Indebted to China

My column yesterday about the Duterte administration’s “Build! Build! Build!” program ended with the line from Kenny Roger’s “The Gambler”: “You don’t count your money/ When you’re sitting at the table/ There’l be time enough for counting/ When the dealin’s done.”

I used that to refer to the government gambling our future with its Dutertenomics whose focus is massive infrastructure spending (P8.4 trillion until the end of President Rodrigo Duterte’s term) and increased revenue generation through tax reform. Typical of gamblers, government is going full speed ahead with the program, saving the “counting of the money” or counting of the costs, “when the dealin’s done” or after the President’s term.

So what will happen when we start the “counting.” That would be difficult to countenance because that would be years away. But this early, red flags are already being raised, both in revenue generation and massive spending. Worries have already been raised about the new impositions despite cuts in the income tax. How would taxes on gasoline, salty and sugary food and other impact on the lives of the poor?

As for the foreign borrowings, a big bulk of which would come from China, I would refer to an expert, Hardeep Puri of the Research and Information System for Developing Countries (RIS) of India, whose views came out in globalnation. inquirer.net yesterday. He said the Philippines should be wary of projects funded by loans from China to avoid falling into a debt trap like what happened to other Asian countries.

“It has to be viable projects. You have to pay it back. If it will lead to debt and equity, then drop it,” he noted, adding: “If debt becomes equity, then you’re selling your country. You might end up selling more than your islands.”

Among the payoffs that have been touted by President Duterte after his visit to China last year was the $24 billion pledges in the form of loans and investments. This means the Philippines would soon join other Association of Southeast Asian Nations countries where China poured “massive amounts in loans and investments,” like Thailand, Myanmar, Laos and Cambodia.

What befell the countries caught in a debt trap with China is already known. In fact, what happened in some South African countries where infrastructure projects employ Chinese workers may soon be replicated in the Philippines. Didn’t Budget Secretary Benjamin Diokno say recently that the Duterte administration was open to “foreign labor” for China-funded infra projects here?

But the case of Sri Lanka illustrates another dire possibility for us. China funded the construction of an international airport and a deep sea port in that country that ended up becoming a losing proposition, thus making it difficult for its government to pay the loan. As a result, Sri Lanka agreed to give China Merchants Port Holdings an 80-percent stake in the port.

But what might happen to us could be worse considering that we are in a different predicament from the other countries heavily indebted to China. We are engaged in a territorial dispute with the very same country we could be caught in a debt trap. What will happen then?