China debt trap? Opposition bets say PH at 'losing end' of 'onerous' loans

MANILA, Philippines – Opposition senatorial bets said that deals with China must be studied carefully, or else the Philippines will be at the "losing end" due to the "onerous" provisions.

At the CNN Philippines senatorial forum, Senate bet Raffy Alunan challenged the idea that Manila will fall into a debt trap with Beijing.

"There are enough lessons internationally. Our economic managers have captured these lessons. It's still speculative in nature, because we have not yet signed up to the kind of loans that will lead us to a debt trap," Alunan said.

Alunan added that it's "premature" to say that the Philippines will not be able to pay the loans with China, because much of the deals are yet to be finalized.

"The Belt and Road initiative have memorandum of understanding, and not contracts. These are still subject to negotiation. So it's premature," Alunan said.

Manila has signed at least two loan deals and two grants with Beijing. The loan agreements are the $211-million Kaliwa Dam project and the $186-million Chico River irrigation project, as well as the P3.6-billion grant for two Pasig River bridges.

At the 2nd Belt and Road Forum in China, 19 agreements with Chinese companies were signed by President Rodrigo Duterte, which would bring $12.165 billion (P634 trillion) worth of investments to the country.

In response to Alunan, former Magdalo Representative Gary Alejano said that the Philippines should learn from other countries that have given up parts of their territories as collateral to China.

"Dapat alalahanin natin ang relasyon sa China dahil ad hoc at bilateral, walang nakakaalam. We would be at the losing end sa negosasyon na 'yan na dehado pala tayo habang kumikita ang ibang tao sa gobyerno. Matuto tayo," Alejano said.

(We should think about our relationship with China because it's ad hoc and bilateral, so no one knows [about the negotiations]. We would be at the losing end in these negotiations while other people in government earns from it. We should learn our lesson.)

Election lawyer Romulo Macalintal said that these deals should be studied, regardless.

"Ang mahirap sa sinasabi ng pamahalaan na hindi pa ito done deal, hihintayin pa ba natin na matapos ang kontrata saka tayo magrereklano? Aanhin mo pa ang damo, kung patay na ang kabayo? Dapat pag-aralan 'yan. 'Pag dehado tayo, ipaglaban natin 'yan," Macalintal said at the forum.

(Do we wait until the contract is done before we complain just because the government is saying that these deals are not yet done? What will you do with the grass if the horse is already dead? We should study that. If we're on the losing end, then we should fight against it.)

Otso Diretso bet Samira Gutoc also pointed out that the presence of Chinese military at the West Philippine Sea "speaks of bad faith."

Confidentiality clause

The opposition bets also noted the confidentiality clause under the two loan agreements with China, and urged the government to be more transparent about other deals.

"Kung walang problema ang mga kontrata, bakit ayaw ilabas ang kontrata? Sa tingin ko, may tinatago. (If there is nothing wrong with the contract, then why don't they they make it available to the public? I think they are are hiding something)," former congressman Erin Tañada III said.

Meanwhile, Neri Colmenares of left-leaning Makabayan and Labor Win coalition questioned government's response on the confidentiality clause saying that the deals are a "standard loan."

"Standard loan daw ang sa China. Magpakita kayo ng confidentiality agreement sa iba. Debt trap ang sa China. Kaya dapat ibasura. (China loans are said to be a standard loan. Show us other deals that have confidentiality clause. China will lead us to dept trap. We should scrap it)," Colmenares said.

But a seemingly lost retired general Ronald Dela Rosa questioned whether the opposition bets asked for the copy of the loan agreements. 

"Confidentiality, confidentiality kayo. Nanghingi ba kayo ng dokumento sa Malacañang? (You keep on saying confidentiality. But did you ask for the document at the Malacañang?)" Dela Rosa told other candidates at the forum.

Recently, all 9 loan agreements were made public by the Department of Finance. (READ: Made in China: Loan terms with waivers, shrouded in secrecy)

Chinese contracts are templated to include confidentiality clauses, as well as waivers of sovereign immunity if the country won't be able to pay off its loans.

These clauses were cited by various international news groups as the reason why some countries like Sri Lanka coughed up its port to China. (READ: Lessons for Manila from Sri Lanka's 'debt-trap' experience)

Supreme Court Senior Associate Justice Antonio Carpio had earlier warned that the China deals would allow Beijing to take gas-rich Reed Bank if the Philippines defaults on it loans.

Earlier this month, opposition lawmakers from the Makabayan bloc asked the Supreme Court to stop the Chico River pump irrigation project. – Rappler.com

Aika Rey

Aika Rey covers the Philippine Senate for Rappler. Before writing about politicians, she covered budget, labor, and transportation issues.

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