China leaves Duterte’s dream train at the station

Soon after winning the presidency in mid-2016, Philippine leader Rodrigo Duterte vowed to build a modern railway across the underdeveloped southern island of Mindanao, a promise that drew loud applause from the well-dressed audience invited to his first State of the Nation Address.

Duterte’s dream of a Mindanao train line, an ambitious project four previous Filipino presidents have broached but failed to build, has likewise remained a fantasy almost half-way through Duterte’s six-year executive term.

As economic and financial pressures mount, witnessed in a faltering stock market, surging inflation and a fast depreciating currency, analysts say the only way the Mindanao train will get on track is if China upholds its vow to provide cheap financing for the 830-kilometer railway system.

But with still simmering bilateral territorial disputes in the South China Sea, a recent recalibration of Manila’s strategic relations back towards the US and Beijing’s mounting economic worries at home caused by a mounting trade war with the US, ground-breaking originally scheduled for last quarter has been delayed.

The Mindanao Railway Network promised to be Duterte’s flagship infrastructure project while underscoring his government’s self-professed “separation” from the United States in pursuit of a more “independent” foreign policy reoriented towards China.

Duterte’s proclaimed pivot to China was reciprocated with a lavish pledge from Beijing to provide Manila with more than US$24 billion in development and investment funds, in line with the Chinese government’s US$1 trillion Belt and Road Initiative (BRI).

In March 2017, Chinese Vice Premier Wang Yang visited Davao City, Duterte’s hometown where he previously served as governor, to show Beijing’s commitment to constructing the southern railway. The railway was estimated at the time to cost 218 billion pesos (US$4 billion), according to news reports.

Wang was the guest of honor at an official presentation on the Mindanao railway’s economic boosting prospects. Wang suggested at the time that China could help finance the project through either soft loans or investment in the government’s public-private partnership scheme.

The National Economic and Development Authority, a Philippine state agency, approved last year the first Tagum-Davao-Digos phase of the railway at a cost of 37.3 billion pesos (US$726 million). The line is expected to reduce travel time along the route from 3.5 hours by road to 1.3 hours by rail.

Government officials have justified the expense by saying the line would facilitate faster movement of goods and people in a region where economic development has been severely hampered by decades-old of armed conflict pitting Muslim and other insurgent groups against state forces.

Mindanao is the country’s main agriculture producing region and also holds an estimated US$1 trillion of mineral deposits. The island is host to the so-called Tampakan project, the largest known undeveloped copper and gold reserve in Southeast Asia, and other big-ticket mines.

The Mindanao railway’s construction was earlier targeted to start in the third quarter of this year, with the Department of Transportation pushing for China to fund all of the project’s phases through official development assistance (ODA).

The Philippine side has not given up hope. In late August, a top-level Philippine economic delegation traveled to Beijing to resubmit an indicative list of 12 big-ticket infrastructure projects for possible Chinese grant financing, including the Mindanao railway project.

The delegation included Finance Secretary Carlos Dominguez III, Public Works Secretary Mark Villar, Socioeconomic Planning Secretary Ernesto Pernia, Budget Secretary Benjamin Diokno and other senior government officials.

They submitted the proposed projects to the newly created China International Development Cooperation Agency (CIDCA), a leading agency responsible for administering foreign aid and overseas development assistance.

CIDCA chairman Wang Xiaotao vaguely assured the delegation of China’s intention to provide assistance to Manila “in the direction determined by the leaders of both our countries.”

“This truly shows that China gives great importance to the promotion of its bilateral relations with the Philippines,” Wang said in a statement, according to a Philippine Finance Department release on the meeting.

The delegation also met with the Export-Import Bank of China, the Asian Infrastructure Investment Bank and top-ranking Chinese officials to discuss infrastructure project implementation and financing.

Nonetheless, the Philippine delegation returned to Manila without any firm commitments from Chinese leaders or funding sources on the Mindanao railway.

Indeed, more than a month after its hat-in-hand mission to Beijing, the Philippine Finance Department has not announced if China and the Philippines have forged any formal agreement regarding the financing of the Mindanao railway.

As of October 10, Asia Times’ questions to the Mindanao Development Authority, a body dedicated to the island’s socioeconomic development, regarding the status of the Mindanao railway system and Chinese financing were unanswered.

During Duterte’s first State of the Nation Address in 2016, the leader proudly predicted that the Mindanao railway system would be up and running before he steps down from power in mid-2022.

But more than two years into Duterte’s term, it’s not clear that the southern train will leave the station any time soon, if at all.