Philippine President Rodrigo Duterte’s hometown of Davao City on the southern island of Mindanao is still waiting for China to fulfill its vow to provide billions of dollars of aid and investment under its “One Belt, One Road” initiative.
A year ago, Duterte drastically shifted Philippine foreign policy when he announced his government’s “separation” from the United States, Manila’s long-time treaty ally, during a milestone four-day state visit to China.
Beijing has since aimed to adopt Manila as its new “little brother” in reciprocation of Duterte’s pivot, underwritten by a rich pledge to provide over US$24 billion in development aid and investment largely for infrastructure development.
A Philippine Department of Finance report on the pledge said that China will provide US$9 billion in soft loans, including a US$3 billion credit line from the Bank of China, while economic deals including infrastructure investments would amount to about US$15 billion.
Those include promised rich outlays earmarked for the president’s hometown, Davao City, Mindanao’s bustling economic hub with an estimated population of around two million. The city is currently governed by Duterte’s daughter, Sara Duterte; the elder Duterte served as governor for over two decades before his election to the presidency in mid-2016.
Chinese Vice Premier Wang Yang visited Davao City in March this year to assure Duterte that Beijing is keen on fulfilling its pledge to a city that markets itself under the slogan “Life is Here.” That trip was followed by a goodwill visit a month later by Chinese warships to Davao which Duterte personally greeted.
Wang said China’s assistance would come either in the form of low interest loans or by encouraging Chinese investors to plow into the Philippine government’s Public-Private Partnership (PPP) scheme, according to a Davao City information office report.
Things looked upbeat for Davao until the Islamic State-aligned Maute Group laid siege to Marawi City. In June, Beijing responded to the threat by donating high-powered firearms worth US$7.2 million for use by troops to flush out the terrorists and more recently through dozens of heavy construction machines for the shattered city’s rehabilitation.
While Marawi surely needs massive resources for rehabilitation, initially estimated by the government at around US$1 billion but likely to cost much more, Davao City officials are still optimistic China will not waver from its initial pledge to develop the city’s infrastructure.
Yet it remains unclear why Beijing has tarried in making actual outlays while other One Belt, One Road initiatives are steaming ahead in other Asian countries. Some analysts suggest Beijing may be withholding the funds until the bilateral relationship is more firmly consolidated, including in regard to unresolved territorial disputes in the South China Sea.
Duterte has drifted back strategically towards the US to provide assistance in combating a rising transnational terrorism threat in the country. It’s a development China is no doubt watching closely and may have factored into the tardy release of promised aid and investment, some analysts suggest.
Five big ticket projects for Davao City were presented to local economic officials during Wang’s March visit, based on a document furnished to Asia Times by the regional office of the National Economic and Development Authority (NEDA).
Photo: AFP/Manman Dejeto
The projects include the Davao City expressway project spanning 23.3 kilometers at a cost of 24.5 billion pesos (US$477 million), the Davao City coastal road project worth 15 billion pesos (US$292 million), the Davao coastline and port development project for 39 billion pesos (US$759 million), the 445.3 billion pesos (US$8.7 billion) Mindanao Railway Project, and the development, operations and maintenance of the Davao City airport for 40.57 billion pesos (US$790 million).
In September, Department of Public Works and Highways (DPWH) Secretary Mark Villar and Embassy of China in the Philippines Economic and Commercial Counsellor Jin Yuan signed an agreement for the conduct of a feasibility study on the Davao City expressway project.
“The DPWH and Chinese Project Team will be working together for the prompt realization of a comprehensive feasibility study so that we may soon reap the thousand-fold socio-economic benefits of this expressway,” Villar vowed.
The expressway is expected to alleviate clogged traffic, ease access to Davao’s Sta Ana Port and other suburban areas in the city.
Maria Lourdes Lim, NEDA director for the Davao Region, said they are also pushing for China to prioritize the long sought-after Mindanao Railway Project, which will connect Davao City with other key areas in the southern Philippines spanning a circumferential length of 830 kilometers and another 702 kilometers of spur lines for other areas.
The first phase involving the Tagum-Davao-Digos segment costing 37.29 billion pesos (US$726 million) has already been approved by NEDA’s board and is targeted to start construction in 2018 and finish in 2022. The development of the Mindanao Railway system has been proposed since the administration of the late Philippine dictator Ferdinand Marcos.
Lim also said they hope China will give priority funding to the Davao City coastal road project, whose acquisition of the right-of-way component has already commenced. “The development of sustainable and improved infrastructure facilities and services shall support Davao region’s growing economy, expanding population and rapid urbanization,” Lim said.
The Philippines, including Davao City, are on China’s development assistance radar largely due to the rise of Duterte and his cultivation of close ties with Beijing, according to Finance Secretary Carlos Dominguez, Duterte’s former classmate and long-time friend.
“This is the time to move decisively. Fortunately, we have a leader capable of much audacity,” Dominguez said in a speech at a ‘Duternomics’ forum earlier this year. “We have a leader of vision and intense love of country. All the favorable factors are present. It is time now for a breakout.”
According to a Finance Department report, China’s unprecedented pledges of aid and investment “reflect[s] the strong confidence of the international community in the Duterte administration’s capability to sustain the Philippines’ high growth path and realize its inclusive growth agenda.”
Duterte has vowed to preside over a “golden age of infrastructure” under his ambitious “Build, Build, Build” program that will be funded largely by overseas development assistance and foreign loans, mainly from China but also as much as US$9 billion from Japan.
