MANILA — One of the most ambitious Philippine railway projects, the 100-kilometer Mindanao Railway Phase 1, is dead in its tracks, based on a letter of the Department of Finance (DOF) addressed to the Chinese Embassy seen by ABS-CBN News.

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"We wish to formally convey to your office that, as discussed with the Department of Transportation (DOTr), the Philippines is no longer inclined to pursue the Chinese ODA financing for the Mindanao Railway Project Phase 1- Tagum-Davao-Digos Segment (MRP-TDDS)," the DOF said in the letter.

According to a senior economic manager, a Chinese senior economic official expressed their concerns regarding "geopolitical factors" as the reason for the lack of progress in the infrastructure projects with Beijing.

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While Transportation Secretary Jaime Bautista did not confirm the conversation, he observed that China's interest in funding infrastructure projects in the Philippines has waned.

“Parang ganun ang lumalabas,” Bautista said.

'NO RESPONSE'

The P83-billion Mindanao Rail Project Phase 1, which was supposed to receive backing from China, was originally set for construction in January 2019.

In 2022, the DOTr said there was no response from China when it followed up on the funding requests.

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China also demanded interest rates higher than 3 percent, which was unfavorable to the Philippine government.

After a long wait, the DOTr has considered the China funding for the Mindanao Railway Phase 1 project "withdrawn."

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The DOTr said the project would continue without China's aid.

"Yung Mindanao Railway, it is an approved project so we will continue the project. Again, reviewing the plans. We need to get a funder for this Mindanao Railway project. Maybe you know that the past administration was talking to China for the funding of this project, unfortunately, the loan was not finalized," Bautista said.

Aside from the Mindanao Railway Project, the construction of several China-backed railway projects under the "Build, Build, Build" program could not move forward because they have yet to be funded.

Among the projects that still need funds are the planned train systems from Laguna to Bicol, Clark to Subic, part of the campaign promise of former President Rodrigo Duterte.

"We tried to work with the Chinese and we gave them, I think, [until the] end of the month to confirm if they will be able to support these projects that the previous governments started - that's for the Mindanao Railway and for South Long Haul and the Subic Clark Railway," Bautista said.

The government is now looking at other possible funders to support the stalled railway projects, he said.

"For example for South Long Haul I met with one country ambassador in Asia to support the Bicol South Long Haul. He had a meeting with the president the other day and I had a meeting after the meeting with President Ferdinand Marcos, Jr. So it looks very promising," Bautista said.

"We're talking to possible investors and possible supporters, funders…. We are looking at possible investors. We are looking at ODA support and the government. So it is a combination of the Philippine government support, ODA, and private sector support," Bautista added.

Bautista said the possible funders are open to offering interest rates lower than three percent.

As of writing, there are no China-funded projects in the incoming infrastructure projects of the Department of Transportation.