MANILA, Philippines – A flood control project and a bus rapid transit (BRT) system, both in Metro Manila, are the first two infrastructure deals to be presented to the Asian Infrastructure Investment Bank (AIIB) for possible funding, after the Philippines’ formal entry as a founding member of the Beijing-backed lender.
Following last week’s ratification by the Senate of the Articles of Agreement, National Treasurer Roberto Tan said in a statement on Monday, December 12, that the government may now request that the AIIB send a mission to the Philippines to discuss the proposed list of projects prepared by the National Economic and Development Authority (NEDA) for the bank’s financing.
The first two big-ticket infrastructure projects up for the AIIB’s financing are the EDSA BRT project and the Metro Manila flood control project.
“These are the projects that are the most prepared in terms of government approvals, feasibility studies, and other requirements, and are already in the pipeline, so these projects can be processed most expeditiously for co-financing by AIIB,” Tan said.
Finance Secretary Carlos Dominguez III had said that the BRT, similar to that in Guangzhou in China, is also supported by the Asian Development Bank, while the Metro Manila flood control project is being backed by the World Bank.
Dominguez said the country’s membership to the AIIB would provide the government “another source of long-term funding at very reasonable interest rates” for the Duterte administration’s unprecedented infrastructure buildup.
“Achieving full membership in the AIIB is a significant milestone. Completing our domestic procedures for ratification puts us in solidarity with 56 other countries,” Dominguez added.
So far, the Philippines has an initial list of 18 big-ticket items worth P427.5 billion combined, which were approved by the NEDA Board.
The country’s national treasurer said the Philippines is “looking at $300 million to $500 million for the initial year,” as financial window that it can tap from the AIIB.
“Funds from AIIB will serve as an additional source of concessional financing to support our growing infrastructure requirements. Its terms and conditions are comparable to those of other multilateral development banks,” Tan said.
AIIB funding to help close P8-T infra gap
The Senate, voting 20-1, ratified last December 5 the Philippines’ entry into the AIIB, beating the December 31, 2016 deadline set by the bank for members to submit their respective “instruments of ratification.”
In its briefing paper, the Department of Finance (DOF) said the AIIB “can provide financing to major capital investments of the government and the private sector.”
According to Dominguez, the Duterte administration needs at least P8 trillion to close the infrastructure gap over the next 6 years.
“AIIB can support the government in reducing the infrastructure gap in the Philippines and accelerating annual infrastructure spending to account for 5% of GDP (gross domestic product),” he said.
The Philippine government is financing its infra program through a mix of soft loans, grants, official development assistance (ODA), and the public-private partnership (PPP) program, Dominguez said.
Among the NEDA Board-approved projects include the improvement of the Ninoy Aquino International Airport (NAIA), the South Line of the North-South Railway Project, the Metro Manila BRT, the Metro Manila Flood Management Project, the New Cebu International Container Port, and the Panglao Airport.
The China-led lender is owned by 57 sovereign-member countries, with a total capitalization of $100 billion.
Its member countries include Australia; China; South Korea; United Kingdom; the ASEAN countries of the Philippines, Malaysia, Thailand, Singapore, Brunei, Indonesia, Laos, Myanmar, Cambodia, and Vietnam; European states such as Austria, France, Germany, and Italy; Brazil; Russia; India; and South Africa.
Of the 57 members, 37 are from Asia and 20 are non-regional members.
The AIIB became operational last January 17, and to date, the bank’s Board of Directors has approved 6 infrastructure projects totaling $829 million. – Rappler.com