Philippines gets infrastructure finance boost from Japan, ADB

By Lean Alfred Santos 07 August 2015

Passengers on board a train in Manila, Philippines. Japan's $2 billion official development assistance to the country will finance a major railway development project to boost Manila's urban transport infrastructure. Photo by: Rose Ferrer / CC BY-NC-ND

The Philippines has just received a major infrastructure boost.

The Japanese government this week pledged $2 billion in official development assistance for one of the Philippines’ major railway development projects. Once released, the aid disbursement will be the East Asian donor’s single-biggest ODA loan package to any development partner to date, according to a statement released by the Philippines’ foreign affairs department.

The financial commitment is the fruit of over two years of negotiations and studies between the two governments on ways to address mobility bottlenecks in the Southeast Asian nation, particularly in metropolitan Manila and its neighboring cities and municipalities.

Once tagged the “sick man of Asia,” the Philippines now has one of the fastest-growing economies in the region. But transport infrastructure has failed to keep pace with the growth not just of the economy but the population as well — over 10 percent of the Philippines’ more than 100 million residents live in the metropolis. This has resulted in chronic traffic jams, which are often exacerbated by frequent flooding caused by monsoon rains and typhoons.

The Japanese loan aims to address this problem by supporting the first phase of the North-South Commuter Rail Project, which involves the construction a 36.7 kilometer “narrow-gauge elevated commuter railway.” The project will be implemented by the country’s transportation and communication department.

The rail project forms part of a larger and more comprehensive partnership between the Japanese and Philippine governments, as outlined in the “Cooperation Roadmap for Quality Infrastructure Development in the Transport Sector in Metropolitan Manila Area,” which serves as a blueprint to address the “immediate need for accelerating the development of infrastructure in the transport sector in metropolitan Manila.”

Among other projects in the cooperation plan that Japanese ODA may finance in the short term include three railway projects, including a Mega Manila Subway Study, and a plan to develop the country’s transportation planning and database management capacity.

This loan package comes a week after the Asian Development Bank announced a new — and significantly higher — sovereign lending package to the Philippines. From 2016 to 2018, the Manila-based financial institution will make $3 billion available for the Southeast Asian nation, up 67 percent from its previous three-year allocation of $1.8 billion.

In a statement, ADB President Takehiko Nakao said the money will be used to continue bank support for the country’s infrastructure needs, education, youth employment, social protection and access to finance, among others.

One infrastructure project ADB has recently invested in is one that aims to construct and rehabilitate a major international passenger airport terminal in the Philippines, which received a $75 million private sector loan from the bank.

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About the author

Lean 2
Lean Alfred Santos@DevexLeanAS

Lean Alfred Santos is a Devex development reporter focusing on the development community in Asia-Pacific, including major players such as the Asian Development Bank and the Asian Infrastructure Investment Bank. Prior to joining Devex, he covered Philippine and international business and economic news, sports and politics. Lean is based in Manila.

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