Rigged for China?

An exclusive report in this paper on Jan. 30 raised questions about the selection process for a flagship project of the Duterte administration that, according to sources quoted in the report, appears to show that a Chinese firm had been “favored from the beginning.”

The project is the $10-billion Sangley Point International Airport in Cavite, a new gateway seen to help decongest the country’s main international airport.

A look at the documents showed, first of all, that the feasibility study and the draft joint venture agreement issued to potential bidders for the project already seemed to make clear that the project would involve China.

“There were many direct references to the Chinese government’s planned involvement in the project from its feasibility study dated July 2019 to the draft joint venture and development agreement issued to potential bidders starting Oct. 11 last year,” noted the report.

The Cavite provincial government directly mentions China in the draft agreement, a section of which reads: “…The province has initiated discussions on the provision of debt financing for Phase 1 with the development financial institutions and policy banks of the People’s Republic of China.”

The Sangley project, according to the feasibility study, will be funded mainly through borrowings, with about 98 percent of the debt to be provided by the Chinese—specifically the state-owned China Development Bank, which will finance 75 percent or P413.25 billion of the estimated project cost of P550 billion.

The remaining 23 percent will be underwritten by other state-owned Chinese enterprises, and 2 percent by the Cavite government.

Taken together, “There are traces all over that it’s intended for the Chinese,” said one of this paper’s sources, and that, as the report noted, “Reading all the documents together implied that a potential Chinese lender might not favor a non-China aligned partner.”

The “subjective criteria” was not the only red flag; potential bidders also backed out because of an “unrealistic” deadline of two months to prepare the proposals, instead of at least six months to a year, which indicated that the selection process was deliberately rushed for the favored bidder.

“It was clear to us that the project is really for China,” one of the proponents told the Inquirer.

The outcome of the bidding seems to bear this out. Six companies initially expressed interest in the project by purchasing bid documents on Oct. 11 last year — MacroAsia, Metro Pacific Investments Corp., Prime Asset Ventures Inc., Philippine Airport Ground Solutions Inc., Langham Properties Inc., Mosveldtt Law Offices, and Megawide Construction Corp.

When the deadline to submit proposals ended on Dec. 17, only one bidder came forward — the Lucio Tan-owned MacroAsia, in partnership with China Communications Construction Co. Ltd. (CCCC), a China state-run infrastructure company.

With no other bidders, the MacroAsia-CCCC consortium is expected to be formally awarded the joint venture public-private partnership project with the Cavite government.But if the selection process was indeed rigged from the beginning to favor a China-aligned party, that would only add to the reservations that have been raised about the likely winning bidder.

In 2009, for instance, MacroAsia’s partner CCCC, China’s biggest firm, was blacklisted by the World Bank due to alleged fraudulent practices. And one of CCCC’s companies that will work on the Sangley project, CCCC Dredging (Group) Co. Ltd., built China’s illegal military installations on islands seized from the Philippines in the West Philippine Sea.

Alarmed observers have also warned about the national-security implications of giving Chinese companies owned or controlled by the Chinese government access to strategic defense installations such as the Sangley airport, which was developed by the Americans as a military base vital to the protection of Manila, the country’s capital.

While the Duterte administration is busy undoing, or trying to undo, supposedly “onerous” contracts with local companies, it visibly relaxes its stern gaze when it comes to China and Chinese deals.

To date, Chinese companies have been allowed to set up telecommunications equipment right inside Philippine military camps, bag critical infrastructure projects such as dams and bridges, provide CCTV coverage to parts of Metro Manila, and virtually run the country’s power grid. Soon, Beijing is likely to add the Sangley airport project to its list of no-sweat acquisitions.