MANILA, Philippines --- The Philippine government has promised to pay back the $500-million loan to China for the scrapped North Rail project in the next two years.
The administration of President Benigno S. Aquino III decided to scrap the rail project after discovering anomalies in the deal.
In his recent visit to China, Interior and Local Government Secretary Manuel Roxas II informed Chinese Vice Foreign Minister Fu Ying about the government's intention to pay off its debts and the cancellation of the North Rail contract with a Chinese contractor in a meeting in Nanning.
Roxas, in a news conference at the Palace, said China has asked the Philippines to immediately reimburse the loan for the botched North Rail contract at the height of the tension at the Panatag Shoal.
"What was supposed to be a multi-year long term loan was immediately called due and demandable by China. So we discussed how it will be paid. We have the resources and we will pay this," Roxas said.
"According to Finance Secretary (Cesar) Purisima, they have started negotiations and we can pay it in installment over the next two years," he added.
Roxas explained that the Aquino government decided to scrap the anomalous rail project with a Chinese contractor following a Supreme Court ruling it violated the country's procurement law.
The North Rail project, initiated by the Arroyo government in 2004, was also burdened by other anomalies such as poor construction and overpriced materials by the Chinese builders. Last year, the Aquino government shelved the North Rail project to renegotiate the terms of the contract with the Chinese.
"The Supreme Court ruled that it did not follow the procurement law. There is no such thing as executive agreement. All procurement by government must comply with the procurement law," Roxas said.
"The contractive was not effective. It included the disengagement process, the arbitration process, the process to undo the North Rail contract," he said.
Despite canceling the North Rail contract with China, Roxas said the government may revive the project that seeks to link Metro Manila to Clark, Pampanga, and seek better contract terms. China and other financiers may also join if the government decides to bid out the project this time following procurement rules.
"The North Rail Corporation will reassess and check what will be needed. The government plans a high speed rail connection to Clark. That will continue. Whether it will be on the PNR alignment or some other alignment, that will be a different decision," he added.
Roxas likewise tried to downplay Beijing's decision to ask Manila to pay off its loan immediately amid the territorial row in the West Philippine Sea.
"The timing may be coincidental but we cannot really say. Regardless if our relations are good or not, the Panatag Shoal happened or not, the North Rail contract was still anomalous. It will not be pursued," he said.
In the same meeting with Chinese official, Roxas also tried to iron some kinks in an energy agreement between China and the Philippines.
He asked China to make good with its promise to train Filipinos under the accord between the Chinese State Grid Corporation and the National Grid Corporation.
"Based on the contract, there ought to have been a turnover of technology, training, etc. But up to now, the Chinese still makes these decisions and I explained to Vice Minister Fu Ying and she understands and will check how to address the situation," he added.
Concerning his China trip, Roxas said his mission last week had been a start in reinstating the frayed relations between China and the Philippines.
Roxas said that while both countries have expressed sovereignty over their territorial claims, both countries have also expressed to renew ties that had been frayed because of the territorial dispute.
"Both sides expressed their desire to prevent further deterioration in our bilateral relations," Roxas said. "Friendship could be reactivated."
He said that he was able to achieve his mission in the sense that he was able to personally convey to the Chinese leadership the views of President Aquino.
Roxas was able to talk to China's president-in-waiting, Vice President Xi Jinping, as well as Vice Foreign Minister Fu Ying in Nanning.
"As I conveyed to Vice President Xi, talk-talk is better than no talk. The fact that messages are reliably conveyed, I think is a good step, a good foundational step so that the DFA and the other negotiators can build upon whatever foundations may be established in this meeting," he said, noting that Vice Foreign Minister Fu was invited for a visit to the Philippines during the meeting.
"Two things are significant: there is a clear communication link and messages have been conveyed through that communication link at the highest levels," he added.
As this developed, two brother lawmakers filed a bill seeking for the creation of the Center for West Philippine Sea to study the basis of the claims of the country over the waters and islands in the West Philippine Sea under the United Nations Convention on the Law of the Sea (UNCLOS), international law, local laws, and historical data.
Under House Bill 6457 filed by Reps. Rufus Rodriguez (2nd District, Cagayan de Oro) and Maximo Rodriguez, Jr. (Party-list, Abante Mindanao), the Center, which shall be attached to the Department of Foreign Affairs (DFA) under the Office of Special and Ocean Concerns, shall propose actions and measures to defend the nation's sovereignty and patrimony.
Rodriguez said the Center shall also prepare concrete plans on how to develop and fully utilize all natural resources in the area and perform other duties and responsibilities that would strengthen sovereignty and other claims over the area.
Under the bill, an amount of P50 million shall be initially appropriated for the proposed creation of the Center which shall be provided by Congress in the annual budget of the DFA under the annual General Appropriations Act. (With reports from Madel R. Sabater and Rolly T. Carandang)
