Author Topic: Worries about Chinese loans to the Philippines  (Read 301 times)

adroth

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Worries about Chinese loans to the Philippines
« on: July 11, 2018, 03:06:25 PM »
China's debt-trap diplomacy reaches the Philippines, which is likely to accept Chinese loans 1,100% more expensive than other options
Tara Francis Chan Mar. 6, 2018, 10:40 PM

http://www.businessinsider.com/chinas-debt-trap-diplomacy-hits-philippines-with-exorbitant-loans-2018-3

The Philippines is close to accepting loans from China that are 1,100% more expensive than ones from Japan.

The country's chief economist said it will accept the loan as it needs "more friends," as relations between the two countries warm after years of territorial disputes in the South China Sea.

The loan is part of a so-called debt-trap diplomacy in which China engages in infrastructure projects in poorer countries, a pattern it has followed to establish its global Belt and Road initiative.

The Philippines is close to accepting Chinese loans that are up to 1,100% more expensive than those from Japan, in another instance of China's debt-trap diplomacy.

The loans from China, which will be used to fast-track infrastructure projects including a dam, railway project, and irrigation system, come with an interest rate of 2% to 3%. But loans available from Japan have interests rates between 0.25 and 0.75%, up to 12 times cheaper than those from China.

"We cannot get all the loans from ... Japan. Between 2 and 3 % interest rate is still much better than commercial [loans]," Ernesto M. Pernia, the Philippines' chief economist, announced in February.

According to the government's official news agency, Pernia said Japan's slowness was part of the reason — "We don't want to be left behind" — but CNN and local outlet Rappler both reported the economist weighing up the need for diplomatic "friends."

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« Last Edit: July 12, 2018, 05:18:49 AM by adroth »

adroth

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Re: Worries about Chinese loans
« Reply #1 on: July 11, 2018, 03:08:32 PM »
Ex-envoy fears PH headed to Chinese debt trap
ABS-CBN News
Posted at Apr 10 2018 10:06 AM

http://news.abs-cbn.com/news/04/10/18/ex-envoy-fears-ph-headed-to-chinese-debt-trap

MANILA - A former ambassador on Monday said he fears the Philippines is headed to a debt trap as the country seeks for more Chinese loans to boost the administration's P8-trillion infrastructure push in the next 4 years.


Jose Apolinario Lozada Jr, who held postings in Austria, the Vatican and the Republic of Palau, said there is no certainty yet if the "Build, Build, Build" infrastructure projects will be finished in the next 4 years and if China's support would continue beyond the term of President Rodrigo Duterte.

"What is really the President's take on this—he just wants to take off or he wants to finish it? Because if he's going to finish it in 4 years time, what kind of projects are we going to get? They may not really be durable enough for the country to benefit from," he told ANC.

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adroth

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Re: Worries about Chinese loans
« Reply #2 on: July 11, 2018, 03:09:48 PM »
China calms ‘debt-trap’ fears: Natural resources won’t be used as collaterals
Ian Nicolas Cigaral (philstar.com) - March 10, 2018 - 5:25pm

MANILA, Philippines — China on Friday belied a report carrying a scholar’s comment saying the Philippines could use its natural resources as collateral for Chinese loans, as it seeks to douse growing fears that the Southeast Asian nation could fall into a debt-trap.

The Philippine government expects to sign three loan agreements with China this year.

In a report by Chinese state-run newspaper Global Times dated March 4, Xiamen University's Southeast Asian Studies Center head Zhuang Guotu explained that Manila can easily repay the loans considering the country's "strong debt-paying ability."

Zhuang likewise insisted that Chinese soft loans have "very low" interest rates. Funding deals, he said, are usually accompanied by repayment agreements that will allow the Philippines to swap key assets like natural resources "as collateral."

In a press conference in Beijing, Foreign Ministry Spokesperson Geng Shuang distanced the Chinese government from Zhuang’s view.

The Chinese spokesman stressed that by convention, parts of China's concessional loans require the borrowers to use certain sovereign credit as collateral, which he said is an international practice.

“China has never asked and will never ask relevant countries to use natural resources as collateral in loan agreements,” Geng said.

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Read more at https://www.philstar.com/headlines/2018/03/10/1795434/china-calms-debt-trap-fears-natural-resources-wont-be-used-collaterals#d6sOJVe45utoTGBH.99

adroth

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Re: Worries about Chinese loans to the Philippines
« Reply #3 on: March 10, 2019, 01:16:51 AM »
No property mortgage in China deals: Diokno
Jessica Fenol, ABS-CBN News
Posted at Nov 30 2018 10:35 AM | Updated as of Nov 30 2018 10:48 AM

https://news.abs-cbn.com/business/11/30/18/no-property-mortgage-in-china-deals-diokno

MANILA – No Philippine properties were used as mortgage in any of the country's loans to China, Budget Secretary Benjamin Diokno on Friday said.

The "golden rule" is to borrow only if returns are higher than the cost of borrowing and if projects have at least 10 percent economic internal rate of return, Diokno told ANC's Headstart.

"We do not mortgage our piece of property. It’s a straightforward deal. The internal rate return has to be higher than the cost of money," he said.

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"Now interest rates are very low …Our debt to GDP ratio right now is only 40 percent and declining and so we are now able to do this plus we have a very rigorous process of selecting projects," Diokno said.

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