MANILA, Philippines– The government is “extra careful” not to fall into the Chinese debt trap, said Socioeconomic Planning Secretary Ernesto Pernia on Wednesday, June 27.
“Given the various experiences already felt by the other countries that have already dealt with China, we are more cautious,” said Pernia, the director-general of the National Economic and Development Authority (NEDA).
The socioeconomic planning chief was reacting to recent news reports underscoring how a port in Sri Lanka was taken over by China because the former could no longer pay for it.
Sri Lanka pushed through with the $1-billion project despite feasibility studies concluding that it would not work.
The port sits along one of the world’s busiest shipping lanes, yet drew only 34 ships in 2012.
The Sri Lankan government was forced to lease the port and 15,000 acres of land around it to China for 99 years. The deal gave China strategic economic and military footholds in the busy waterway. (READ: [OPINION] What scares me the most about China’s new, ‘friendly’ loans)
Pernia said only one China-funded infrastructure project has been signed and started.
Beijing has loaned the Philippine government P3.14 billion for the Chico River Pump Irrigation Project. The project drew flak since the loan carried an interest of 2% a year and will mature in 20 years. (READ: Locals protest Duterte admin’s Chico River project)
Loans from Japan generally carry only 0.25% to 0.75% interest.
Pernia was previously quoted as saying that the government “needs more friends” like China to carry out ambitious infrastructure projects.
He said the government is “trying to diversify” funding sources.
“Korea is getting more interested now in funding our projects,” Pernia added.
NEDA reported that a total of 75 infrastructure projects amounting to around P1.9 trillion are in the pipeline. Of these, 32 projects are expected to be completed before President Rodrigo Duterte’s term ends, while 43 projects are expected to be finished beyond 2022. – Rappler.com