60-40 deal with China? Duterte wants more

President Duterte wants the country to have more than 60 percent share in the profit from any possible joint exploration deal with China in the West Philippine Sea.

In remarks before soldiers at the Eastern Mindanao Command camp in Davao City last Thursday, Duterte said he would try to secure a sharing agreement more advantageous to the Philippines than the traditional 60-40 ratio.

Duterte spoke about his plans while again justifying his friendlier relations with China and its president, Xi Jinping. “Rather than fight, what can we get?” he said. Duterte has been criticized

by various sectors for setting aside a landmark ruling of a UN-backed arbitral court in 2016 invalidating China’s massive claim in the South China Sea and affirming the Philippines’ own maritime entitlements. China had vowed not to comply with the ruling.

Duterte argued that by cozying up to China, the Philippines could get more from Beijing in terms of development aid as well as trade.

Early this year, Duterte proposed the 60-40 profit sharing ratio for any joint oil exploration with China. Malacañang later explained the President had based his figure on the 60-40 restrictions on foreign equity in businesses in the country.

The two leaders have given their go signal for the crafting of a framework for a joint exploration particularly in areas within the West Philippine Sea.

Meanwhile, senators said yesterday the Duterte administration could take heed of Malaysia’s move to cancel two Chinesefunded big-ticket infrastructure projects to prevent the Philippines from being ensnared in a debt trap from Beijing.

The senators, both from the majority and opposition blocs, reiterated their suspicion for Chinese loans after Malaysian Prime Minister Mahathir Mohamad canceled three projects bankrolled by Beijing worth over $20 billion.

The country’s economic managers led by Finance Secretary Carlos Dominguez met with their Chinese counterparts earlier this week in Beijing to present a list for projects being eyed for financing through official development assistance (ODA).

Senate President Pro Tempore Ralph Recto said the government should “look out for” the danger of being deep in debt with China, which has been dangling juicy offers to the country.

“And that’s why PPP (public-private partnership) should be a better model than ODA. PPP will not affect the balance sheet of the national government. No need to borrow, to borrow too much,” Recto said.

He said he was disturbed by reports that the administration was borrowing from China at commercial rates.

He said ODA-funded projects are usually expensive but they can be worth it if they are of good quality like those financed by Japan.

Recto warned the administration’s “Build, Build, Build” infrastructure program seems to be anchored on Chinese financing.

Sen. Joseph Victor Ejercito, vice chairman of the Senate committee on public services, said his apprehension on “China being friendly and offering assistance to finance and undertake big infrastructure projects.”

“For sure it will have strings attached. And knowing China, it will come at a heavy price too,” Ejercito said, adding procuring loans would require that the funder, the studies, the contractor, some materials to be supplied will be dictated by Beijing.

“I would trust Japan more than China. There is sincerity in their offer of assistance,” Ejercito said.

Sen. Aquilino Pimentel III, whose political party PDP-Laban has forged ties with the Chinese Communist Party, however sought more objectivity and sobriety from critics.

“No two countries are 100 percent similarly situated. Let us decide for ourselves what is best to do given our own situation and our own analysis,” Pimentel said when asked whether or not the government should take its cue from Mahathir.

“We should not blindly copy what other countries are doing,” he said.

Opposition Sen. Leila de Lima said the government should look at the long-term economic repercussions of all the planned China-funded infrastructure projects and investments into the country.

“The Philippine government must take its cue from Prime Minister Mahathir who decided to cancel three China-backed projects amounting to $22 billion to avoid his country from falling into a debt trap. We need to take heed before it’s too late,” she said in a statement from detention.

“Entering into loan agreements, especially those that are not obtained through competitive procurement, can put not only our country in dire debt and cripple our economy, but also undermine our sovereignty and national security,” she added.

In November 2016, De Lima filed Senate Resolution 222 seeking to inquire into the various investment deals entered into by the administration during President Duterte’s state visit to China in October that year.

The following year, she also urged the Senate to look into the possible onerous terms and long-term financial and economic repercussions of the multibillion-dollar loans and investments package offered by China to the Philippines under the Belt and Road Initiative.

Last February, she again filed another resolution directing the appropriate Senate committee to investigate the complete terms and conditions of the loans entered into by the Philippine government to fund its Build, Build, Build program to assess the possible impact of Chinese loans on the economy and national security.

Defense and military officials, meanwhile, are hopeful the only “nuclear element” that China would add to the South China Sea dispute is nuclear energy for power generation on its manmade islands.