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BY EDGARDO J. ANGARA
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Generous Chinese ODA: At what price?
PUBLIC Works secretary Mark Villar recently announced that the government will soon be breaking ground on a new bridge over the Pasig River, connecting Ortigas and Fort Bonifacio. This will be the first of 12 new Pasig River roadways envisioned to help decongest and ease traffic across Metro Manila.
The construction of two of these bridges will be financed through a P3.6-billion (RMB500-million) official grant from the Chinese government, agreed to and signed by Finance Secretary Carlos Dominguez and his counterpart in Beijing last May.
These two bridges signal the burst of big-ticket infrastructure projects under the Duterte administration’s “Build, Build, Build” initiative. Several of these projects will be funded from the US$24-bilion worth of investment, infrastructure and official development assistance (ODA) pledges from China that President Duterte was able to obtain in October 2016.
Last week, Hardeep Puri, Chair of India-based think tank, the Research and Information System for Developing (RIS) Countries, sounded a cautionary call on the Philippines and the rest of the ASEAN.
In his warning, Puri, a former Permanent Representative of India to the United Nations, cited the cases of Sri Lanka and Laos who have both received substantial official development assistance from China for major infrastructure projects, but are now experiencing immense difficulties coping with heavy debt burdens.
In 2016, Sri Lanka offered to swap some of the US$8-billion it owes to China for equity in some major infrastructure projects that Beijing had financed, including the Mattala International Airport (known as the “world’s emptiest airport”) and the US$1.4-billion Colombo Port City project. Colombo committed to Beijing that Sri Lankan companies would sell significant stakes to their Chinese counterparts. According to a recent Quartz.com article, Sri Lanka is so heavy in debt it devotes up to 95.7 percent of government revenue to debt service.
In the case of Laos, analysts are nearly unanimous in doubting the economic feasibility of a 417-km high-speed railway, which broke ground last December and is expected to run from the Chinese border to Vientiane, the capital of Laos. The project is being financed through a loan from China’s Ex-Im Bank. As early as 2013, when the project was first proposed, the Asian Development Bank (ADB) described it as “unaffordable.” The project cost is US$5.8 billion — nearly half Laos’ 2015 GDP of US$12.3 billion. A source interviewed for a recent Financial Times article said, “The high-speed railway through Laos makes little economic sense…China’s goal is clearly to find a land route to move goods from Western China to mainland Southeast Asia. But with Laos’ small population and economy, little of this trade would stay in Laos and Laos would ship very little to China on the railway.”
On the other side of the Asian mainland is Venezuela in South America. The oil-rich Latin American country is undergoing deep turmoil in part because it agreed between 2007 to 2014 to pay down its US$65-billion debt to China through oil — whose price has plummeted drastically since 2016.
These cases appear to be the latest in decades-long pattern of China’s “checkbook diplomacy.” Developing countries are offered seemingly generous amounts of development assistance, but ultimately sink into a debt crisis.
Philippine Ambassador to China Chito Santa Romana recently said not a single contract has been signed yet regarding the ODA and investments Beijing have pledged to Manila.
Under an independent foreign policy, the Philippines rightly cultivate close friendships with all nations — even those it may have deep disagreements with. The ultimate goal of an independent foreign policy is to look after the country’s own interest, first and foremost. (angara.ed@gmail.com| Facebook & Twitter: @edangara)/PN
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