RP eyes $1.2-B soft loan from China

The Philippines hopes to get at least $1.2 billion in concessional loans from China during the visit of Chinese Prime Minister Wen Jiabao this month for the rescheduled Asean summit.

According to Francis Chua, president of the Federation of Filipino-Chinese Chambers of Commerce and Industry Inc. (FFCCCII), the government hopes to sign the loan agreement for the $1.2 billion loan while Wen is in Cebu for the Asean summit which was rescheduled for Jan. 10.

Wen was originally scheduled to arrive in December last year to attend the Asean Summit.

His trip was cancelled after the summit was postponed due to a typhoon.

About $500 million of the $1.2 billion loan is intended to finance the second phase of the Northrail project.

The Chinese government-owned firm China National Machinery and Equipment group (CNMEG) is doing the Northrail project.

The Chinese government has already extended a $400 million credit facility for the Northrail’s first phase.

The first phase covers 32 kilometers from Caloocan City to Malolos, Bulacan.

The $400 million loan was extended by the China Export Import Bank. 

Chua said the Chinese government has expressed willingness to extend an additional loan for the Northrail’s second phase which will be  from Malolos to Pampanga.

China also reportedly agreed to  extend another $200 million loan to fund a portion of the Southrail.

The additional funding would  be provided by the China National Technical Import and Export Corp.

A South Korean contractor is set to construct the Divisoria to Calamba portion of the Southrail, while CNMEG would construct the portion from Calamba, Laguna to Quezon and eventually to Sorsogon.

Wen is also expected to finalize another $500 million loan to fund other big-ticket projects in the Philippines.

Chua said a working group is being formed to determine projects that could use Chinese financing.

The railway system is part of the government’s grand plan for the Subic-Clark Alliance Development (SCAD).

These involve related projects such as the Subic containerized terminal project, the Subic-Clark expressway and the Clark airport.

The Subic containerized terminal project would have one-half the capacity of the Manila port.