Philippines

Country Region

Bridge-building initiative helps Beijing and Manila get over the troubled waters of the South China Sea dispute.

Photo: Newly-linked: The China-Philippines Binondo-Intramuros bridge project.
Newly-linked: The China-Philippines Binondo-Intramuros bridge project.
Photo: Newly-linked: The China-Philippines Binondo-Intramuros bridge project.
Newly-linked: The China-Philippines Binondo-Intramuros bridge project.

While recent extreme weather events mean that the Philippines' massive infrastructure development programme may have to be re-designated as 'Re-build, re-build, re-build,' they certainly won't suffice to derail the key projects already commissioned in any significant way. Nor will they undermine the dramatically improved relationship between the country and China, a relationship that, in the past, was more strained than productive. Now, though, against the ever-expanding backdrop of the mighty Belt and Road Initiative (BRI), the two countries are committed to building bridges. Quite literally.

As the damage caused by recent super-typhoon Mangkhut underlines, the Philippines is more vulnerable than most when it comes to incidences of extreme weather. As an archipelagic country, made up of more than 7,600 islands, building and maintaining bridges is an essential element in its economic development. The devastation left behind by the storms and typhoons that all too frequently strike the country – particularly in the case of its fragile bridges and viaducts – is made all the worse by the fact that the country still has far fewer such structures than it really needs.

There are, for example, only 19 bridges spanning the 27km-long stretch of the Pasig River that wends its way through Manila, the national capital. By comparison, the 13km of the Seine River in Paris is spanned by 37 such structures during the course of its meanderings through the French capital.

With this infrastructural shortcoming also a feature of many of the Philippines' other major cities, weather damage aside, extreme traffic congestion is now endemic, while bottlenecks caused by the restricted number of crossing points are commonplace. To try to remedy this, during July 2016-June 2018 the government completed retrofitting / strengthening work on 642 bridges, together spanning more than 29km. Some 939 bridges, spanning about 40km in total, were also wholly refurbished, while 204 new bridges (8km in all) were constructed. This, though, is only scratching the surface.

Given the immense costs involved in wholly upgrading the country's connectivity and transport infrastructure, it was inevitable that China would emerge as the only viable source of investment. Fortunately, the country's needs seem to be very much in line with the aims of the BRI, China's ambitious international infrastructure development and trade facilitation programme.

From China's point of view, the Philippines has a clear role to play in the bigger BRI picture. Most obviously, with a population in excess of 104 million, it is a ready market for Chinese exports, with its status as one of the fastest-growing economies in the ASEAN bloc only likely to enhance its allure. Improved connections and, consequently, improved relations would only ease access to this market.

On top of that, there is the country's geographical significance. China has already earmarked the Port of Davao, some 946km to the southeast of Manila, as a key stopping-off point and consolidation hub for the planned expansion of its trade in Southeast Asia and the South Pacific. To that end, it is committed to funding the redevelopment of the port as part of its wider investment commitment to the Philippines.

To date, China has pledged to back large-scale Philippine infrastructure projects to the tune of US$7.34 billion. This, though, is only part of the broader $24 billion agreed during the 2016 state visit to Beijing by Rodrigo Duterte, the President of the Philippines. Tellingly, since Duterte took office in May 2016, there has been a massive 5,682% increase in Chinese investment in the Philippines.

In more specific terms, earlier this year, China delivered on its pledge to provide PHP4.13 billion (US$78 million) of funding for two bridges on the Pasig River, with work beginning on both in July. The first project is actually a replacement for the 506-metre Estrella-Pantaleon bridge that connects Makati City and Mandaluyong City. The second is the all-new 734-metre Binondo-Intramuros Bridge, which will connect two of Manila's most historic districts.

More recently, in late September, the Chinese government agreed to finance and construct the PHP1.5-billion Davao River Bridge-Bucana, part of the 18km Davao City Coastal Road Project. At the same time, China also signed off on a $13.4 million grant for a feasibility study on plans for the massive Panay-Guimaras-Negros bridge project.

Financing for these projects is mainly being provided via the China International Development Cooperation Agency (CIDCA), which only opened its doors in April this year. Despite its relatively recent establishment, the Philippines has already submitted 12 prospective big-ticket infrastructure projects to the agency for consideration. These are believed to include the Luzon-Samar (Matnog-Alen) Bridge; the Dinagat (Leyte)-Surigao Link Bridge; the Camarines Sur-Catanduanes Friendship Bridge; the Bohol-Leyte Link Bridge; the Cebu-Bohol Link Bridge and the Negros-Cebu Link Bridge.

