The Association of Southeast Asian Nations’ (Asean) looming economic integration and the China’s Belt and Road initiative will shape the development of the region’s economies, in particular the Philippines, Finance Secretary Carlos Dominguez III said.
During the recent 7th Executive Board Meeting of the China-Asean Bank Association (Caiba) at Shangri-La at the Fort in Taguig City, Dominguez said China and Asean’s move to ensure the fast flow of trade in the region is “most fortuitous for the Philippines.”
“The nations of Southeast Asia stand to benefit hugely from the Belt and Road initiative. That complements our own efforts at regionalization. It will help make regional integration and economic cooperation more intensive,” he said.
“This convergence is the central dynamic that will shape the development of the region’s economy through the length of this Asian Century. The Belt and Road initiative is the most significant enterprise since the construction of the Great Wall. Unlike the Great Wall, however, this initiative enhances cooperation instead of repelling interaction,” the finance chief added.
China earlier expressed its plan to invest heavily in its trading partners’ infrastructure through the initiative. Similarly, the Philippine government also announced its plans to invest in a massive infrastructure modernization program—“Build, Build, Build”—in a bid to attract more investors and make growth inclusive.
“The convergence is perhaps most fortuitous for the Philippines. The economic strategy of the Duterte administration aims precisely to achieve high and equitable growth for its people through the modernization of infrastructure,” Dominguez said.
“The ‘Build, Build, Build’ program looks precisely at easing the movement of people and goods to encourage more investments. A shift to investment-led growth is the key to achieving inclusive economic growth,” he added.
According to the finance chief, China is also providing its strong support for the Philippines’ efforts “to close the infrastructure deficit and raise investment inflows to fuel growth” by providing 100-percent funding for two bridges across the Pasig River.
He said the move “symbolizes [a]closer relationship between our two countries” and the Metro Manila Flood Management Program, which will be co-financed by the China-led Asian Infrastructure Investment Bank (AIIB) and the World Bank.
Dominguez said this program, which aims to prevent flash floods during the monsoon season, “highlights the convergence between our new and our traditional sources of funding for development projects.”
He also said the Bank of China also helped the Philippines in gaining a foothold in the Panda bond market.
“As you know, the Philippines is set to issue a $200-million renminbi-denominated bond in the Chinese market within the next few months. We are very happy that the bank has come to our assistance,” Dominguez said.
“We also welcome the bank’s efforts in bringing the Philippines’ growth narrative to Chinese investors, as demonstrated in the last Philippine Economic Briefing in Shanghai,” he added.
Earlier this year, Dominguez signed an underwriting agreement with the Bank of China and Standard Chartered Bank (China) on the Panda bond float on the sidelines of the 31st Asean Summit in Manila.
A financing cooperation agreement was also signed by Dominguez and Liu Liange, president of the Export-Import Bank of China, for two of the Philippines’ flagship infrastructure projects—the Kaliwa Dam-New Centennial Water Source of the Metropolitan Waterworks and Sewerage System (MWSS) and the Chico River Pump Irrigation facility of the National Irrigation Administration (NIA).
The finance chief also signed a memorandum of understanding (MOU) with Chinese Vice Commerce Minister and International Trade Representative Fu Ziying to “jointly identify and study” an indicative list consisting of the second basket of key infrastructure cooperation projects for possible Chinese financing.
They also signed an economic and technical cooperation agreement on providing a 150-million renminbi (approximately $23 million) Chinese grant for the government’s quick recovery and reconstruction program for Marawi City.
During President Duterte’s visit to Beijing in October 2016, the Philippines secured $24 billion in investment and trade pledges, as well as development support from China. Of this amount, $15 billion are from business deals and investments, while Chinese President Xi Jinping committed $9 billion in official development assistance and loans from the Export-Import Bank of China, the China Development Bank, and the Bank of China.
Dominguez said China’s package of assistance and investment pledges is “a crucial element in [the Philippines’]efforts to spur faster growth.”
“The first basket of the Philippines’ China-supported flagship infrastructure projects is now ready for loan financing and includes the Philippine National Railways’ South Long Haul Line from Manila to Bicol,” Dominguez said.