Philippines drops application for $5bn Chinese loan

Philippines Chinese loans
Philippines’ transport secretary Jaime Bautista (Public domain)

The Philippines has abandoned plans to seek Chinese loans for three railway projects, together valued at more than $5bn, Bloomberg reports

The projects in question are the Subic–Clark Railway, the South Long-Haul Project and the Mindanao Railway Project.

Negotiations over the loans began with the China Import-Export Bank in 2018, but the Philippines government began signalling last year that Beijing seemed uninterested in progressing the deals (see further reading).

Now Manila says it will look elsewhere for funding.

Jaime Bautista, the country’s transport minister, told Bloomberg on Friday that President Ferdinand Marcos Jr had reviewed the deals and concluded that the Chinese were not going ahead with the loans.

Bautista said the finance ministry would send a formal notification to terminate the funding for the $880m freight railway that is to run between the former US military bases of Subic and Clark and the $3bn Long-Haul project.

He added that there were “at least two Asian countries” interested in these two projects but didn’t name them.

The government is also considering funding the three projects or partnering with multilateral lenders and private companies, he added.

The decision comes amid steadily worsening relations between Beijing and Manila. The Philippine Centre for International relations comments that the two countries have “experienced fiery issues” and that relations are at an all-time low.

The centre comments: “It is critical for the Philippines and China to prevent bilateral issues from straining the atmosphere for cooperation, and this means going beyond the tense and unconstructive cycle of ‘action-reaction’ – the frequent provocation in contested maritime areas resulting in vehement and hostile protests.”

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