Philippines, China agree to resume negotiations on 3 major railway projects

By Arjay L. Balinbin, Senior Reporter

THE PHILIPPINES and China have agreed to resume negotiations on three major railway projects, the Department of Transportation (DoTr) said on Sunday.

Transportation Secretary Jaime J. Bautista and Chinese Ambassador Huang Xilian “agreed to restart negotiations for major transport projects during their recent first official meeting at the Chinese Embassy in Makati City, Aug. 11,” the DoTr said in a statement.

“The two officials discussed resumption of talks for the major China-funded railway projects such as the PNR South Long Haul Project (North-South Commuter Railway), Subic-Clark Railway, and Mindanao Railway (Tagum-Davao-Digos),” it added.

Mr. Huang in a separate statement said he “hopes that the China-Philippines cooperation in infrastructure and railway would achieve more tangible fruits and bring about more benefits to the Filipino at an early date.”

The Chinese ambassador said his discussion with Mr. Bautista on railway cooperation was “constructive.”

“China is… devoted to promoting the connectivity of the Southeast Asian countries by sharing its experience and introducing the cutting-edge technology of railway construction and rolling stock manufacturing,” Mr. Huang said.

President Ferdinand R. Marcos, Jr. last month directed the DoTr to go back to the negotiating table to secure loan agreements for the three railway projects.

The Philippine government had recently canceled its loan applications for the three projects because the Chinese government was “unresponsive,” Transportation Undersecretary Cesar B. Chavez said in July.

Former Finance Secretary Carlos G. Dominguez III had also said China Eximbank (CEXIM) wanted an interest rate of 3% for the loans.

Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said that the Philippine government should ensure that the new loan agreements will have “competitive interest rates.”

“It should be competitive to current interest rates for development loans being offered by other development agencies and bilateral partners. However, the government should be wary at the current level of interest rates, as central banks have been raising rates in the past few months to curb inflation,” he said in a phone message, when sought for comment.

“Government therefore should reconsider whether or not to proceed with these projects until such time that interest rates and inflation have stabilized,” Mr. Ridon added.

Central banks around the world, led by the US Federal Reserve, have been aggressively raising interest rates to tame inflation.

Mr. Ridon said the deal should also ensure that Filipino workers will be prioritized even in China-funded infrastructure projects.

Transport expert Rene S. Santiago said separately that the Philippines and China should make the loan terms public.

“The three (railway) projects are not economically viable, unfortunately,” he said in a phone message.

The DoTr also said that Mr. Bautista and the Chinese ambassador also talked about China-Philippines maritime cooperation projects, particularly the hotline communication and legal affairs cooperation arrangements between the Philippine Coast Guard and the China Coast Guard.

There were also discussions on possible partnerships on maritime traffic safety, ferry safety, and maritime search and rescue, as well as capacity building for maritime governance, safety supervision, and vessels safety inspection.

“The Chinese government’s funding support for these projects will serve to strengthen bilateral relations and enhance the partnership between the Philippines and China,” the DoTr said.