July 16th, 2022
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) is requesting President Ferdinand Marcos Jr. and Transport Secretary Jaime Bautista to explore alternative financing options for the Calamba-Bicol railway after the suspension of the financing agreement between China and the Philippines for the 380-kilometer line.
“It was clarified by former Finance Secretary Sonny Dominguez that the Duterte government pulled out of applying for financing, after China failed to act on certain processes. We were, as the young would say, ghosted, so Sec. Dominguez pulled us out rather than leave us hanging,” Salceda said.
“The interest rate for the loans appears to be on the high end, at 3 percent per annum, when Japan offers a 0.1 percent per annum rate. Of course, the Chinese yuan is generally a more stable currency than the Japanese Yen, but factoring exchange rate parity, the Japanese offer would still be significantly more attractive, by around 2.5 percentage points, even taking the worst peso performance versus the yen and the best peso performance versus the yuan,” Salceda said.
“So, what I gather is we asked for a better rate, and China appears to have stop responding.”
“The only problem, I think, is that the project is near-construction stage already, and all the plans have been made. Kumbaga, nabuyo na tayo. But if, say, a Japanese offer comes, and it comes with little disruption to the overall plan of implementation, we should take the offer.”
“If China wants to continue the deal, they should offer more competitive rates. Anyway, I think we should open up to other offers.”
“I understand PBBM has instructed Secretary Jaime Bautista to go back to the negotiating table on this issue. We would be at a stronger negotiating position if there are alternative financing options within our grasp,” Salceda added.
Bicol railway to benefit nearby regions
Salceda said that the construction and completion of the Bicol railway will be crucial not just for the Bicol region but also for nearby provinces, such as Samar and Leyte, the home province of the President’s family on the Romualdez side.
“The Bicol railway is very critical for Luzon-Waray commerce because it will terminate in Daraga, where the Bicol International Airport is. Move a little further down, perhaps through a cargo highway that Senator Chiz and I can propose, and you’re already in Sorsogon. From there, much of the maritime commerce between Luzon and Region 8 passes,” Salceda said.
“So, it’s crucial for cheaper logistics, food security, and trade and industry, especially between these two regions,” Salceda said.
“The Bicol railway is the crucial link to the intermodal transport system that we are envisioning. Once you have that complete, the people of South Luzon will have sea, air, rail, and road options for personal transport and cargo. And these transport systems will be interconnected, with the railway and expressways as the backbone of the network.”
“I think finishing the Bicol railway is mission critical for PBBM’s administration and Secretary Bautista, because it was a campaign promise by PBBM back in March. And, given his administration’s seriousness in resolving this hiccup early, I can see the sincerity to solve the problem,” Salceda added.