The commitments of investments and development assistance pledges by Japan and China to the Philippines are among the largest amounts announced by the two economic powerhouses for a single country, Finance Secretary Carlos Dominguez III said.
Dominguez said these unprecedented pledges of aid and investments by Japan of US$9 billion and China of US$24 billion reflect 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.
“These record inflows from Tokyo and Beijing make up the initial investment dividend from the President’s foreign policy rebalancing towards accelerated integration with our ASEAN (Association of Southeast Asian Nations) peers and major Asian trading partners China, Japan and South Korea,” Dominguez said.
“Also, such financial assistance from Beijing and Tokyo at the onset of this Administration best illustrate the international community’s deepening confidence in the Duterte presidency that drown out the political chatter emanating from certain quarters,” he said.
Dominguez noted that “these funding and investment commitments are the highest announced by Japan and China for one country alone. Such commitments mirror the strong relations that the Philippines has with Japan and China.”
“We share a broad range of common interests as well as similarities in culture with our Asian neighbors. President Duterte’s push for stronger regional integration will continue and will serve as a strong foundation for cooperation with our fellow members in the ASEAN as well as with Japan, China and our other Asian neighbors,” Dominguez said.
Dominguez said that Japanese Prime Minister Shinzo Abe’s pledge of a 1-trillion yen investment and development aid package is the largest that Japan has committed to a single country.
The JPYY1-trillion pledge spread over five years, which is equivalent to about $9 billion or around P424 billion, was announced by Prime Minister Abe at the start of his state visit to the Philippines.
“For the further development of the Philippines, we will create business opportunities through ODA (official development assistance) and private sector investments which together will be of the order of one trillion yen over the next five years,” Prime Minister Abe said in Malacanang last Thursday.
In October last year, President Duterte reaped aid and investment pledges from Beijing worth $24 billion during his four-day state visit to China.
Dominguez recalled that Trade Secretary Ramon Lopez had announced that China will provide $9 billion in soft loans, including a $3 billion credit line with the Bank of China, while economic deals including investments would amount to about $15 billion.
Prime Minister Abe said a joint committee on economic cooperation and infrastructure would be launched between the two countries.
He also said Japan “will leverage Japanese technology and know-how to the fullest extent to positively cooperate for the improvement of infrastructure in Metro Manila and the whole of the Philippines.”
According to Asian Development Bank (ADB) President Takehiko Nakao, the Philippines’ growth under the Duterte administration is now “becoming more” solid and “very fast” providing investors with a good location for opening new businesses here or expanding existing ones.
Nakao said the ADB projects the country’s growth at 6.8 percent in 2016 and 6.4 percent this year, which is the highest among ASEAN countries except Myanmar, because it started from a low level of GDP.
He said investors are “pay(ing) attention to the Philippines again,” with Japanese manufacturers training their sights on the Philippines as an alternative location for their factories.
Several private and multilateral institutions are similarly bullish on the Philippines and are confident that it can sustain its high growth of above 6 percent and its status as one of Asia’s fastest growing economies, provided that the Duterte administration delivers on, among others, its commitment to accelerate spending on infrastructure.
These include the International Monetary Fund, World Bank, ADB, BMI Research-Fitch Ratings, S&P Global Ratings, Nomura, First Metro Investment Corp. (FMIC), Colliers International, Nordic Business Council of the Philippines (NBCP), Philippine Chamber of Commerce and Industry (PCCI), Employers’ Confederation of the Philippines (ECOP), Goldman Sachs, Bank of the Philippine Islands (BPI), Standard Chartered Bank, Hong Kong and Shanghai Banking Corp. (HSBC), Sun Life Asset Management Co., AB Capital Securities, Lamudi PHL and the Management Association of the Philippines (MAP).
For his part, President Duterte said he and Abe “instructed our respective agencies to seek new areas of collaboration as well as to work on fulfilling the agreements signed in Tokyo last year during my visit.”
“As part of those efforts, we are encouraging our business sectors to intensify two-way trade and investments,” Mr. Duterte said.