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Philippines' Tactical Realignment Delivers Infrastructure Windfall

With its foreign-policy pivot towards China, the Philippines looks to have secured extensive mainland investment in its own ambitious infrastructure-redevelopment programme as part of President Xi Jinping's far-reaching Belt and Road Initiative.

Photo: Reflecting on change: Manila Bay girds itself for a major infrastructure upgrade. (Shutterstock.com)
Reflecting on change: Manila Bay girds itself for a major infrastructure upgrade.
Photo: Reflecting on change: Manila Bay girds itself for a major infrastructure upgrade. (Shutterstock.com)
Reflecting on change: Manila Bay girds itself for a major infrastructure upgrade.

By pivoting his foreign policy towards China, Rodrigo Duterte, the President of the Philippines, has cannily delivered a huge fillip for his administration's Philippine Development Plan (PDP) – a strategic infrastructure roadmap designed to reinvent the country's economy. At the heart of the PDP are seven massive infrastructure projects, together representing an investment of some P270 billion (US$5.36 billion). Following the President's tactical realignment, it is now expected that China will play a key role in delivering a number of these projects as part of its ambitious Belt and Road Initiative (BRI).

Signalling the start of this China-Philippines infrastructure initiative, the Philippine government and a number of public and private Chinese agencies recently signed a Memorandum of Understanding (MoU). This commits the various parties to a far-reaching infrastructure-development programme, one designed to improve mobility and development across the various regions of the country with a particular focus on the island of Mindanao. Among the priorities identified are enhancing ship-passenger connectivity and cargo handling, providing solutions to Metro Manila's worsening traffic situation and helping to remedy the country's current internal transport problems.

According to Ning Jizhe, Deputy Chairman of the National Development and Reform Commission of China (NDRC), China is fully behind Duterte's 10-point socio-economic agenda, especially where it overlaps with the objectives of the BRI. Speaking after the signing of the MoU, he said: "We hope both sides can nurture these plans and that Chinese business will now be keen to invest in the Philippines."

The eagerness of China to invest in the country was underlined by the recent visit to Manila by a number of senior mainland officials. It is believed that the delegation – which included a Vice-governor of the state-owned China Development Bank and a Vice-president of the similarly state-owned China National Technical Import and Export Corporation – discussed the possibility of developing the port facilities of Manila, Cebu and Davao. The latter is one of the principal cities of Mindanao and was Duterte's former mayoral seat.

The delegation also reviewed proposals for the expansion of the Manila Harbour Centre, allowing it to handle larger vessels. The P7.4 billion project would require the reclamation of 50 hectares of Manila Bay in addition to the 79 already reclaimed to facilitate the development of the Manila North Harbour Centre, the country's largest international commercial port for bulk and break-bulk cargoes.

Commenting on the success of the visit, Red Romero, the Vice-chairman of R-II Builders, the Manila-based construction company that manages the Centre, said: "While this is not the first time we have entertained a Chinese delegation, this group was far more enthused about the project than any previous Chinese visitors."

In other moves, the Philippine government has already green-lit work on a US$183 million container port in Cebu. In order to deliver the project, Mega Harbour Port and Development, the lead contractor, has partnered with China Communications Construction Co (CCCC) Dredging, the world's largest dredging company.

The new facility – billed as Cebu International Port – will extend across an 85-hectare expanse on the shores of the town of Consolacion. Among its proposed resources is a 1,200-metre-long berthing facility.

Explaining the need for the new facility, Edmund Tan, the Cebu Port Authority's General Manager, said: "The proposed new Cebu International Port is expected to provide a lasting solution to the congestion problems at the existing Cebu port as well as the shallow water depth of the Cebu international container berths."

In terms of added connectivity, the Cebu Provincial Government has announced it is seeking Chinese backers for its Trans-axial Highway Project. As well as a 280-kilometre road connecting the northern and southern tips of Cebu, the project's remit extends to a seven-kilometre-long seaport, a 550-hectare reclamation project for Talisay-Minglanilla-Naga and four economic zones in Cebu's Second to Fifth districts.

Expanding upon his plans for the province, Hilario Davide III, the Governor of Cebu, said: "As Chinese financiers are looking to invest in the province, we have pitched the Trans-axial Project to them."

For China's part, its interest in the Philippines was rekindled only after Duterte's administration softened its stance over the controversial South China Sea issue. While the administration may still not view China as an entirely friendly neighbour, it is clearly eager to benefit from its largesse as the Philippines looks to develop its own local infrastructure.

It is not all just about investment dollars, however. A recent joint statement by Dr Zhang Yuyan of the China Academy of Social Sciences and Dr Federico Macaranas of the Asian Institute of Management (AIM) suggested that the Philippines should also take advantage of China's huge expertise in the field of infrastructure construction. Speaking during a recent AIM forum in Makati City, Zhang said: "There is huge, huge room for co-operation."

Geoff de Freitas, Special Correspondent, Cebu

Content provided by Picture: HKTDC Research
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