Crossroads (Toward Philippine social and economic progress)
Philippine Star, 28 November 2018


The official state visit of Xi Jinping of China to the Philippines produced a large set of potential economic cooperation projects that promises to be more than spectacular as the two nations face the future.

29 agreements and protocols. During the final day of the visit, a total of 29 specific memoranda of understanding (MOUs) were officially exchanged in an official ceremony that took place before the two heads of states, China’s leader and President Duterte.

Could they signify the establishment of vital links between actors, sectors and leading institutions of the two nations in a strengthening set of economic and cultural relationships? Or would these only be displays of ceremonial exchange of lavish intentions that could end up yielding a weak fruit?

Political will of both sides to execute the intended efforts now matters. Much depends on the capacity of the contracting parties to follow through and realize the intentions.

Comprehensiveness and, in some cases, down to specific details. All the MOUs are in the nature of facilitating cooperation on specific matters.

Though theatrical drama – or golpe de gulat – is often needed, the specifics of MOUs indicate evidence that groundwork across a range of activities is being pursued.

It has been two years since the initial warming of relations between the two leaders took place. Moreover, it is also a way of announcing that the priorities of the moment are in the front burner of future action.

What is at stake for the Philippines. International observers see a tilting of balance between the weight of Philippine allegiance toward China and away from traditional allies.

The Philippine move to build bridges with China is a step in our progress and maturation as a nation. The Philippines needs to expand the scope of relations with important countries, most of all with its neighbors where so much is at stake.

China is now an important economic power. We should be able to tame it for our national purposes to help us strengthen ourselves economically.

In the course of a few decades, China has become the most significant trading partner of the Philippines, along with Japan. There are even more important opportunities to strengthen these economic ties with China.

The list of economic cooperation agreements on the move as shown by the many MOUs should demonstrate this emphatic possibility.

The MOUs could show the way. The MOUs range from initiation of intent to examples of on-going activities to be pursued at the next level: initiation of intent; project developments somewhat maturing; and actual actions to be pursued, such as financing actual studies, loan contracts, or creating or approving new activities or institutional arrangements.

Noteworthy among the sector agreements touched are MOUs on accessing the “Belt and Road project initiative of China”; cooperation in training involving the ministries of education, information technology, agriculture and rural cooperative; infrastructure, and culture.

With respect to infrastructure projects, the specifics involve project studies concerning the Davao Expressway project; the bridges project linking Panay- Guimaras-and-Negros islands; the agreement to undertake the construction of the Kaliwa Dam, which is essential toward sustaining the water supply needs of MetroManila.

Noteworthy among the list of projects is the plan to undertake joint exploration for oil and gas in the South China Seas part of Philippine claims; the plan to set up a renminbi exchange to foster quicker payments involving bilateral trade; and the banking certificate for the Industrial and Commercial Bank of China to open a branch in the Philippines; and the agreement to assist in the setup of a renminbi exchange.

There is also an agreement to cooperate in the management of industrial parks in a segment of the Clark economic zone area. Also, the permission for the Philippines to float panda bonds in China is recognized in one MOU.

The possibilities of positive results arising from oil and gas exploration in the Philippine part of the South China Seas area are high, since Malampaya has been a substantial find that has proven, during its lifetime of exploitation, to be an important component of the nation’s energy requirements. Unfortunately, there are fewer takers of this effort to expand further supply because of the generally flush supply of natural gas in the world economy, especially in the rich fields of the Middle East and strong new finds in other places. The Philippines needs to stabilize domestic supply to sustain its long term energy needs.

Integrated steel mill in Mindanao.  Although not explicitly included in the 29 items of agreement, the integrated steel mill project in northern Mindanao involving an investment of $3.5 billion investment proposed by the Panhua group in China was also signed during the state visit.

Panhua’s steel project proposes the setting up of a modern steel manufacturing facility that covers 10 different product steel lines. The project includes a modern port facility and is proposed to be located in the Phividec Industrial Estate in Togoloan, Misamis Oriental.

The project will energize the Phividec Industrial Estate, which since its founding has had to struggle hard to get locators. The steel company is among the major manufacturers of steel in China. Its steel products are broadly sold to many countries.

The project will provide impetus toward a stronger domestic sourcing of major construction needs for the country through its steel production. The was originally set up in an industrial zone near Shanghai. It has become a major exporter of steel products to many industrial countries, including developing countries.

Is this a foreboding of more Chinese investments to be made in the Philippines? Big investments bring in an assortment of other investments.