The Philippines and China exchanged Monday (June 13) the documents for a 2.34-billion renminbi loan to finance the construction of a two-way, four-lane bridge connecting Davao City and the Island Garden City of Samal in Mindanao.
At approximately P17.39 billion (about USD 362 million), the loan for the Samal Island-Davao City Connector (SIDC) project is the first renminbi-denominated loan secured from China under the Duterte administration.
Finance Secretary Carlos Dominguez III, on behalf of the Philippine Government, and Chinese Ambassador to the Philippines Huang Xilian, representing the Government of the People’s Republic of China, exchanged documents on the framework agreement and the loan agreement for the concessional loan on Monday afternoon at the Department of Finance (DOF) in Manila.
This concessional loan will cover 90 percent of the financing requirements of the SIDC project’s design-and-build contract worth P19.32 billion.
The agreements for the RMB 2.34 billion loan were signed last May 31. The ceremonial exchange coincides with the celebration of the 47th anniversary of Philippine-China diplomatic relations and the 21st commemoration of the Filipino-Chinese Friendship Day, which was held on June 9.
The Department of Public Works and Highways (DPWH), the main implementor of the Project, entered into an agreement with the China Road and Bridge Corp. for the construction of the 3.86 kilometer (km) SIDC bridge, which, once completed, will significantly cut travel time between Davao City and Samal Island, and reduce the dependency on ferry services.
With an interest rate of 2 percent per annum, the loan is payable in 20 years, inclusive of a 7-year grace period.
With the signing of the loan accord for the SIDC project, China’s total financing commitments to the Philippines now amount to USD 1.1 billion, which also includes the loans such as for the Chico River Pump Irrigation Project of the National Irrigation Administration (NIA), the New Centennial Water Source-Kaliwa Dam Project of the Metropolitan Waterworks and Sewerage System (MWSS), and the Project Management Consultancy (PMC) of the Philippine National Railways (PNR) South Long Haul Project of the Department of Transportation (DOTr).
The SIDC project complements the Mindanao Spatial Strategy/Development Framework 2015-2045, the Davao Regional Development Plan, and the Davao Gulf Area Development Plan 2011-2030, which all aim to facilitate commerce and trade, generate jobs, create wealth among the local government units (LGUs) in Mindanao, and share the benefits of its growth to more remote municipalities, including Samal Island.
The Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area Cooperation (BIMP-EAGA), which intends to promote economic development in underdeveloped and geographically remote regions in its member countries, is also expected to benefit from the SIDC Project.