During his first state visit to China last October, Duterte declared that the Philippines and China were now “besties”, or the best of friends. But for the presidential hometown of Davao City that closer relationship has yet to build a single Chinese-funded pillar, road or railway.
China – Pls wire the $24 billion to Mr. Duterte’s account yesterday.
China please don’t let down Mr. Duterte.
During the early year of Aquino, China loaned then Phil US$100 million (forgot the exact number) for a rail project. As relationship deteriorated and rail project cancelled, China asked for the money back. Guess whtat!
The project never started but the money was gone. Then Aquino said Phil will repay the loan over multiple years.
David Makinde Really? When was this?
David Makinde give the true details.it is just hearsay google or wikepedia, there is no about that maybe we can ask PAB about that.
Google ‘Northrail scandal’
Funds for development require planning, blueprint, feasibility studies and approval as well as the sorting out of basic matters like land acqusition, and management after the project are done. There are agreements to sign and partnership deals to discuss. What this article implies is that if China promised 24bil last year, then it should just promptly cough it up NOW, without much ado. Or you are lying SOBs. What are we? Children in a fairy tale in need of a big bad wolf? Is this journalism or just propaganda to cast the Chinese in a bad light in any which way? It’s quite pathetic.
Felicitas Traviño-Baylon It is actually true. This happened during GMA’s time. His boys asked for a $500 Million loan from the Chinese Government to fund the North Rail Project. They then negotiated with the Chinese company CNMEG without the required bidding process, GMA’s boys claimed that their deal with CNMEG was an "Executive Agreement" hence is not required to follow the legal procurement processes. Atty. Harry Roque, Atty. Neri Colmenares, et.al, questioned this in court. The court ruled that the the CNMEG-Phil. Gov’t Agreement was a violation of the Anti-Graft law as it was not an "Executive Agreement" and that it needed to go through the legal procurement processes as mandated by the law. the sad part is that we continue to pay the loan today along with the accrued interests.
You can get more information by googling Harry Roque+CNMEG+North Rail
Techu Tumbali During GMA’s time. A loan was secured from China to pay for the proposed North Rail Project. They did not go through a bidding prcoess when they entered into an agreement with the Chinese Company CNMEG. Atty. Harry Roque and Atty. Neri Comenares questioned this and claimed that it is a violation of the Anti-Graft law. GMA’s boys claimed that the RP-CNMEG deal was an "Executive Agreement" hence did not need to go through a bidding process. The Court ruled otherwise and said that they violated the law since the RP-CNMEG deal WAS NOT an Executive AGreement. Sadly we continue to pay the loan along with the interests today.
David Makinde No, this happened during the time of GMA. It was in 2012 (Aquino’s time) that the court ruled that the Agreement with the CNMEG was illegal because it did not go through the bidding process.
duterte’s mental instability is the reason china is yet to release the promised monetary assistance. period
PRChina just lost a war against Bhutan. Bhutan is a small poor country. The bhutanese did receive help from India but nonwtheless, Bhutan is a small poor country and they won a war against the mighty PRChinese army. Which means they lost money.
Felicitas Traviño-Baylon it’s all in his mind no evidence to show his rantings.
David Makinde as far as i know that is during gloria arroyo, the north rail project
You have a valid point there.
David Makinde There were no such loans made to Aquino. China loaned that money to Arroyo for the graft-ridden Northrail project. The project was scrapped due to anomalies in the procurement procedures. Part of the loan was released, but disappeared to memebers of the Arroyo Administration, not to Aquino. Northrail, along with the also graft-ridden NBN-ZTE deal, also ‘allowed’ China to engage in ‘joint explorations’ in sections of Philippine territory.
Jerome Lantin Suarez Very detailed reply. Thanks.
What partnership deals? Chine Exim Bank chooses the Chinese company to award with the project, and hands the budget over. That is how Chinese loans work. A recipient nation ‘takes out’ a loan, which China uses to pay itself, then the recipient nation pays the loan with interest to China.
The Philippines needs Chinese investments and for China it makes a lot of sense. There is a bureaucracy involved in these types of investments and this takes time. It is a known fact some bureaucrats want bribes to fast track approvals. China has had mixed experiences with investing in the Philippines, we have seen large number of Chinese detained and brought to the notorious concentration camp Bagong Diwa, in Taguig City. There they stay under miserable conditions, until their employer pays hefty sums for a missing approval. Bureau of Immigration (BI) has a tainted reputation. Recently three BI executives were charged for taking a 50-million-peso bribe.
Let us hope the bureaucratic obstacles get resolved. Investment in the Mindanao region is need for helping the region mineral rich region. Mindanao has huge potential for tourism, but first the terrorism scare must be solved, the only long-term solution for reducing crime and terrorism is to fight poverty.
There are some childish Senators (Trillanes etc) that make the Philippines look bad. With elements like corruption, BI, and destructive politics it will take time for the projects to start. The US alleged covert operations against the President Duterte administration is not helpful. It should be in US interest to help the Philippines.
Agree. It takes 2-3 years at the latest to put the project on funding phase after all preliminary works and tasks were done
Jerome Lantin Suarez so the guy on top was wrong blaming Pnoy for the utang na Hindi naman sya ang Ng utang it was GMA. Thank you for clearing this out.
Leonardo Esmero Negotiations are just that: negotiations. If another country offers a better deal, a country can always take that deal instead of dealing with China. And in any case, after the infrastructure is built, will the Chinese then ship the what they have built home, leaving the recipient nation with nothing? They lose all the way? I think you are simplifying matters a tad.
David Makinde Ex-pres. Aquino should be made to explain this..if not true..david must apologize for this fake news.