Recto secures financing agreements for 2 big-ticket infra projects with JICA to drive inclusive growth for Filipinos

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Finance Secretary Ralph G. Recto has secured financing agreements with the Japan International Cooperation Agency (JICA) for two big-ticket infrastructure projects under President Ferdinand R. Marcos, Jr.’s Build Better More program that will help drive inclusive growth for all Filipinos.

“Infrastructure investments have the highest multiplier effect on the economy. As for every peso invested in new infrastructure, two pesos and thirty centavos are infused into the national economy,” he said in his speech at the ceremonial signing of the loan agreements on March 26, 2024, at the JICA Philippine Office in Makati.

“[T]he projects not only enhance mobility but also improve the lives of our people through the creation of more jobs and businesses. They will be the engines driving economic growth and dispersing the fruits of modernization to every corner of the country,” the Finance Chief said.

Secretary Recto, on behalf of the Philippine Government, and JICA Chief Representative Takema Sakamoto signed the loan agreement for the third tranche of financing for the Metro Manila Subway Project (MMSP) Phase 1, worth JPY 150 billion (about PHP 55 billion).

With a total project cost of PHP 488.48 billion, the MMSP Phase 1 is the country’s first-ever underground mass transport system and the third biggest project under the Marcos, Jr. administration’s Build Better More program.

It involves the construction of a Depot and a 33-kilometer railway system consisting of 17 stations that shall connect Valenzuela City to Bicutan with a branch line going to NAIA Terminal 3 in Paranaque City.

Once operational in 2029, the subway will reduce travel time from Valenzuela to NAIA from 1 hour and 30 minutes to just 35 minutes and can accommodate 519,000 passengers per day on full operations.

Aside from the recently signed third tranche of financing, the MMSP Phase 1 is being supported by two active loan agreements with JICA, namely the first tranche worth JPY 104.53 billion (about PHP 38.81 billion), which was signed on March 16, 2018; and the second tranche worth JPY 253.31 (about PHP 94.05 billion), which was inked on February 10, 2022.

Meanwhile, the officials also signed the loan agreement for the first tranche of financing for the Dalton Pass East Alignment Road Project (DPEARP) worth JPY 100 billion (about PHP 37 billion).

The second tranche of financing for the project worth JPY 39.19 billion (about PHP 14.58 billion) is proposed to be signed in 2027.

With a total project cost of PHP 67.4 billion, the DPEARP is one of the biggest infrastructure projects in Central and Northern Luzon that involves the construction of a 23-kilometer (km) alternative road bypassing the existing 77-km Dalton Pass East Bypass Route.

It also includes a 6.121-km tube section and 10 bridges with a total length of 5.828 km, as well as slope protection works.

The project will link Nueva Ecija and Nueva Vizcaya to the Cagayan Valley Region and is expected to be completed in 2031.

Secretary Recto said the DPEARP is set to provide safer transport for local communities and smoother distribution of agricultural goods, which will directly benefit farmers in the Cagayan Valley Region.

JICA has offered the Philippines highly concessional financing terms for both big-ticket projects under its Special Terms for Economic Partnership (STEP), carrying an interest rate of 0.30% per annum for non-consulting services and 0.20% per annum for consulting services, to be repaid in 40 years, inclusive of a 10-year grace period.

On top of the highly favorable terms, Secretary Recto emphasized that the Philippines has been given the privilege of utilizing state-of-the-art Japanese technologies in these projects, ensuring that the Filipino people’s hard-earned taxes are invested in world-class infrastructure projects.

He said the MMSP Phase 1 incorporates innovative flood management and advanced seismic technology into its design, ensuring not only efficiency but also sustainability for future generations.

Similarly, the DPEARP leverages Japanese expertise in the excavation and construction of the twin mountain tunnels and 10 bridges, guaranteeing their resilience against natural disasters.

The Finance Chief expressed his gratitude to JICA for its unceasing support to the Philippines through the delivery of infrastructure projects that are safe, resilient, and responsive to the needs of the Filipino people.

He reiterated the Department of Finance’s (DOF) strong commitment to securing financing to realize the Marcos, Jr. administration’s massive infrastructure development program as well as providing support to implementing agencies in the uninterrupted delivery thereof.

The DOF-International Finance Group (IFG) is in charge of securing foreign grants and loans to fund the government’s infrastructure projects and various development projects.

Moreover, Secretary Recto has initiated the conduct of regular worksite visits on infrastructure projects to monitor their progress and ensure their efficient implementation.

“These strategic infrastructure investments underpin all our efforts to build an economy that is truly inclusive and beneficial to all Filipinos,” Secretary Recto said.

“The projects are building blocks in our ascent to becoming an upper-middle-income country hopefully by 2025 and, eventually, the world’s 14th-largest economy by 2075,” he added.

Meanwhile, JICA Chief Representative Sakamoto said investors are eagerly waiting for the completion of the game-changing projects, referring to MMSP Phase 1 as the future icon of Bagong Pilipinas and the DPEARP as another symbol of Japan and the Philippines’ strong friendship.

He also pledged JICA’s continuous support to the Philippines being its most important partner.

Department of Transportation (DOTr) Secretary Jaime Bautista; Department of Public Works and Highways (DPWH) Secretary Manuel Bonoan; and Embassy of Japan Economic Minister Nihei Daisuke witnessed the signing of the loan agreements.