Finance Secretary Benjamin E. Diokno (File photo from the Department of Finance)
MANILA, Philippines — Prohibiting state-owned Chinese companies from participating in local vital infrastructure projects would be disadvantageous to the country, Finance Secretary Benjamin Diokno said on Wednesday, thus rejecting Senate President Juan Miguel Zubiri’s proposal in countering Beijing’s hostile acts in the West Philippine Sea.
“In case a decision is made to ban Chinese contractors from participating in [the] pipeline projects of the national government, it may … affect the implementation of [these] projects,” Diokno said on Wednesday at the resumption of the budget briefing at the Senate.
Such restrictions, he added, would only adversely affect other public-private sector partnership projects, particularly those involving power generation and development of renewable energy sources that could easily cost billions of dollars.
Fielding questions from Zubiri, President Ferdinand Marcos Jr.’s finance chief pointed out that China plays a major role in official development assistance (ODA) projects, such as those funded by the Beijing-led Asian Infrastructure Investment Bank.
Major fund source
China is also among the major funding sources of two other leading international financial institutions, the Asian Development Bank (ADB) and World Bank, Diokno noted.
“If the main contractors, suppliers or subcontractors will be Chinese firms or Chinese nationals, [imposing a ban will] have a potential impact on the economy [due to] possible delays in the projects that will be affected,” Diokno warned during the deliberations of the Development Budget Coordination Committee.
“And of course, we have to shift the financing for those projects that have been requested from China,” he added.
Budget Secretary Amenah Pangandaman earlier disclosed that the government would be spending P1.418 trillion on infrastructure projects, or about a fourth of the proposed P5.768-trillion national budget for 2024.
Malacañang also increased the allotment for the Department of Transportation for next year to P214.3 billion, more than double of its approved budget of P105.98 billion this year.
According to Diokno, blocking Chinese contractors from infrastructure projects might also result in a shortage of workers.
“Because of the … long list of infrastructure projects that we want to do, we’re running out of workers in the Philippines,” he claimed. “We need to hire foreign workers, maybe Indian [or] Chinese workers.”
Zubiri, however, said it was not logical for the Philippines to continue engaging with China in the wake of its continued defiance of the landmark 2016 arbitral ruling that recognized the country’s sovereignty over its 370-kilometer exclusive economic zone, including the West Philippine Sea.
Vietnam ‘template’
Doubling down on his suggestion, the Senate leader told the economic managers to use Vietnam as a “template” by improving the country’s economic ties with the European Union, United States, Japan, South Korea, and other “friendly” states.
“We think so highly of China when we actually only get a little from them,” Zubiri said.
“As I have said, it makes no sense for us to give billions of pesos to a Chinese contractor [that] will bring the profits back to China, and that profit, because it is state-owned, will go back to fund their different activities in the West Philippine Sea,” he added.
Zubiri urged the government’s finance team to put its foot down by cutting ties with the Chinese firms, insisting that “we’re only letting ourselves get fried in our own oil.”
“We have to also stand up for our troops in the West Philippine Sea. We should not allow ourselves to be bullied,” he stressed.
Mere 0.8%
Sen. Risa Hontiveros said data from the National Economic and Development Authority (Neda) showed that of the estimated $13 billion in ODA that the country received from foreign countries in 2018, financial aid from China accounted for a measly 0.8 percent.
“Japan, on the other hand, accounted for 40.3 percent of the total (ODA), and in that list, China also trailed Australia, South Korea, the European Union, and France in total ODA given,” Hontiveros said.
Diokno, who was seated across from the senators, nodded his head in agreement.
“That statistics is correct,” the finance secretary said. “There are only few Chinese projects. Most of the projects done during the Duterte administration are financed by ADB or Jica (Japan International Cooperation Agency).”
‘Build Better More’
But Diokno said China, just like any other ADB member states, may participate in the public bidding of ADB-financed projects.
“If [the project] requires a Chinese contractor and if that Chinese contractor wins, we cannot do anything about it,” he said.
The “Build Better More” infrastructure program presently includes 194 Infrastructure Flagship Projects worth around P8.3 trillion.
“These 194 big-ticket infrastructure projects aim to address the binding constraints to business investment and expansion. The goal is to create more high-quality and resilient jobs offering better wages to Filipino workers. This is key to significantly reducing our country’s poverty incidence to single-digit levels by 2028,” said Neda Secretary Arsenio Balisacan.
Given the huge required outlay, he said the private sector’s participation through public-private partnerships is indispensable.