Senatorial candidate Neri Colmenares “is just desperately seeking media mileage” in calling out the Duterte administration for its allegedly “onerous” $62.09-million loan agreement with China.
That’s according to presidential spokesperson Salvador Panelo, and it’s exactly the wrong thing to say about the issue.
Any citizen, whether it’s Colmenares or an ordinary person who can read and understand contracts and their implications, has the right to question the government about the deals it enters into with foreign governments or entities on the people’s behalf.
Imputing ill motives to such an inquiry, rather than answering the issues raised and welcoming the opportunity to clarify the matter with the public, is about the basest response there is.
The loan agreement with China for the Chico River Pump Irrigation Project in Kalinga, the first Chinese-funded flagship project under the administration’s “Build, build, build” infrastructure program, is completely aboveboard, according to the Department of Finance — “reviewed, negotiated and approved” by the DOF, the Department of Justice and the Bangko Sentral ng Pilipinas, and likewise greenlighted by the Monetary Board.
Considering all factors such as project cost and foreign exchange risks, the effective rates between recently signed Japanese and Chinese loan agreements “are actually quite close to each other,” the DOF said.
Indeed, in the copy of the deal obtained by Colmenares, the project has an interest rate of 2 percent. While higher than Japan’s rates of 0.25 percent to 0.75 percent, in no way can that be called “exorbitant.”
But Colmenares is on to something in raising the alarm over a number of provisions. Section 8.1 of the contract, for example, stipulates that the Philippine government “irrevocably waives any immunity on the grounds of sovereign …” on its “patrimonial assets and assets dedicated to commercial use.”
What are these “patrimonial assets” that are set to serve as collateral for the loan? Territory? Natural resources? Which ones, and how will they be valued? And why such cryptic language on so critical an issue as the potential appropriation of parts of the national patrimony by a foreign government?
But the Philippines can pay the debt, argued Assistant Finance Secretary Antonio Lambino. The country’s debt to China stands at only 4.5 percent of the total debt, compared to 9.5 percent with Japan.
“Kayang-kaya nating bayaran ang mga utang na ito” (We can easily repay this loan), he said, and so any worries to the contrary are “hypothetical.”
That, of course, hardly answers the question. What IF something unexpected happens and the Philippines finds itself unable to pay? The DOF, take note, also failed to foresee and forestall the painful inflation spike last year due, in part, to the sudden rise in world crude prices.
If something unanticipated does happen within the 20-year span of the China deal that renders the Philippines unable to settle its debt, the provision on “patrimonial assets” as payment kicks in.
So what will the Philippines give up? Or, more properly, what has this administration committed the next Philippine governments and generations to fork over in case of a loan default? (In drawing up this proviso, were the DOF’s army of vetters and analysts perhaps living under a rock to not have heard of the unfortunate fates of Sri Lanka, Djibouti, Maldives and other countries that had to give up their own strategic national assets on the back of Chinese loans?)
There’s also Section 8.8, which demands that “all the terms, conditions and the standard of fees hereunder …” be kept “strictly confidential.”
Why the inordinate secrecy?
And the most flabbergasting provision of all: Section 8.4 says, “This agreement as well as the rights and obligations of the parties hereunder shall be governed by and construed in accordance with the laws of China.”
If this deal was thoroughly vetted as Lambino et al. say it was, what were the economic managers thinking in the first place when they acquiesced to have the contract carry such a patently lopsided provision in favor of China?
Why agree to placing the Philippines in a subordinate position where it would have to submit to the laws of the very country that has displayed hostile, aggressive designs on its national interests?
Whether for “media mileage” or not, Colmenares did right by bringing the deal to the public’s attention and seeking greater scrutiny of it.
Malacañang and the DOF will simply have to do more to explain the devil seemingly lurking in the details of this deal, instead of unleashing vituperation on concerned citizens who are bothered enough to raise legitimate questions about it.