South Korea provides $50 mil loan for Philippine infrastructure program
By Darlene Basingan
MANILA, NNA - South Korea will extend a $50 million loan to the Philippine government to help speed up the implementation of several projects under the Duterte administration's ambitious infrastructure program.
This comes amid concerns that many of the big-ticket projects of President Duterte might not be implemented or completed within his remaining three years in office. There is also uncertainty about the continuity of the projects after his term.
The president’s economic managers are now scrambling to speed up the implementation of his projects, which had seen a jump in big-ticket projects from 75 to 100 following a revision. The new list had removed even larger projects which were replaced with smaller ones that are more feasible to implement immediately.
In a ceremony at the Philippine Department of Finance, Finance Secretary Carlos Dominguez III and Chief Representative Sungho Jang of the Export-Import Bank of Korea exchanged documents after signing the agreement for the loan worth 2.73 billion pesos ($50 million) for the Philippines-Korea Project Preparation Facility (PKPPF) which costs a total of $71 million.
The PKPPF will primarily benefit projects under the Department of Public Works and Highways and the National Irrigation Authority. It will fund "project preparatory activities" that would help fast-track the projects, which come under the country's massive Build, Build, Build program.
Finance secretary Dominguez said the activities include pre-feasibility and feasibility studies, detailed engineering designs, and safeguard assessment analyses.
"These are necessary and integral aspects of any project as they help us determine whether a particular project is economically viable and sustainable over the long term and, ultimately, whether the Filipino people will reap the economic benefits and outweigh the public resources that the government might invest," he said in his speech.
"Rigorous analyses also guide us in determining the best sources of financing for any given project," he added.
The loan will come from Export-Import Bank of Korea through Korea’s Economic Development Cooperation Fund.
"The balance will be financed by the counterpart fund of the Philippine government through the project’s implementing agencies," the DOF said in a statement.
Apart from the loan being zero-interest, the South Korean bank has also granted a repayment period of 40 years, inclusive of a 10-year grace period.
On the attractive terms, Dominguez said, "Service charges are set at only 10 basis points or a tenth of one percent of each disbursement."
He said the loan for the project is the second agreement sealed between Manila and Seoul under the 1 billion dollar pledge for official development assistance to the Philippines.
The DOF and the Korea Export Import Bank had signed a $173 million loan deal for the building of Cebu International Container Port during the official visit of President Rodrigo Duterte to South Korea last year.
To ensure the continuity of the “Build, Build, Build” program of the administration, the Philippines trade and investment department plans to propose a bill that seeks to institutionalize the program to ensure that the next administration would continue with it.
“When we took over the administration in 2016, the total pipeline we have was around 50 billion pesos. When we leave in 2020, the total pipeline will be around 1.4 trillion pesos. That is our legacy to the next administration,” Dominguez told reporters after the ceremonial exchange of loan documents with South Korea.