CHINA and the Philippines have set up the structures of coordination to effectively implement the investment pledges forged between Manila and Beijing during President Rodrigo Duterte’s state visit last month.
This development, according to global lenders, is net positive for the Philippine economy.
Credit Suisse viewed the Philippine pivot to China as net positive for the economy and balance of payments starting next year, as “it will help bring in more FDI [foreign direct investments]and tourism from China in 2017 with political drags removed.”
HSBC, on the other hand, noted China is likely to replace the United States as the largest investor in the Philippines.
Of the $24 billion in hard and soft investment commitments from China, HSBC expects $2.5 billion of inflows in 2017 or 0.8 percent of gross domestic product, compared to $200 million in total FDI from Beijing since 2010.
“This should more than offset any reduced investment from the US, but is unlikely to stem the deterioration in the current account, which we expect to halve this year to 1.3 percent of GDP due to the widening goods deficit,” it said.
According to the Department of Finance (DOF), Philippine officials led by Finance Secretary Carlos Dominguez 3rd, Public Works Secretary Mark Villar and Senator Alan Peter Cayetano met last week with officials of the National Development and Reform Commission of China (NDRC), just days after President Duterte approved the National Economic and Development Authority (NEDA) Board’s pre-investment and project guidelines.
“I think this afternoon we have laid the ground work on moving ahead and we should continue this dialogue with specific projects in mind,” Dominguez said at the meeting.
Led by NDRC Deputy Chairman Ning Jizhe, the Chinese officials reiterated Beijing’s full support for President Duterte’s 10-point socioeconomic agenda and their keen interest in investing in, among others, energy, tourism, technology and infrastructure, particularly in the construction of railways and bridges.
The NDRC is China’s main planning and strategy agency.
“We have been informed of the 10-point economic agenda. On our side, we have the One-Road One-Belt Initiative by President Xi Jinping and we hope that both sides can encourage these plans and encourage Chinese business to invest in the Philippines,” Ning said during the meeting.
The Chinese official noted the purpose of their visit was to discuss in detail and implement the various memorandums of understanding (MOUs) signed during President Duterte’s visit, particularly on investment cooperation and transport infrastructure.
“Developing the economy and promoting people’s livelihood will be the foundation of our governments’ cooperation,” Ning said.
In the meeting, Dominguez informed the NDRC delegation that President Duterte, as chairperson of the NEDA Board, has ordered the Investment Coordination Committee to ensure good and close coordination with the NDRC in executing the economic cooperation between the Philippines and China.
The officials agreed to hold an investors conference next year to discuss possible projects, after the Philippine government submits the proposed ventures will benefit the most from Chinese technology and expertise.
To speed up the pre-investment process, Dominguez committed to provide the Chinese embassy with a list of possible projects by December 1.
Describing the MOUs as “good frameworks of cooperation” between the two countries, Ning said his instruction from China was to “bring these MOUs to reality.”
During President Duterte’s state visit, Dominguez signed three agreements on behalf of the Philippines: the Agreement on Economic and Technical Cooperation giving Manila a 100-million yuan grant to implement anti-illegal drugs and law enforcement security cooperation projects, and the MOU Supporting the Conduct of Feasibility Studies for Major Projects, in which China will provide financing support for feasibility studies on big-ticket infrastructure, agriculture and rural development projects.
The third MOU signed was on Financing Cooperation with the Export-Import Bank of China (China EXIM), which would allow the Philippines to tap China EXIM funds for major projects.
Given China’s impressive achievement in lifting its people out of poverty, Dominguez said he is confident the technologies for energy, irrigation, flood control, and land and sea infrastructure would benefit the Philippines.