HAINAN, CHINA—Finance Secretary Carlos Dominguez III and Chinese officials signed here on Tuesday a US$62 million loan agreement to help fund the construction of the Chico River Pump Irrigation Project in Northern Luzon and a separate accord on economic and technical cooperation providing for a $79 million grant for at least four other projects undertaken by the Philippine government in cooperation with China.
On behalf of the Philippine government, Dominguez signed the Preferential Buyer’s Credit Loan Agreement on the Chico River Pump Irrigation Project with Chinese Ambassador to the Philippines Zhao Jinhua, representing The Export-Import Bank of China, and an Agreement on Economic and Technical Cooperation with China Commerce Minister Zhong Shan on the sidelines of the four-day Boao Forum for Asia.
These two accords comprise two of the six agreements signed by the Philippines and China during the visit of President Duterte here to meet with Chinese President Xi Jinping and attend the annual forum held at the coastal town of Boao in this Chinese province.
According to the Department of Finance (DOF), the $62.09 million (about P3.135 billion) loan agreement on the Chico river irrigation project, which will be implemented by the National Irrigation Administration(NIA), covers 85 percent of the total contract amount of $73.04 million (approximately P3.689 billion). The total project cost of the Chico river irrigation project is $86.57 million (P4.372 billion).
The interest rate on the US-dollar denominated loan is 2 percent per annum with a maturity period of 20 years, inclusive of a seven-year grace period, the DOF said.
According to the National Economic and Development Authority, the irrigation project will provide a stable supply of water to around 8,700 hectares of agricultural land, benefit 4,350 farmers and their families, and serve 21 barangays in the provinces of Cagayan and Kalinga in Northern Luzon.
Meanwhile, the Agreement on Economic and Technical Cooperation involves a 500 million renminbi grant (approximately $79 million or P4.13 billion) to finance the following projects and activities: 1) the Binondo-Intramuros and Estrella Pantaleon bridges in Metro Manila of the Department of Public Works and Highways (DPWH)(RMB 264.8 million, partial funding); 2) the feasibility study for the Davao City Expressway Project of DPWH(RMB25.83 million); 3) the provision of radio and broadcasting equipment to the Presidential Communications Operations Office (RMB17.82 million), and 4) the Philippine-Sino Center for Agricultural Technology-Technical Cooperation Program Phase III of the Department of Agriculture(RMB 27.52 million). The total grant for these four projects amounts to RMB335.97 million.
The remaining amount of RMB164.03 million under the RMB500 million grant will be used to finance other projects, the DOF said.
Before proceeding here, Dominguez traveled to Singapore to take part in the ASEAN Finance Ministers and Central Bank Governors Meetings and speak before the World Bank-Singapore Infrastructure Finance Summit.
During the Singapore summit, Dominguez said the Philippines is continuously upgrading its institutional processes on approving and executing big-ticket infrastructure projects to hasten the implementation of its ambitious “Build, Build, Build” program consisting of 75 flagship projects with a combined public investment of $170 billion over the next five years.
The measures that the government has undertaken to speed up project implementation include advancing right-of-way acquisition and land resettlement prior to the loan signing for the financing of infra projects and the designation of the Department of Budget and Management (DBM) as the procurement agent, he noted.
Dominguez said the government has also frontloaded budget allocations for its counterpart funding commitments and established project monitoring offices to closely observe the completion of projects.
To further fast-track the implementation of projects, Dominguez said that on his watch, the DOF, along with the NEDA, are now finalizing the guidelines for the implementation of a “3-in-1” process in which the approval of the NEDA Board, the Forward Obligational Authority of the Department of Budget and Management and Special Presidential Authority are issued all at once rather than in span of several weeks or months as was previously done.
The traditional Public-Private Partnership (PPP) method, which was “simply too tedious, too complex and prone to unnecessary delays” was also modified to a ” hybrid PPP ” model so that the government now implements the projects using a combination of its own budget, the massive inflows of Official Development Assistance (ODA) and funds raised from bond floats at investment-grade rates to speed up project execution, reduce completion risks and deliver the economic benefits to the people as soon as possible, Dominguez said.
He said the government’s “Build, Build, Build” program “benefits from expanded ODA (Official Development Assistance) flows from our friends in the region such as China and Japan” as well as from “a revived interest in infrastructure investments among multilateral institutions such as the Asian Development Bank (ADB), World Bank (WB) and Asian Infrastructure Investment Bank (AIIB).”
Given that infrastructure investments have the highest multiplier effects, Dominguez said the Duterte administration is undertaking its 75 strategic infra projects to sustain the growth momentum, create jobs and attract investments. Of these projects, 23 are “shovel-ready” and the rest are expected to pass the approval processes within the year, he said.