to be repaid with public property. “The Kaliwa Dam loan does have such a provision in Section 8.1 where the PH govt explicitly ‘waives any immunity on the grounds of sovereignty or otherwise for itself or its property in connection with any arbitration proceeding,’ albeit except when prohibited by PH law. This is a different formulation from t he C hico R iver ag reement,” he said. He also argued China’s track record when it comes to loan agreements with other countries also See “China loan,” A2
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Modify or cancel China loan accords–IBON
HE Duterte administration should modify or terminate the loan agreements it signed with China to avoid falling into the Chinese debt trap, an independent think tank said. According to Jose Enrique A. Africa, executive director of research group IBON Foundation Inc., the loan agreements signed between the Philippines and China as released publicly by the Department of Finance (DOF) were “disadvantageous” and pose a risk to the country’s economic growth. “We remain concerned that the administration’s intent to borrow as much as $14.4 billion from China, disadvantageous loan ag reements, and estab lished over-aggressiveness by China to assert its self-interest combine to create a Chinese debt trap for us. The risk also becomes greater as the country’s hyped economic growth starts to falter,” Africa said in a message to the BusinessMirror. He also expressed concern that the Kaliwa Dam loan agreement has also “similarly objectionable” provisions as the Chico River Pump Irrigation Project deal although these were stated differently. These provisions include those which are governed by Chinese law, provisions on the dispute settlement in a Hong Kong/Chinabased tribunal, the possibility of
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Sentral ng Pilipinas (BSP) reported that the current-account deficit widened to 2.4 percent or $7.9 billion in 2018 from 0.7 percent of GDP or $2.1 billion in 2017, attributing the rise to the increase in imports of capital goods. “However, the deficit is financeable given the surplus in services trade and income balances and the upsurge in foreign investment,” the DOF added.
GRICULTURE Secretary Emmanuel F. Piñol is pushing for the passage of a law that allows the Department of Agriculture (DA) to build small reservoirs nationwide to improve the country’s water system to avert future water crises. The measure was among the recommendations made by the DA at the Cabinet-level meeting on water last week, according to Piñol. The meeting was presided by Defense Secretary Delfin N. Lorenzana. In a separate development, however, a lawmaker noted there is a 30-year-old law mandating the setting up by barangays of rainwater collectors, which has not been implemented. Surigao del Sur Rep. Johnny Pimentel said Congress should probe the “lifeless performance” of Rainwater Collector and Springs Development Law, or Republic Act 6715 as Metro Manila and 71 provinces reel from “waterless conditions.” Piñol said they support the bill filed by Sen. Loren B. Legarda, who chairs the Senate Committee on Climate Change, that seeks to promote sustainable land management (SLM) programs, including the creation of a national soil and water conservation program.
See “Current account,” A8
See “Reservoirs,” A8
MARIKINA public schools like H. Bautista Elementary School use a rainwater-harvesting system to collect water for watering plants, cleaning rooms and flushing toilets. A 30-year-old law mandating local governments to set up rainwater collectors has been largely unimplemented, but is now being revived as the country reels from a dry spell. CLIMATE CHANGE COMMISSION PH
Current account still financeable, says DOF
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HE country’s current account will remain to be financeable as long as the government maintains the economy’s good fundamentals, the Department of Finance (DOF) has said. In an economic bulletin issued on Sunday, the DOF said that the country’s current account remains financeable even as the deficit rose to 2.4 percent of gross domestic product (GDP) in 2018, as foreign investors still deem
the country an attractive investment destination. “Maintaining good fundamentals by keeping the twin deficits—budget and current account—manageable through maintaining interest rates at the level that raises both the volume of savings and investments will enable the country to sustain rapid economic growth in the medium term,” the DOF said. Earlier in the month, the Bangko
n JAPAN 0.4765 n UK 69.2274 n HK 6.7286 n CHINA 7.8810 n SINGAPORE 39.1438 n AUSTRALIA 37.5468 n EU 60.0717 n SAUDI ARABIA 14.0807
Source: BSP (22 March 2019 )