With relations between China and the Philippines at a high point, despite the still-simmering South China Sea territorial disputes, it seems safe to assume that many of these projects will be greenlit. Indeed, it has been widely anticipated that Xi Jinping, the Chinese President, will give his formal assent to the proposals during his state visit to the Philippines later this year.

Marilyn Balcita, Special Correspondent, Manila

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Concerns over China's geopolitical intentions remain a challenge for Belt and Road projects in Southeast Asia.

Photo: High-speed rail: A test case for BRI readiness across Southeast Asia. (Shutterstock.com/nattapan72)
High-speed rail: A test case for BRI readiness across Southeast Asia.
Photo: High-speed rail: A test case for BRI readiness across Southeast Asia. (Shutterstock.com/nattapan72)
High-speed rail: A test case for BRI readiness across Southeast Asia.

The Belt and Road Initiative (BRI) has not moved quite as quickly in Southeast Asia as it has in South or Central Asia. This is partly down to ongoing tensions in the South China Sea, which have raised concerns among some countries in the region as to China's geopolitical intentions.

At present, the 10-member Association of Southeast Asian Nations (ASEAN) is caught between these concerns and a desire to enhance its already strong trade relations with China. Overall, there is a recognition that the region would benefit from BRI-driven investment, with the Asian Development Bank maintaining US$1 trillion needs to be spent on infrastructure development by 2020 just to maintain current growth levels.

Xue Li is the Director of International Strategy at the Beijing-based Chinese Academy of Social Sciences' Institute of World Economics and Politics. Outlining the challenge facing the BRI, he said: "We haven't done enough to attract countries in Southeast Asia. On the contrary, their level of fear and worry toward China seems to be rising."

For Southeast Asia, the Singapore-Kumming Rail Link is something of a test case. This high-speed link will run through Laos, Thailand, and Malaysia, before terminating in Singapore, a total distance of more than 3,000km. To date, though, not everything is going the way China might have preferred.

In Laos, construction has been delayed. It is also likely that all of the work will have to be paid for by China, as Laos cannot afford the $7 billion required. In Thailand, meanwhile, negotiations have broken down. The Thais now want to build only part of the line – short of the border with Laos – and finance it themselves without Chinese involvement.

As to which company will build the Singapore-Malaysia stretch, that will be decided next year, with Chinese – as well as Japanese – firms emerging as the current frontrunners. Across the board, though, there is unhappiness at what is considered excessive demands and unfavorable financing conditions on the part of the Chinese. Back in 2014, Myanmar pulled out of the project, citing local concerns over the likely impact of the project.

A similar situation has now arisen in Indonesia. The $5.1 billion Jakarta-Bandung High-speed Railway Project, seen as an early success for the BRI, may now require significantly more funding. Indonesia is also unhappy at what it terms 'incursions' into its waters by Chinese fishing boats. It is, however, trying to downplay their significance as a 'maritime resource dispute' in a bid not to deter Chinese investment in the country. The Philippines is, by comparison, less conciliatory, largely because China is not one of its key trading partners. At present, the Philippines and Vietnam are the ASEAN nations most cynical with regards the ultimate intentions behind the BRI.

Singapore, a country with no direct stake in the South China Sea, remains strongly committed to the Initiative. In March this year, Chan Chun Sing, Minister in Prime Minister's Office, emphasised the importance of BRI as a means of improving links with China and its near neighbours.

He said: "The BRI represents a tremendous opportunity for businesses in Singapore – as well as in the wider Southeast Asian region – to work more closely with China. The more integrated China is with the region and the rest of the world, the greater the stake it will have in the success of the region. The more we are able to work together, the more it will bode well for the region and the global economy."

In line with this, this year has seen a number of Memorandums of Understanding (MOUs) signed between China and Singapore. Back in April, one such undertaking was signed between International Enterprise Singapore (IES) and the state-owned China Construction Bank. Under the terms of the memorandum, $30 billion is now available to companies from both countries involved with BRI projects. At present, the two organisations are in discussion with some 30 companies with regards to developments in the infrastructure and telecommunications sectors.

