DOF: No preferential treatment for China ‘Build, Build, Build’ loans

Finance Assistant Secretary Maria Edita Tan. Photo by Ryan Leagogo/INQUIRER.net

MANILA, Philippines — The Department of Finance (DOF) said Tuesday that no preferential treatment was given to China on loans secured under the government’s massive “Build, Build, Build” infrastructure program.

During the Senate committee on economic affairs hearing on the “Build, Build, Build” program, Finance Assistant Secretary Maria Edita Tan insisted that all loans passed through a strict vetting process.

“When we negotiated the contract, no preferential (treatment) for China as far as sourcing is concerned. It’s there in the (loan) agreement; it’s what in the supply contract,” Tan said during the Senate probe.

Concerns about the Chinese loan agreements have been raised earlier by former lawmaker and senatorial candidate Neri Colmenares, particularly loan covering the Chico River dam project.

Colmenares said the loan terms for the project was “onerous and highly favors China.”

READ: Ex-lawmaker raises alarm over onerous’ China loan

On Tuesday’s hearing, officials from the DOF, National Economic and Development Authority (Neda) and the Bases Conversion and Development Authority (BCDA) disclosed that loans offered by China for infrastructure projects undergo a unique process.

It was revealed that such infrastructure loans can only be secured if the project is bid out first to Chinese contractors.

BCDA President and CEO Vivencio Dizon said the “bidding process comes before the loan agreement is actually negotiated and signed.”

Tan confirmed this and said that the Chinese usually provide three contractors before the bidding process.

Officials noted that this process is unique to China because Japan and South Korea use a different system, wherein the loan agreement is signed first before the project is bid out to contractors accredited by the Asian Development bank (ADB).

Despite the difference, Dizon said there is no preferential treatment given to China as the bidding process is “very transparent and very competitive.”

He also said that there is “no direct negotiation in the process [and] in the selection of the Chinese contractor.”

“The bidding process is very transparent and very competitive. The Chinese government provides a list of accredited contractors, and that list is vetted by implementing agencies,” Dizon said.

He added that choosing the country from whom to borrow has several conditions, including the willingness of the lenders, the lenders’ capability to lend, their technology, and interest rate.

The DOF revealed that nine loan agreements were already executed — at least four with Japan, two with Korea, and two with China.

The two loan agreements with China were the Chico River Pump Irrigation project in Kalinga and Cagayan provinces and the New Centennial Water Source Kaliwa dam project in Quezon province.

Data from Neda also showed that out of the 76 big-ticket projects under the “Build, Build, Build” infrastructure program, 11 are to be funded under the official development assistance (ODA) loans.

Meanwhile, a total of 19 projects will be funded by China. /ee