AIIB approves loan for Manila flood management project

AIIB and China heavily involved in Duterte’s

THE Asian Infrastructure Investment Bank (AIIB) and World Bank have signed up to provide funding to improve flood management in the Metro Manila area.

The project will cost US$500 million, of which the AIIB will provide US$207.6 million. The loan was approved by the AIIB’s Board of Directors on September 27. The World Bank will also lend US$207.6 million to the project, with the Philippine government providing the remaining US$84.79 million.

Flood events, particularly during the typhoon season from June to October, are a recurring problem in Manila. Under the Metro Manila Flood Management Project, 36 existing pumping stations will be modernized, 20 new ones will be constructed, and supporting infrastructure along critical waterways will be improved.

Flood damage in Manila, 2012

Both the AIIB and Chinese government are heavily involved in supporting the vast infrastructure plans being pursued by President Rodrigo Duterte. He has announced over US$180 billion of projects under the so-called "Build, Build, Build" initiative. Already awarded are 21 projects worth US$16 billion. These include an upgrade of Manila Ninoy Aquino International Airport and a railway line on the southern island of Mindanao. Other projects include upgrading ports, roads and rail links.

In mid-September the National Economic and Development Authority (NEDA) board approved a number of flagship projects. Construction on the Binondo-Intramuros Bridge and Estrella-Pantaleon Bridge projects is set to begin in fourth quarter this year, and end in the fourth quarter of 2020, with financing from the government of China.

China will also provide concessional loans to the three priority projects, namely the south line of the North-South Railway, New Centennial Water Source Kaliwa Dam and Chico River Pump Irrigation project. China is also financing feasibility studies for the construction of the Davao City Expressway and Panay-Guimaras-Negros Link Bridge. With regard to the Kaliwa Dam, the NEDA Board approved a change in project structure from a public private partnership (PPP) to an Official Development Assistance project with funding from China.

China is not alone in providing assistance to the Philippines on big projects. The Manila-Clark Railway project and the Metro Manila Subway are both being financed through Official Development Assistance from Japan. The railway project is expected to be completed by 2022, and the subway project will begin construction next year.

Another major project that will soon be awarded is Clark International Airport New Passenger Terminal Building. The Bases Conversion and Development Authority recently announced that it has set down December 5 as the deadline for the submission of bids.

The construction of the New Passenger Terminal Building will be undertaken as a PPP project under a build-transfer scheme. Under the scheme, the private partner will finance, design and construct the new airport passenger terminal. This will then be transferred to the government upon its completion.

As a large number of Chinese contractors arrive in the country there has been some controversy about using local employees versus those brought in from China. China has complained about inflexible rules on the percentage of local employees that have to be used on projects, as well as slow progress in areas such as compulsory purchase of land for road and railway projects.