The government should be cautious in striking deals with China amid fears that the Philippines may be plunging itself into a debt trap, three Senate bets said Sunday.
“Dapat maging cautious tayo sa pag-enter into contracts sa China sapagkat maraming mga bansa ang may experience na hindi maganda sa Tsina at alam natin na mas mataas pa ang kanilang interes na binibigay kaysa sa ibang bansa katulad ng Japan,” labor lawyer Sonny Matula said during CNN Philippines’ last Senatorial Forum.
[Translation: We should be cautious in entering into contracts with China because many countries have had a bad experience with China and we know that the interest rate they give is higher compared to other countries like Japan.]
Matula said the government should review the deals it has made with China.
Community organizer Bernard Austria also said that the Philippines should look to other countries as cautionary tales on Beijing’s debt trap.
“Pupwede naman ‘yung foreign direct investment, so bakit doon tayo magfo-focus doon sa Build, Build, Build kung saan sinasangla natin ang ating teritoryo?” Austria said.
[Translation: We could go with foreign direct investment, so why are we focusing on Build, Build, Build where we are mortgaging our territory?]
For his part, Doctor Willie Ong said the Philippines should ensure that it is not entering into agreements where it is on the losing end.
“Kailangan makipag-deal tayo sa mga ibang bansa na malapit sa atin, pero kailangan wise tayo. Dapat lamang lagi tayo sa mga pakipag-deal sa kanila,” Ong said.
[Translation: We need to deal with nearby countries, but we need to be wise. We should always have the upper hand when we deal with them.]
The loan deals between the Philippines and China have come under scrutiny following warnings from Supreme Court Senior Associate Justice Antonio Carpio and former Bayan Muna Rep. Neri Colmenaresthat the country risks losing resources should it fail to pay its debt to the Asian giant.
Recently, Carpio warned that deals on the Kaliwa Dam and the Chico River irrigation project may leave the Philippines letting go of “patrimonial assets,” which he said includes gas from the Reed Bank.
This has been refuted by the Finance department. In a recent media briefing, it said that gas from the Reed Bank would not be handed to China, but would be sold to generate funds to pay off debt in the “unlikely” event that the country will default.
It has also said that interest rates on Chinese loans only appear to be larger compared to Japanese loans as these are pegged to the U.S. dollar, while the latter is pegged to the Japanese Yen.