In June, an additional MOU was signed between IES and the Industrial and Commercial Bank of China. This has seen a further $90 billion earmarked to support Singapore companies engaged in BRI-related projects.

Ronald Hee, Special Correspondent, Singapore

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With Beijing-Manila ties at their most cordial, the Belt and Road Initiative is helping cement the countries' partnership.

Photo: Can BRI backing help break Manila’s cycle of floods and water shortages?
Can BRI backing help break Manila's cycle of floods and water shortages?
Photo: Can BRI backing help break Manila’s cycle of floods and water shortages?
Can BRI backing help break Manila's cycle of floods and water shortages?

As with many of the most successful Belt and Road Initiative (BRI) infrastructure-redevelopment projects, many of China's investments in the Philippines advance the programme's overall objectives while also meeting key local needs. A prime example of this is the mainland's huge contribution to tackling the water-management issues that have long confounded Manila, the Philippines' capital.

Already deemed a priority by Rodrigo Duterte, the Philippines President, and a key component of his massive Build, Build! infrastructure initiative, China agreed to underwrite the costs of two of the related projects late last year. This saw the Beijing-led Asian Infrastructure Investment Bank (AIIB) and the World Bank each sign off on loans of US$207.63 million for the Metro Manila Flood Management Project, with the balance of US$84.74 million being met by the Philippines government. At the same time, China also agreed to provide the US$234.92 million required to initiate the New Centennial Water Source-Kaliwa Dam project (NCWSP).

In terms of water management, Metro Manila suffers from two seemingly contradictory problems, having both too much and, on occasion, too little. This sees the city regularly subjected to serious flooding, often with tragic consequences for many of its residents, while it also struggles to meet the growing demand for safe drinking water occasioned by the region's ever-expanding population. It is hoped that the two China-backed projects will help to alleviate both of these problems.

In terms of the first, the Metro Manila Flood Management Project, this will entail a substantial upgrade to 36 of the region's pumping stations, while an additional 20 will be constructed from scratch. It will also involve a major overhaul of much of the supporting infrastructure along the region's primary waterways.

In total, work on the project will extend across a 29 sq km site. Once completed, it is expected to eliminate the danger of flooding for some 210,000 local households, benefitting about 970,000 people in all.

The first phase of the project, which will see five existing pumping stations substantially upgraded, is expected to get under way this year. At present, details of the required engineering work are being finalised, with procurement work set to be completed by the end of June. Construction proper will then begin in the autumn, with a scheduled end date early in 2020.

The project overall is aiming for a May 2024 completion date. From a local angle, construction will be overseen by the Manila Development Authority, with the National Housing Authority and the Social Housing Finance Corp also playing supervisory roles.

In the case of the NCWSP dam, it is hoped that this will bring an end to the capital's water shortages. To this end, the project will see the construction of a low dam with a discharge capacity of 600 million litres per day and a 27.7-kilometre raw water conveyance tunnel with a capacity of 2.4 million litres per day.

At present, the Philippine authorities are considering bids from three mainland construction companies, one of which, under the terms of the loan, will be appointed as the principal contractor on the project. The three shortlisted contenders are China Engineering, Power China and a joint bid from Guangdong Foreign Construction and Guangdong Yuantian Engineering. Once due diligence has been completed, the winning bid will be announced by the Metropolitan Waterworks and Sewerage System, the Philippine government body with oversight on the project.

Scheduled to be completed in 2023, there is considerable pressure to ensure this particular project is not subject to any delays. This is largely down to the fact that the Angat dam, the source of 93% of the capital's water supply, will be unable to meet the growing demands of the city's population within eight years. Should the NCWSP encounter any major obstacles, Manila's taps running dry could become a very real possibility.

While the benefits to the Philippines represented by these two projects are clearly apparent, the upside for China is less immediately tangible. The new partnership between the two countries, however, has helped patch up a relationship that has more than occasionally been a little fraught. It has also succeeded in reducing the long-simmering tensions over the South China Sea, with the two countries now working more towards jointly administering and exploiting this particular stretch of the Pacific Ocean, rather than competing for ownership.

The thawing of relations has also already substantially improved bilateral trade, while the boost to the Philippine economy expected to result from the many China-backed infrastructure projects will doubtless provide a ready consumer market for an increased level of mainland exports. At the same time, this new co-operation is also expected to give China access to improved maritime trade via a number of the Philippines' hub ports.

Marilyn Balcita, Special Correspondent, Manila

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