Can PH natural resources be used as collateral for China loans?

Dharel Placido, ABS-CBN News

Posted at Mar 07 2018 09:52 PM | Updated as of Mar 07 2018 11:09 PM

MANILA - A Chinese scholar raised eyebrows after being quoted in a Chinese news report as saying that the Philippines’ natural resources can serve as collateral for Chinese loans to Manila.

Zhuang Guotu, head of Xiamen University's Southeast Asian Studies Center, told state-run Global Times that “[Chinese] loans are usually accompanied by repayment agreements, which use certain natural resources as collateral."

Zhuang also said “China's infrastructure capability leads the world and as a result many countries and regions are willing to cooperate with China.”

The Philippines has turned to China for funding of a portion of President Rodrigo Duterte’s P8.4 trillion infrastructure push.

Critics, however, have warned of the so-called "Chinese debt trap,” citing the experience of Sri Lanka which was forced to lease its Hambantota port to a Chinese operator for 99 years in order to pay its debt to Beijing.

Filipino maritime expert Jay Batongbacal was among the first to raise the Global Times article, saying using natural resources as “collateral” is akin to a mortgage.

“Who knows which among the 7,641 islands are being ‘mortgaged’? Can you imagine what if the Cordilleras are foreclosed? Or the Visayan Sea? This boggles the mind. No wonder Sri Lanka got shafted,” Batongcbacal said on Facebook.

Former National Security Adviser Roilo Golez also said Zhuang’s comment was “disturbing and alarming.”

“Our natural resources as collateral! Our family jewels in hock as a condition for the Chinese loans! Is this correct? Is this the reason why joint exploration is being pushed hard? The government, Malacañang, DOF (Department of Finance) and NEDA (National Economic and Development Authority) must clarify this and say it isn't so!” Golez said in his blog.

The Global Times is published by the ruling Chinese Communist Party’s mouthpiece, People’s Daily. The widely read tabloid has published nationalistic commentaries deemed by some as a reflection of the sentiments of Beijing officials.

MUCH ADO OVER 'GOSSIP'?

Sought for comment on the Global Times article, Presidential Spokesperson Harry Roque said on Tuesday that the Philippine government will only “rely on basic docs (documents) and there is not any.”

In a news conference on Wednesday, Roque also dismissed the Global Times piece as mere “tsismis” (gossip).

“Hindi ko po gagamitin ang isang Chinese newspaper bilang primary source to establish a fact. Hahanapin ko po ang primary document, nasaan iyong kasunduan na iyan,” he said.

(I will not use as a Chinese newspaper as a primary source to establish a fact. I will look for the primary document, where is that agreement.)

“Kung may ganiyang kasunduan, kukomento po ako. Eh dahil wala namang ganiyang kasunduan, tsismis po iyan.”

(If there is an agreement, I will comment. And since there is no formal document on the matter, I will say that is just gossip.)

The Philippine government under Duterte has been pushing for joint exploration with China in the South China Sea, much to the dismay of critics who warn that this could dilute the Philippines claims to the resource-rich waters.

Batongbacal, director of the University of the Philippines Institute for Maritime Affairs and Law of the Sea, also noted that the success rate of joint developments involving China usually “leaves very much to be desired.”

“On the whole, therefore, China’s track record for joint development with various partners have been consistently unsuccessful in either resulting in the discovery and development of reserves, or definitely improving their relations with their joint development partners,” Batongbacal said in a Facebook post.

“This is partly due to the ambiguity of the joint development agreements (JDAs) China has been willing to sign; issues over implementation and intention arise and interfere because inconsistencies between text and conduct create mistrust and lead to non-pursuit of the commitments. All areas subject of these JDAs are just as hotly contested and tension-prone as they were before the JDAs were signed.”