The Department of Finance has taken great pains to demonstrate that the provisions contained in loan agreements entered into with China are standard. They are provisions contained in all loan agreements with other countries.
All the agreements are publicly available. The critics arguing that the agreements with China are injurious to our interests did not study the documents with enough diligence. Those critics are desperately trying to make our bilateral relations with China an issue in the electoral campaign, contrived as their arguments might be.
By unfairly characterizing the loan agreements as injurious to our sovereignty or as a means to lure us into a “debt trap,” the anti-China chorus presents fake arguments. That chorus is out to vilify China and smear the administration using the weapons of dishonesty.
The local chorus is part of a global anti-China campaign led by the US. The campaign seeks to block the increasing partnerships China is forging with many nations, including those traditionally seen as US allies. The main anchor of those increasing partnerships is China’s Belt and Road Initiative (BRI), the largest effort this century to enhance trade through improved infrastructure.
This anti-China campaign is increasingly losing steam, however.
Last month, Italy signed on to the BRI. A major trade agreement was forged between the major European economy and the rising Asian economic superpower.
Within days, France warmly welcomed Chinese President Xi Jinping after the Asian economic superpower purchased 300 Airbus planes for its domestic fleet. Switzerland has likewise joined the BRI bandwagon, expressing confidence in China’s monumental effort to improve infrastructure, digital and trade connectivity on a global scale.
For many months, the anti-China campaign used the example of the Hambantota Port project in Sri Lanka as an argument that China is using loans to acquire assets in other countries. The opposition party in Sri Lanka used to criticize the port deal and denounce what it called as a “debt trap” used by China to ensnare the small country.
That opposition party is now in power. Completely reversing its earlier position, the new government is seeking more project loans from China. It now praises the Hambantota Port deal, where China agreed to convert debt to equity, for reducing Sri Lanka’s outstanding debt and increasing vessel calls on the port by 30%.
Malaysia’s Mahathir Mohamad earlier cancelled a major rail project contracted with loans from China. He, too, has reversed his position and now backs the East Coast Railway project. China, for its part, demonstrated flexibility by agreeing to reduce the rail line at Kuala Lumpur’s request.
The stalled 1,400-kilometer China-Myanmar high-speed railway is now being built with great urgency. This will bring major benefits to the isolated economy.
Meanwhile, the local opposition is losing resonance with voters with its false claims against the deals signed with China. The opposition has failed to dent President Duterte’s approval ratings nor improve their polling numbers by vainly vilifying Chinese economic support.
Accounting
Meanwhile, Zamboanga City is in peril of power shortages due to the strong-arm tactics employed by a generating company. Instead of employing those tactics, it might work to everyone’s advantage if the power supplier sits down with its clients and works out what might simply be discrepancies in accounting entries.
The Zamboanga City Electric Cooperative (Zamcelco) was long drowning in debt due to improper management. The poor management inflicted on city residents and enterprises by way of long outages.
Last year, an investor-management contract was awarded to a joint venture between Crowninvestment Holdings Inc. and Desco Inc. The joint venture offered a P2.5 billion bid to pay off Zamcelco’s debts and rehabilitate the service. Since it took over last January, the new management settled P1.2 billion of the cooperative’s debt.
A financial audit undertaken by the new management, however, revealed the cooperative has been overbilled P441 million by Western Mindanao Power Corp. (WMPC), one of Zamcelco’s power suppliers. The overbilling constituted charges for capital recovery fee and operation and management. Crown-Desco believes these should not have been charged since the power supply agreement between Zamcelco and WMPC has not yet taken effect to this day.
Zamcelco sought the help of the city government to help sort out the disagreement over the charges. Days after Zamcelco asked for time to review the apparent overbilling, however, WMPC arbitrarily cut off the power supply. This resulted in serious shortages in the city’s power supply.
On the advice of Zamboanga Mayor Beng Climaco, Zamcelco offered partial payment of P150 million – albeit under protest – simply to normalize power supply in the beleaguered city. In addition, the new management fired up the old diesel generator sets to offset the power WMPC is now withholding. The cooperative is pushing ahead with its extensive capital expenditure plan to modernize the grid and upgrade distribution facilities.
But power supply remains deficient and outages stymie the city’s economy.
Meanwhile, WMPC is said to be agitating the people of the city to protest against the electric cooperative even if the power shortage is of its own making. By aggravating the situation, the power supplier seems bent on using strong-arm tactics to force the cooperative to pay questionable charges.
Everyone loses in an unwholesome situation like this one. The power supplier is not selling to a major client. The cooperative has less power to sell its consumers. The people of Zamboanga are suffering the effects of power outages.
If this is the way all enterprises choose to do business, our economy is doomed. There is nothing to rein in the greed of those who hold leverage.