DOF: China commits over ₱375-B in loans, grants for 'big-ticket' PH projects

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Metro Manila (CNN Philippines, November 14) — Over ₱375 billion (US$734 billion) in soft loans and grants were pledged by China for large-scale projects in the Philippines, the Finance Department said.

China's combined $7.34 billion in soft loans and grants will be for 10 "big-ticket" projects, two bridges in Metro Manila, two drug rehabilitation facilities in Mindanao and for the rehabilitation of war-torn Marawi City, the Department of Finance (DOF) said in a statement Tuesday.

Soft loans pertain to lendings with very low interest rates, while grants are monetary gifts.

The DOF said the $7.19 billion (around ₱368 billion) in loans will cover 85 percent of the total cost of the 10 projects and will be divided in two baskets.

The first basket, comprised of $3.21 billion (around ₱164 billion), will include:

  • $234.92 million (around ₱12 billion) for the Kaliwa-New Centennial Water Source in Quezon province
  • $72.49 million (around ₱3.7 billion) for the Chico River Pump Irrigation Project in Cagayan province
  • $2.91 billion (around ₱149 billion) Philippine National Railways South Long Haul Railway in North Luzon

These figures are different from the original estimates during Chinese Vice Premier Wang Yang's visit to the Philippines in March 2017. The DOF said the estimated cost of these projects may still change.

Read: PH, China seal more economic deals

The second basket of loans worth $3.98 billion (around ₱204 billion), which the government said are still being discussed, may cover the $947.64 million (around ₱49 billion) Subic-Clark Railway in Luzon and the $424.81 million (around ₱22 billion) Davao City Expressway in Mindanao.

The DOF said out of the $148.22 million (around P7.6 billion) in grants, $99.27 million (around ₱5 billion) will be used to build the Binondo-Intramuros bridge and the Estrella-Pantaleon bridge across the Pasig River to help ease traffic congestion in Metro Manila.

The agreements for these bridges were signed in June 2017.

Read: China, PH ink deal for two Pasig River bridge projects

Nearly $23 million (around ₱1.2 billion) in grants will be used to put up to two drug-rehabilitation facilities in Mindanao, while $26 million (around ₱1.3 billion) will go to rehabilitation and reconstruction efforts in war-torn Marawi City.

Related: PH allies pitch in for Marawi rehabilitation

Part of the $26 million includes the heavy equipment that China donated to the Philippines in October 2017.

Related: China turns over much-needed construction equipment to PH to rebuild Marawi

Agreements for many of these projects will be signed during the Philippines-China bilateral meetings taking place at the Association of Southeast Asian Nations (ASEAN) +3 Summit.

Read: Philippines to turn over ASEAN chairmanship to Singapore

The Duterte administration has pushed for closer ties with China, despite contesting claims over the South China Sea.

Related: ASEAN, China agree to start talks on the Code of Conduct in contested waters - Roque

In July 2016, the Permanent Court of Arbitration in The Hague unanimously ruled in favor of the Philippines' position that China's "nine-dash line" maritime claim is excessive and encroached into the Philippines' 200-nautical mile exclusive economic zone.

Read: PH wins maritime arbitration case vs. China

The "nine-dash line" is China's purported historical boundary that covers about 85 percent of the South China Sea, including 80 percent of the Philippines' exclusive economic zone in the South China Sea.