Japan will provide close to P60 billion worth of loans to the Philippines to support key infrastructure and development projects.
Three projects will be funded by the loan, which had a total amount of 129.857 billion yen ($1.143 billion), statements released by the Japanese foreign ministry showed.
The assistance form part of the 1 trillion yen financial package for Philippine development projects pledged by Japan last year. Japanese Prime Minister Shinzo Abe committed to providing the loan during the first day of President Rodrigo Duterte’s visit here.
READ: Philippines, Japan sign $6B worth of business deals
Trade Secretary Ramon Lopez said the terms of the loans are friendly because of the robust ties between the Philippines and Japan.
“It’s really development assistance. It’s like giving a friend a very good deal,” Lopez told reporters Wednesday here.
“It’s like a friend helping another friend,” he added.
READ: Cayetano: Rejecting conditional foreign aid 'a policy to all countries'
As much as 104.53 billion yen may be given to support the first phase of the Metro Manila Subway Project.
The project seeks to help address the traffic congestion in Metro Manila, ease atmospheric pollution and climate change and in turn promote investments in the Philippines.
The interest rate on the loan is 0.1 percent per annum while the repayment period is 28 years after a 12-year grace period.
About 800 billion yen (P356 billion) is needed to complete the subway project. Incoming presidential spokesman Harry Roque said Japan might extend as much as $6 billion or about 600 billion yen worth of loan for the subway.
“There is a commitment from Prime Minister Abe himself about a $6 billion investment in a subway in the Philippines. This will be a tremendous help to the traffic problem in the country,” Roque said.
“A subway is long delayed. I’m very glad to announce that in this trip, the $6 billion investment was formalized,” he added.
Part of the multibillion-peso loan will also fund the third phase of the arterial road bypass project, which costs about 9.399 billion yen.
The project seeks to help relieve traffic congestion and improve transportation capacity and efficiency in Plaridel City by building a bypass road along the Philippine-Japan Friendship Highway. The highway directly links Metro Manila with Central Luzon.
The interest rate for the road bypass project is 1.5 percent per annum while the repayment period is 20 years after the grace period of 10 years.
Japan is also providing a 15.928 billion yen loan to fund the Cavite Industrial Area Flood Risk Management Project, which is expected to reduce flood damage in the province.
Foreign Affairs Secretary Alan Cayetano and Japan Foreign Minister Taro Kano exchanged notes on the project loan in the presence of Duterte and Abe last Monday.
The rate of interest on the loan is 0.3 percent per annum while the repayment period is 30 years after a 10-year grace period.
Other commitments
Roque said Japan has also announced a currency swap that would allow the conversion of yen to Philippine peso.
“The peso and yen now convertible. That will be tremendous help to OFWs (overseas Filipino workers) because they lose money when they convert to dollar first before converting to peso,” Roque said.
Roque said Japan is also looking into investing $2 billion for a liquefied natural gas facility in the south.
The Japanese government also committed to providing the Philippines 40 patrol boats to strengthen its maritime defense capacity, he added.
Roque said the assistance provided by Japan had nothing to do with maritime disputes in the region. There were speculations that Japan is assisting the Philippines to solicit support on its dispute with China over the Senkaku Islands in the East China Sea
“I do not see why there is an ongoing race between China and Japan,” Roque said.
“There's a policy of a veer towards Asia and I think the ever-improving ties between Asian countries, including both Asia and Japan, is a proof that we are not favoring one Asian country as against another,” he added.
READ: Japan vows maximum aid for Marawi rehab
Roque said the giving of assistance by Japan is part of “soft diplomatic policy.”
“As Filipinos, we welcome all countries to be our friends as well. But I'm not aware of any reciprocal obligation imposed on us. It was freely given to us, of course, it's an investment,” Roque said.
“And I think as far as the Japanese government and Japanese businesses are concerned, they consider the Philippines as a viable destination for their investments,” he added.
Roque said the Philippines can give back to Japan by being a “good friend.”
Business deals
A total of 18 business deals were also signed during Duterte’s two-day visit here. The agreements can generate $6 billion worth of new investments.
The Trade department signed agreements with Marubeni Corp., Itochu Corp., Sumitomo Metal Mining Co., Ltd., Taiheiyo Cement Corp., Tsuneishi Shipbuilding Co., Ltd., Ministop Co., Ltd., and Lawson Inc.
The Subic Bay Metropolitan Authority signed deals with List Co., Ltd., Newcoast Southbeach Realty, Inc. and Subic Smart Community Corp.
Japan Tobacco Inc. inked an agreement with the finance department while Tokyo Gas Co., Ltd signed a deal with the energy department.
Hitachi Asia signed an agreement with Bases Conversion and Development Authority while Ubicon Holdings, Inc. inked a deal with Advanced World Solutions, Inc. and Alsons/AWS Information Systems, Inc.
Densan System Co. Ltd. signed a deal with CIS Bayad Center, Inc. while Hitachi Ltd. and Nuclear Energy Business Unit Koji Tanaka inked an agreement with Meralco.
Nomura Real Estate Development Co., Ltd. and Isetan Mitsukoshi Holdings Ltd. inked an agreement with Federal Land, Inc. Yamato Kogyo forged an agreement with Steel Asia Manufacturing Corp. while Itochu Corp. inked a deal with Metro Pacific Investments Corp.
