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Philippines on Track for US$24 Billion BRI Rail Development Funding

Thawing China-Philippines relations sees Beijing sign up as backer for country's ambitious infrastructure makeover.

Photo: Belt and Road largesse set to transform train travel across the Phillipines. (Shutterstock.com/Rainier Martin Ampongan)
Belt and Road largesse set to transform train travel across the Phillipines.
Photo: Belt and Road largesse set to transform train travel across the Phillipines. (Shutterstock.com/Rainier Martin Ampongan)
Belt and Road largesse set to transform train travel across the Phillipines.

A proposed 610km railway line – linking Manila, the Philippine capital, to Matnog, a town to the south of the country and the site of a new 50-hectare eco-city – is set to be the latest beneficiary of Belt and Road Initiative (BRI) investment. Following detailed negotiations during last November's ASEAN summit in Manila, the final loan agreement is expected to be ratified early this year, almost exactly 12 months from the date that initial discussions began.

The origins of the scheme, formally known as the Philippine National Railways (PNR) South Long Haul Project, date back to 2015, when it was first mooted by the Bicol Regional Development Council, the trans-provincial body responsible for the region's economic regeneration. It was subsequently adopted as one of the flagship projects of the Build, Build, Build initiative, the massive infrastructure development programme initiated by Rodrigo Duterte, the Philippine's controversial President. It is believed that Duterte is committed to seeing the project completed before the end of his term in office in the summer of 2022.

Once completed, the massive P151 billion (US$3.01 billion) rail initiative will run south from Manila to Matnog, connecting the provinces of Sorsogon, Laguna, Batangas, Quezon, Camarines Sur and Albay along the way, as well as a number of international seaports and Special Economic Zones. It is also envisaged that it will vastly improve connectivity between Southern Luzon's urban centres and several regional growth hubs, ultimately enhancing productivity in the industrial, services and agricultural sectors.

As an added bonus, it is also expected to boost tourism within the Bicol region by as much as 30%, while carrying up to 400,000 passengers in its first year of operation. In total, it will cut the transit time between Manila and Bicol from 11 hours to just six.

The huge cost of the project is largely down to the need to replace the legacy PNR track with, in the first instance, a single-track at-grade (at the same level) rail system. According to the country's Department of Transportation, in addition to the costs of replacing the track, the project's budget will also extend to the provision of new carriages/engines and a number of other supplementary requirements. On top of the Chinese investment, between P800 million and P7 billion of funding has been allocated to the project from the Philippine government's 2016 and 2017 budgets, with a further P3 billion expected to be diverted from the 2018 public spending round.

In addition to the South Long Haul project, the Philippines' government has also approved two other major rail projects over the past 12 months – the P358 billion Metro Manila Subway and the P134 billion PNR-South Commuter Line. It is envisaged that, ultimately, these three projects will segue into one integrated commuter rail system.

Overall, the confirmation of the mainland funding is seen as yet another sign that relations between China and the Philippines are continuing to thaw. A consequence of this improved diplomatic relationship is that Duterte can now rely on BRI funding to help bankroll many of his administration's priority economic redevelopment and job-creation initiatives, which have been costed at about US$167 billion. To date, China has pledged US$24 billion in order to help realise these proposals.

Marilyn Balcita, Special Correspondent, Manila

Content provided by Picture: HKTDC Research
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