YEARENDER DOF ensures funding for ‘Build, Build, Build’ projects

Date Posted : January 14, 2019

YEARENDER DOF ensures funding for ‘Build, Build, Build’ projects

Date Posted : January 14, 2019

The Department of Finance (DOF) sealed concessional funding support in 2018 for big-ticket projects under the Duterte administration’s Build, Build, Build” (BBB) program, including its most ambitious and biggest single infrastructure project yet—the first phase of the Metro Manila Subway, the country’s first ever underground train that will stretch from north to south of the metropolis.

Finance Secretary Carlos Dominguez III and Yoshio Wada, the chief representative of the Japan International Cooperation Agency (JICA), pushed the Metro Manila Subway project another step closer to its implementation stage when they signed last March a JPY104.53 billion loan (about P49.82 billion or $939 million) agreement representing the first tranche of Japan’s funding support for the first phase of the Philippines’s first-ever underground rail system.

Utilizing cutting-edge Japanese tunneling technology, the construction of the first phase of the Metro Manila Subway will stretch from Mindanao Avenue in Quezon City to the Food Terminal Inc. (FTI) area in Taguig City and will continue to the Ninoy Aquino International Airport (NAIA). It will involve the construction of an underground railway spanning about 36 kilometers with 14-15 stations expected to be completed by 2025.

On both meetings convened by the Philippines-Japan Joint Committee on Infrastructure and Economic Cooperation last June in Tokyo and in November in Manila, both sides reaffirmed their commitment to ensuring the start of partial operations of the Metro Manila Subway Project by May 2022, or before President Duterte steps down from office.

Before the signing of the loan agreement for the Metro Manila Subway Project, Dominguez also inked with JICA a JPY9.399 billion loan (about P4.48 billion or $84.42 million) for the third phase of the Arterial Road Bypass Project in Bulacan last February.

The third phase of the Arterial Road Bypass involves the expansion of the existing 24.61-kilometer Plaridel Bypass from 2-lanes to 4-lanes that will link the North Luzon Expressway (NLEX) in Balagtas, Bulacan with the Philippine-Japan Friendship Highway, also called Maharlika Highway, in San Rafael, Bulacan. It will bypass the town proper of Plaridel and the urban areas of Pulilan, Baliuag, and San Rafael (all in Bulacan) along the existing Maharlika Highway.

Following the signing of the loan accords for these two projects, Philippine officials under Dominguez’s guidance moved even more swiftly in processing the approval of the loans for other high-impact BBB projects being rolled out by the government in cooperation with Japan.

Last October, the DOF, and JICA signed a JPY4.376 billion (about P2.1 billion or $39.3 million) supplemental loan accord to help fund the second phase of the Bohol Panglao International Airport project.

Dominguez said the signing of the airport deal was a result of the “fast and sure” approach adopted by Manila and Tokyo in the implementation of big-ticket infrastructure projects, with the processing of the necessary requirements for the loan taking only four months on the Philippines’ end, after the NEDA Board’s approval.

The Philippine government once again demonstrated the “fast and sure” approach as its new benchmark in gauging efficiency for the loan processing for BBB projects when it completed the approval process for the Metro Rail Transit 3(MRT) Rehabilitation project in a short span of fewer than three months. This led to the signing of the JPY38.101 billion (about P18.16 billion or $342.2 million) loan agreement for the project last November.

Dominguez said the rehabilitation project will address the problems of the decrepit MRT-3 system in the “most comprehensive fashion” through the replacement of all worn-out tracks, upgrading of the train’s obsolete signaling system, and general overhaul of the 72 light rail vehicles that are already 15 years old.

This project will result in the expansion of the MRT’s current degraded capacity and modernization of all its subsystems, he said.

In November last year, the Philippines and Japan also held the sixth meeting of the Joint Committee on Infrastructure and Economic Cooperation, where they exchanged notes on the loans for two major BBB projects—the Pasig-Marikina River Channel Improvement Project Phase IV to be funded with a Japanese loan of JPY37.905 billion loan (about P18.61 billion or$340.46 million) and the North-South Commuter Railway (NSCR) Extension Project with a loan from Japan of JPY167.199 billion loan (about P79.69 billion or $1.501 billion) representing the first tranche.

Infrastructure spending as of the first 10 months of 2o18 amounted to an impressive P665.1 billion, up by 50.3 percent or P222.5 billion compared to the same period last year.

The loan for the Pasig-Marikina River Channel Improvement Project Phase IV covers the final phase of the project to mitigate the frequent massive flooding caused by the overflow of the Pasig-Marikina River. This project’s final stage covers the river channel improvement works along the stretch of the Upper Marikina River, from the downstream of the Manggahan Floodway to the Marikina Bridge, and includes the construction of the Marikina Control Gate Structure.

