The good, bad news fromunfunded China ‘projects’

THE cancellation of three massive railway projects due to a financial tussle between the governments of the Philippines and China may prove to be both good news and bad news for commuters and the economy.

Experts interviewed by the BusinessMirror gave mixed responses, with one camp saying that the Philippines is better off without the projects, and another lamenting the wasted time and opportunity to get better funding deals.

Last week, the new administration announced that the Philippines and China have canceled the loan agreements for the following projects of the Department of Transportation (DOTr): Philippine National Railway (PNR) Bicol Project, Subic-Clark Railway Project, and the first phase of the Mindanao Railway Project.

Good news and bad news

“That’s good news, actually. The benefit-cost ratios for Subic and Davao Railways are below one, meaning they are white elephants in the making. There are better uses for government’s limited funds,” Rene Santiago, a railway expert, said in a text message.

He noted that the rehabilitation of the Bicol Railway “may be feasible,
but not a complete replacement of system as contemplated by past DOTr.”

For his part, Jose Regin F. Regidor, a research fellow at the University of the Philippines-Diliman National Center for Transportation Studies, said the cancellation of the three massive railway projects may prove to be insignificant within the Marcos administration.

“In the short-to medium terms or within six years, there probably will be no significant effects since it takes quite some time for these types of projects to be implemented,” he said.

However, he noted that the shelving of the loan agreements will create a dent in the long-term plans of the government.

“This is bad news because this means the timetables for these projects will again be moved or delayed. This represents more backlog for projects like these that should have been implemented and completed so many years ago,” Regidor said.

He added: “Since the costs for implementing these projects are always increasing, even escalating considering the current economic conditions affected by factors such as the war in Ukraine, it becomes more difficult to finance these projects, especially through foreign funding.”

China has already signified its intention to renegotiate the deals, with its Embassy in the Philippines saying that it is open for “technical discussions.” Former Finance Secretary Carlos G. Dominguez III had said the Beijing-based Export-Import Bank of China (Ceximbank) would have imposed at least a 3-percent interest rate on the three railway projects.

“Major infrastructure projects like these take time to develop and costs need to be updated and justified by the benefits. While the benefits are established, the costs are ever increasing, thereby somewhat diminishing the attractiveness of the project. That said, the impacts of these projects will not be felt in the immediate, short, or even medium term,” Regidor explained.

Transport officials were sought for updates as to how the new administration intends to move forward with the projects, but they have yet to reply to the BusinessMirror’s queries.

Some lawmakers have already chimed in and suggested the government look for other funding sources such as official development assistance (ODA) deals from jurisdictions other than China.

They have also urged the government to consider placing the deals under the Public-Private Partnership (PPP) Program, the main infrastructure thrust of the administration of former president Benigno Aquino III.

Immediate solutions

For now, Regidor suggested that DOTr focus on developing other modes of public transport to immediately address the increasing demand for mobility and the current transport crisis.

“The new administration would be better off looking for solutions to transport problems that can be implemented immediately or over a shorter period. These include reforms in public transport regulations and operations that focus on increasing the supply side of public transport while also attempting to improve quality of service particularly on improving travel times for commuters,” he said.

Regidor noted that the previous administration’s Libreng Sakay (Free Ride) Program, an initiative that was adopted by the current administration, should not be part of the solutions list that the government should look into.

“Libreng Sakay is not sustainable since there is the same poor quality of service and there [are] limited funds to cover most cities in the country. Perhaps exclusive lanes for public transport along most corridors—not just Edsa—can be considered, showing priority for public transport over private vehicles? Motorcycle taxis and bicycles can also help reduce dependence on private cars but safety concerns need to be addressed to encourage people to bike or use two-wheeler taxis for their regular commutes,” he explained.

In the longer term, however, he still recommends the development of mass transit modes such as train systems.

False hopes

For his part, commuter group Komyut representative Toix Cerna lamented that the shelving of the three railway projects reflects how the previous administration deceived the public and gave them false hopes for better public transport systems.

“As commuters, the most painful part of the cancellations is the feeling of being given false hopes through press releases that swayed the attention of the public from their daily crisis to grandiose projects that the Duterte government promised, which proved to be non-existent,” Cerna said.

He appealed to the new administration to “focus on the transportation crisis, especially the lack of public utility vehicles on the road.”

“They should examine how traditional public utility jeepneys are being barred from plying their routes by the delayed issuance of permits from the Land Transportation Franchising and Regulatory Board. The public transport needs of today should have been addressed yesterday,” Cerna said.

Image credits: Nonie Reyes