Trains in the Philippines

Philippines turns its back on Chinese loans for 3 railway projects

Lance Spencer Yu

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Philippines turns its back on Chinese loans for 3 railway projects

PLANNED TRAINS. Concept art for the Mindanao Railway.

Department of Transportation

Asked whether the tensions between China and the Philippines in the West Philippine Sea have influenced loan negotiations, Transportation Secretary Jaime Bautista had his doubts

MANILA, Philippines – The Philippines is no longer in talks with China for the funding of three major railway projects after loan negotiations with the country continued to stall. 

Department of Transportation (DOTr) Secretary Jaime Bautista confirmed that the government is now looking for other sources of financing for the South Long Haul Railway Project, Subic-Clark Railway Project, and the Mindanao Railway Project – all of which were initially planned to be funded and developed by China.

Tatlo itong project namin na hindi matutuloy ang funding ng Chinese government,” Bautista said in a Radyo5 interview on Thursday, October 26.

Hindi naman tayo pwedeng maghintay ng forever. Then parang hindi na masyadong interesado na rin ang China. Kaya ang gobyerno natin ay naghahanap ng ibang source of funding,” he added.

(We have three projects that won’t be funded by the Chinese government anymore. We can’t wait forever. And it seems like China isn’t that interested anymore. So, our government is looking for other sources of funding.)

The three railways have already been approved by the National Economic and Development Authority (NEDA) as part of 197 infrastructure flagship projects. Bautista said that the feasibility and engineering studies for these projects have been completed.

“It’s a matter of funding and implementation,” Bautista said.

But actual construction has yet to start as China has been reluctant to agree to loan terms with the Philippine government. In fact, China has “failed to act” on the Philippines’ requests for Official Development Assistance (ODA) for these projects ever since July 2022, according to Transportation Undersecretary for Railways Cesar Chavez.

The Philippine National Railways (PNR) also recently confirmed that it was seeking other sources of funding for its South Long Haul project, which has failed to make progress after stalled loan talks with China. (READ: South Long Haul: How failing Chinese loan talks delay PNR’s railway dream).

Tensions with China?

The Philippines’ withdrawal from loan talks comes as tensions with China continue to climb. President Ferdinand Marcos Jr. has ordered a probe into “dangerous, illegal, and reckless maneuvers by vessels of the China Coast Guard” that resulted in the collision of a Philippine boat with a Chinese vessel. (READ: Biden: ‘Any attack on Filipino aircraft, vessels, armed forces will invoke our Mutual Defense Treaty’)

Asked whether geopolitical factors – like the ongoing dispute between China and the Philippines in the West Philippine Sea – have influenced loan negotiations, Bautista had his doubts.

Sa tingin ko, hindi naman kasi ‘yung paguusap namin dito sa Department of Finance and Chinese government, matagal na ‘yan e, even before tayo nagkaroon ng ganitong problema,” he said during the interview.

(In my view, it’s probably not that since discussions between the Department of Finance and Chinese government have been going on for a long time, even before this problem)

PNR General Manager Jeremy Regino also did not point to the security tensions as the reason why loan talks have stalled. 

“Negotiations are ongoing, and I don’t think [the West Philippine Sea dispute] was a factor. It is more on how interested the Chinese government is in the project,” Regino told reporters on October 17.

Other sources of funding

Plans for these railways, along with other ambitious infrastructure projects, were dreamed up during the previous administration of Rodrigo Duterte, who took a friendly stance towards China. However, years later, many of the projects have fallen off-track or completely failed to materialize. (READ: Revise, Revise, Revise: Duterte’s Build, Build, Build list evolving up to the end)

Construction for phase 1 of the Mindanao Railway project, or the portion connecting Tagum to Digos through Davao City, was supposed to begin in the second quarter of 2022. The Subic-Clark Railway was supposed to be up and running as early as 2022, while the South Long Haul was envisioned to be completed by 2027.

But the Philippines hasn’t completely abandoned these three railway projects just yet. Bautista said the government has considered funding the projects either through a combination of ODA from other countries and funding from the national budget, or through a deal with the private sector.

Bautista also recently talked to Marcos about the possibility of another country funding the rail projects, as discussions with an “Asian ambassador” seemed promising, although the transportation secretary did not share more details.

However, seeking another partner to develop the railways may add to the ballooning costs of these projects. For instance, should the government get funding from another Asian country like Japan, then Japan may choose to disregard previous studies done by China and conduct another round of planning activities. –

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1 comment

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  1. ET

    It is good that these railway projects are discontinued. Why should our country have joint projects with a Bully Nation?

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Lance Spencer Yu

Lance Spencer Yu is a multimedia reporter who covers the transportation, tourism, infrastructure, finance, agriculture, and corporate sectors, as well as macroeconomic issues.