For the NSCR Extension, the project involves extending the railway from Malolos in Bulacan to Clark International Airport (CIA) in Pampanga and from Manila to Calamba in Laguna.

The loan agreement for the NSCR Extension Project, Pasig-Marikina River Channel Improvement Project Phase IV, and Road Network Development Project in Conflict-Affected Areas in Mindanao, are expected to be signed in the first quarter of 2019.

Projects with financing support from China, either through grants or loans, also made significant progress in 2018.

So far, China has extended a total of $290.8 million in grants to the Philippines to finance the construction of the Binondo-Intramuros Bridge and Estrella-Pantaleon Bridge, which are both in Metro Manila, and two drug rehabilitation facilities in the provinces of Sarangani and Agusan del Sur in Mindanao; support the conduct of pre-feasibility studies and feasibility studies of projects; donate materials/equipment for law enforcement, provide humanitarian response to victims of typhoon Vinta and earthquake-hit areas in Surigao and conflict-affected areas in Marawi City; construct the Davao River Bridge (Bucana) Project, and donate container inspection equipment.

Dominguez has, on several occasions, pointed out that China was among the first countries to offer assistance to victims of the siege in Marawi City and in the subsequent rehabilitation of its war-torn communities.

In 2018, China formalized its loan to the Philippines of $62.09 million to help implement the Chico River Pump Irrigation Project, which broke ground in June 2018. Upon completion, the 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 Kalinga and Cagayan in Northern Luzon.

Dominguez said that to swiftly address challenges and concerns in the implementation of projects with Chinese financing support, a Philippine interagency task force has been meeting regularly since last year to closely monitor the preparation and processing of such projects.

The China Projects Task Force, which was created in April 2018, “has been effective in monitoring and facilitating the preparation and implementation” of projects proposed for China’s Official Development Assistance (ODA) financing, Dominguez has said.

Infrastructure projects with funding assistance from China received a boost during the state visit last November of Chinese President Xi Jinping in Manila, the first by a Chinese president since 2005.

Out of the 29 bilateral and commercial documents signed during President Xi’s historic visit, the DOF formally exchanged documents with Chinese officials on five economic agreements, namely: 1) the Memorandum of Understanding (MOU) on Jointly Promoting the Cooperation in Key Infrastructure Projects in Davao Region, which outlines the cooperation arrangements between the Philippines and China in implementing big-ticket infrastructure projects in Davao; 2) MOU that provides the framework for China’s support for the feasibility study on the Duterte administration’s major projects as agreed upon between the two countries; 3) financing for new projects covered by the Philippines-China Agreement on Economic and Technical Cooperation, 4) handover certificate of humanitarian cash assistance for the victims of Typhoon Ompong, and 5) MOU on Panda Bonds Issuance.

The new projects covered by the RMB500 million grant includes financing for the Davao River Bridge (Bucana) Project and the donation of container inspection equipment to the Bureau of Customs (BOC) and other projects to be mutually agreed upon by the two governments.

The first MOU for projects in the Davao Region initially covers the Davao City Expressway Project, the Davao-Samal Bridge Construction Project; the Davao River Bridge (Bucana) Project of the Department of Public Works and Highways (DPWH); and the Mindanao Railway Project (Phase I) of the Department of Transportation (DOTr).

During Xi’s visit, officials of the two countries also exchanged documents on the $211.21 million loan and guarantee agreements for the New Centennial Water Source- Kaliwa Dam Project.

The Philippines and China are also continuing discussions in 2019 on the second basket of pipeline projects for possible Chinese concessional financing.

“We are fortunate to have full support from our friends in the region. Both Japan and China have committed about 9 billion US dollars each in investments and official development assistance (ODA), while South Korea has pledged up to 1 billion US dollars in ODA under President Rodrigo Duterte’s term. These commitments complement the support we are getting from multilateral development institutions,” said Dominguez.

He noted that “the magnitude of the ODA we are receiving should be credited to President Duterte’s rebalancing of our foreign policy.”

With BBB projects gathering steam in 2018, infrastructure spending for the first 10 months of that year amounted to P665.1 billion, up by an impressive 50.3 percent or P222.5 billion compared to the same period last year.

As of last November, 35 out of the 75 infrastructure flagship projects have been approved by the Investment Coordination Committee (ICC) and confirmed by the Board of the National Economic and Development Authority (NEDA). These projects have a total investment requirement of P1.54 trillion.

Package 1 of the comprehensive tax reform package (CTRP)–the Tax Reform for Acceleration and Inclusion (TRAIN)–will help the government ensure a steady revenue stream for President Duterte’s cash-intensive signature project “Build, Build, Build.”


-oOo-

Date Posted January 14, 2019

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