De Lima tells Duterte to do a Mahathir: Spurn China debt or face bankruptcy
Opposition Senator Leila M. de Lima urged President Rodrigo to heed Malaysia’s decision to withdraw from the China-backed projects to prevent the Philippines from facing bankruptcy due to suspicious Chinese loans.
De Lima, who chairs the Senate committee on social justice, welfare and rural development, said the government should look at the long-term economic repercussions of all the planned China-funded infrastructure projects and investments into the country.
“The Philippine government must take its cue from Prime Minister Mahathir who decided to cancel three China-backed projects amounting to USD22 billion to avoid his country from falling into a debt trap. We need to take heed before it’s too late,” she said.
“Entering into loan agreements, especially those that are not obtained through competitive procurement, can put not only our country in dire debt and cripple our economy, but also undermine our sovereignty and national security,” she added.
Malaysian Prime Minister Mahathir Mohamad confirmed that three China-backed projects – including a railway connecting Malaysia’s east coast to southern Thailand and Kuala Lumpur, and two gas pipelines – will be cancelled until Malaysia can find a way to pay its debts.
In the Philippines, the Duterte administration has reportedly allocated some PhP8.2 trillion to fund what it called “the golden age of infrastructure” under the “Build, Build, Build” program over the next six years, which would be heavily reliant on Chinese loans.
Last February, she filed Senate Resolution No. 628 directing the appropriate Senate committee to investigate the complete terms and conditions of the loans entered into by the Philippine government to fund its “Build, Build, Build” Program to assess the possible impact of Chinese loans on our economy and national security.
In her resolution, De Lima expressed concern over the administration’s obvious lack of transparency over the terms of Chinese loans to fund the infrastructure program especially because lenders, including China, pay around 2-7 percent finders’ fee for each agreement.
De Lima also took issue on the loans offered by China which she claimed would have an impact on the Philippines’ foreign policy, including the country’s stakes in the contested islands in the South China Sea, locally known as the West Philippine Sea.
De Limacited empirical evidence to show the pattern of China in making use of their supposedly altruistic loan packages but in turn resulted in dept traps and economic collapse in different parts of the world.
“We should learn from the mistakes and misfortunes of other countries in their dealings with China. Our national leaders should exert all honest efforts in protecting our country and the Filipino people against imprudent debt accumulation,” she said.
De Lima cited in particular the cases of Mongolia who had to sell coal to China for only 11 percent of the international market price and of Sri Lanka who had to offer debt-for-equity swaps to China over infrastructure projects, among others.