MANILA, Philippines – The Department of Finance (DOF) plans to send attachés to Japan and China to cement the country's membership in the China-led Asian Infrastructure Investment Bank (AIIB) as well as curb smuggling at its source.
"The AIIB will be beneficial as we believe that we will be able to avail of financing at almost concessional terms for our program of heavy investment in infra in rural areas," said Finance Secretary Carlos Dominguez III at a Senate finance committee hearing on the proposed 2017 budget of the DOF and its attached agencies on Monday, October 3.
While the AIIB's lending rates are still being discussed, as a middle-income nation the Philippines may be able to borrow at around the ordinary LIBOR rate plus 50 basis points, Dominguez added.
The previous administration under President Benigno Aquino III had officially signaled the Philippines' intent to join the new multilateral agency as a founding member, but joining requires ratification from the Senate.
Dominguez said the Office of the President is already processing the formal submission to the Senate and hopes to get it ratified by the end of the year.
He noted that if the country would become a founding member of the AIIB, it would have to pay equity of $1 billion, of which 20% or $200 million is payable over 5 years.
Senator Loren Legarda, chairperson of the Senate finance committee, said she would notify the foreign relations committee in the hopes of speeding up the process of ratification.
"I'd be happy to support it. China is a neighbor so let's engage them in all diplomacies possible, whether cultural, economic and trade," she said.
The DOF plans to have two trade attachés – one in Beijing and one in Tokyo – who will establish ties with the AIIB, explore other possible financial partnerships with China and Japan, and monitor exports to curb smuggling.
The DOF has discovered a discrepancy in the records of what is being exported by other countries to the Philippines and what is imported here, Dominguez said, adding that the difference amounts to P1.8 trillion.
"So we would like our attachés, particularly the one in China, to work closely with Customs both here and in China to check each individual exporter there and find out who their receivers or consignees are because the differential is about 50%," he explained.
"It's the same with Japan. Japan has the largest percentage of Official Development Assistance and loans to us so we're focusing on our two large trading and lending partners."
Dominguez added there is no need for a permanent attaché to be assigned to the United States, the Philippines' second largest trading partner, because ties there are already solid.
"Of course the relationship with the US is also very important but at any one time we already have at least one undersecretary or director-level person stationed there," he said.
Funding for the two attaché positions will be taken from the allocation for maintenance and other operating expenses, which is set at P773.47 million, an increase of 137% from the 2016 budget.
Besides the attachés, the amount will also fund the Philippines' hosting of various international events in 2017, including the Association of Southeast Asian Nations (ASEAN) meetings.
The proposed 2017 budget for the DOF and its attached agencies totals P21.3 billion, which is higher by P2.877 billion or 16% compared to the 2016 budget.
The bulk of the proposed budget will go to the top 3 revenue-generating agencies: the Bureau of Internal Revenue (P8.565 billion), Bureau of Treasury (P6.461 billion), and Bureau of Customs (P3.622 billion).
The DOF also noted that the proposed budget represents 0.9% of the projected total national government revenue of P2.48 trillion in 2017. – Rappler.com
$1 = P48.16