Chinese firms jostle for deals as Philippines goes on building spree

Both countries working to weed out unreliable contractors

SHANGHAI • A construction boom in the Philippines has drawn a surge of interest from Chinese contractors keen to grab a piece of President Rodrigo Duterte's US$180 billion (S$244 billion) Build, Build, Build campaign, a senior Philippine official has said.

The Philippines, "inundated with Chinese contractors going to Manila", has come to an arrangement with China's commerce ministry to try to stem the flow and weed out unreliable firms, Budget Secretary Benjamin Diokno said .

"There are so many contractors and if we deal with them individually, we'll run out of time," Mr Diokno said in the Chinese commercial hub of Shanghai yesterday.

China's commerce ministry will screen contractors and assign three alternative candidates to each project, he said, adding that interest spiked after Mr Duterte's visit to Beijing last year.

Mr Diokno said Chinese firms had already pledged "something like US$9 billion" for infrastructure projects they wanted to be involved in, a jump from commitments of US$3.4 billion reported in March.

"The US$9 billion is a notional number," he added. "They said,'We can give more if the projects are moving.'"

A surge in imports of capital goods this year to support the Philippines' infrastructure ambitions has turned its peso currency into Asia's worst performer, falling at one point to 11-year lows against the US dollar, and pushed the current account surplus into a deficit.

  • $12b

  • Amount Chinese firms have pledged for infrastructure projects they wanted to be involved in, a jump from commitments of US$3.4 billion (S$4.6 billion) reported in March.

Mr Duterte has already approved the auction of 21 projects worth US$16 billion, among them overhauling Manila's airport and a railway line on the southern island of Mindanao. Other projects include upgrading ports, roads and rail links.

When asked about concerns that Chinese contractors might bring along their own workers rather than create jobs, Mr Diokno said the Philippines' labour force was already being stretched.

He added: "We might run out of labour. Our projection is that these projects will create about a million jobs. The contractors are already complaining they don't have enough labour."

The country would consider bringing in labourers from overseas to complete the work, he said. "Our priority is to have those projects completed, rather than playing to the demands of Filipino workers."

Mr Diokno also downplayed debt fears about the campaign, which will be financed partly by a tax reform package.

In May, the Lower House of Congress approved a watered-down version of the Bill, but it still needs Senate approval.

"There's no way that we'll fall into a debt trap because we have a policy right now... (that) we can borrow only 20 per cent from foreign sources," he said.

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 30, 2017, with the headline 'Chinese firms jostle for deals as Philippines goes on building spree'. Print Edition | Subscribe