THE PHILIPPINES will likely benefit from the China-Japan rivalry for economic and political influence in Asia, analysts at BMI Research said, particularly citing prospects for more aid and investments from the two powers.
“Competition between China, Japan and other regional powers for economic and political influence will provide a boost to the Philippines’ infrastructure sector, as countries promise billions of dollars in development aid, preferential financing and private investment,” the Fitch Group unit said in an industry trend analysis report e-mailed to journalists yesterday.
Just last week, Japanese Prime Minister Shinzo Abe paid a two-day visit to the Philippines, even touring President Rodrigo R. Duterte’s home in Davao City and opening the door for more investment and trade dialogues between businessmen from their countries.
Mr. Abe’s Jan. 12-13 visit raked in a fresh ¥1-trillion (around $8.8 billion) assistance package for the Philippines, barely three months after Mr. Duterte’s visit to Japan in October last year that saw the signing of $1.8 billion in private-sector deals.
Earlier that same month, some $13.5 billion worth of investments were committed during Mr. Duterte’s visit to China.
“Although the deals with China are several times larger than the deals with Japan, we believe it (rivalry) will still provide a sizable boost to the Philippines’ construction sector and help Duterte move towards his ambitious P7-trillion ($140-billion) infrastructure spending goal,” the report read, noting the Duterte administration’s plans to pour more funds to infrastructure over the next six years.
Budget Secretary Benjamin E. Diokno has said that the government is looking to spend as much as P9 trillion over the next six years on public infrastructure, as part of efforts to help prod economic growth on to a faster, more inclusive lane.
Economists have said that achieving the government’s 7-8% growth goal would depend largely on how fast and efficiently it rolls out various big-ticket construction projects.
In October, Mr. Duterte announced in a speech in Beijing that he will “separate” from the United States in pursuit of a “pivot” to China, other Asian neighbors and even Russia.
Foreign Affairs Secretary Perfecto R. Yasay, Jr. has also constantly said that Manila would “set aside” the landmark legal victory it won in the Hague in June last year against Beijing over conflicting maritime rights in the part of the South China Sea that lies within the Philippines’ exclusive economic zone, so as not to stand in the way of better trade and economic ties.
Having access to diverse sources of foreign funding would likely attract more offshore investors to come to the Philippines, BMI added, even as it noted that it could be difficult to slug it out with “domestic conglomerates” that have cornered nearly a third of infrastructure projects. Currently, foreign firms looking to bid for public-private partnership deals have to find a local partner in order to bag a building or service contract.
Still, there is sizable room for investments from China to increase, as they currently account for just one percent of construction projects in the Philippines.
Apart from the Philippines, Bangladesh, Indonesia, and Vietnam are also arenas for Chinese and Japanese investments, BMI noted.
18 January 2017
By Melissa Luz T. Lopez
