The 2030 Agenda for Sustainable Development was adopted by all member states of the United Nations in 2015. At its core are 17 Sustainable Development Goals (SDGs) with respective targets, 169 in total, which aim to eradicate poverty in all its forms and dimensions.
The 17th goal or SDG 17 (Partnerships for the Goals) is crucial as it defines the means of implementation and the global partnerships and cooperation that may have to be revitalized to realize the rest of the SDGs. Among the targets of SDG 17, one pertains to strengthening aid and financial resources, in particular official development assistance (ODA) commitments.
But why is ODA to the Philippines crowding into infrastructure?
Worrying ODA profile
The total ODA to the Philippines as of 2019 is US$21.62 billion, supporting a total of 344 programs and projects. The net commitments increased by 46% since Pres. Duterte took over, twice the increase in ODA under the entire term of the Aquino administration.
The bulk of ODA, or 92%, comes as loans, and only 8% are grants; 58% goes to infrastructure, and at a distant second with only 18% is social reform and community development.
The Department of Transportation (DOTr) has the largest share of the active ODA portfolio with 38%, followed by the Department of Public Works and Highways (DPWH) with 16% and the Department of Finance (DOF) with 15 percent. Multi-regional programs and projects account for 36% of the total, followed by region-specific (32%) and nationwide implemented (32%). For region-specific programs and projects, the National Capital Region (NCR) gets the bulk, or 40% of total active ODA portfolio.
By fund source, Japan remains to be the main provider with 39% share, followed by the Asian Development Bank (ADB) (26%) and the World Bank (20%). The dominant use of multilateral ODA is as worrying as the fact that most of ODA is in the form of loans. Multilateral institutions have policy recommendations incorporated in their lending.
The National Economic and Development Authority (NEDA) reports that there are about 117 programs and projects (one-third of the total) funded by 58 loans and 59 grants, that support the achievement of SDGs. Still, the major recipient with 46 programs and projects is SDG 9 (Industry, Innovation and Infrastructure). Far behind with only 27 and 21 programs and projects, respectively are SDG 1 (No Poverty) and SDG 4 (Quality Education).
Obviously, the country’s ODA utilization is largely for the Duterte administration’s focus on infrastructure development. The package is the ambitious Build Build Build, which, despite hype and bluster, has only accomplished 11 out of a target of more than 100 infrastructure flagship projects (IFPs). The indicative amount of the latest list of 112 IFPs is Php4.7 trillion, 56% of which is funded by ODA.
SDG 17 is not it
It appears that SDG 17 is not the reason why the government is overly focused on infrastructure development. There has been an increase in global savings that could be channeled to infrastructure. The Duterte government has been riding the global hype that infrastructure is urgent, which has contributed to the surge in global infrastructure investments. It continues to do so despite increasingly unfavorable global economic trends. This is to provide the infrastructure that is favorable to foreign investors and big business, and at the same time to offer infrastructure itself as a lucrative business for them.
Transport and mobility accounts for 76 of the 112 IFPs or 91% of the total project cost. Subways, trains, bus rapid transits, ports, expressways, skyways, roads and bridges – is the country’s traffic problem so bad that the Duterte government has to prioritize it over the problematic production sectors of agriculture and manufacturing? The economic managers are single-minded about making the country attractive to foreign investors. The Duterte administration is overly relying on foreign capital instead of strengthening domestic production. The latter could cater to domestic needs and could enhance domestic resource mobilization. This focus could potentially make sustainable development truly materialize.
On the other hand, it also appears that SDG 17 is not the reason why ODA funders provide so-called aid. ODA funders have increasingly gravitated towards lending and infrastructure. A 2020 study conducted by the Japan NGO Center for International Cooperation (JANIC), a member of the Reality of Aid Network, shows these two characteristics of Japan ODA: the heavy use of loans and the large allocations to economic infrastructure, especially transportation. JANIC reveals that one reason for Japan ODA’s focus on economic infrastructure is that it is a pillar of the Japanese government’s “Free and Open Indo-Pacific” strategy to contain or compete with China’s rising influence. Japan remains the Philippines’ top ODA funder.
Meanwhile, the increase of China’s infrastructure investments has been a game-changer globally. China established the Asian Infrastructure Investment Bank (AIIB) and launched the Belt and Road Initiative (BRI), a global infrastructure development strategy to invest in nearly 70 countries and international organizations. The Duterte administration saw this as an opportunity for its own infrastructure ambition and really wooed China. Pres. Duterte is the Philippine president with the most trips to China, with a large entourage of businessmen and economic managers. One of the results of these visits and pledges from Beijing was NEDA’s approval of new availment guidelines for Chinese support. This is different from what NEDA has for the Japan International Cooperation Agency (JICA) and presumably would expedite placement of China ODA and investments. The share of China ODA to total ODA to the Philippines increased from a negligible 0.01% in 2016 to 2.73% as of 2019.
Partnerships for profits
Aid has had its post-war historical role, such as the US-driven Marshall Plan in Europe or as Japan’s ‘war reparations’. It has been perceived to have development cooperation objectives. But underneath these aims, the truth about aid is that it has been an instrument of neoliberalism. Aid has been an entry point for ‘donor countries’ and their business conglomerates – and even state-owned enterprises (SOEs) in the case of China – to do business in the recipient countries and rake in profits. The local economic oligarchs, on the other hand, gain immensely from project partnerships and the boost official aid gives to their businesses and wealth.
ODA loans have low, concessional interest rates and long maturity and grace periods, but come with direct conditionalities that are burdensome for the host countries. The funders require the use of their own contractors, technology, businessmen, and even midlevel supervisors as well as workers in the case of China, to be present in Philippine programs and projects.
The loan process is triggered by NEDA’s investment approval and the Philippine government’s request for financing from the funder. Thereafter, there is a difference in the loan process between Japan and China. With Japan, the Philippine government signs the loan agreement with the funder, procures, then signs a contract with the winning bidder. With China, the loan process is reversed – the Philippine government procures, signs the contract with the winning bidder, then negotiates the loan agreement with the funder. In any case, when the funder, whether Japan or China, grants the request for financing in the beginning, it already attaches a shortlist of contractors and consultants from its end.
This practice is evident in the big-ticket infrastructure projects of the administration. One example is the Php357-billion Metro Manila Subway Project Phase 1, which was conceived and funded by JICA and is carried out by the Japanese corporations Shimizu Corporation, Fujita Corporation, and Takenaka Civil Engineering. The local partner is EEI Corporation, one of the leading construction companies in the Philippines, which is under the Yuchengco Group of Companies.
The controversial Php12.2-billion Kaliwa Dam Project is funded by China through the China Export Import Bank and commissioned by China Energy Engineering Corp. The project has consultants from the Metropolitan Waterworks and Sewerage System (MWSS), local corporations such as EDCOP and Primex Corporation, and SMEC, a member of the Singapore-based Surbana Jurong Group.
The long-troubled North South Railway Project (NSRP) is a prime example of an important project, because it truly enhances the mobility of the working people and the spread of development efforts to less developed regions. It is also one of the most sensible solutions to NCR’s traffic problem. But it is also a glaring example of how ODA may not necessarily prioritize real development but only the business of those involved in the project.
The NSRP has two components. The north component includes a 56-kilometer (km) rail line from Tutuban, Manila to Calamba, Laguna. An extension was approved in 2018 – Phase 1 is the 38-km line that connects Tutuban to Malolos, Bulacan and Phase 2 is the 53-km line that connects Malolos to Clark. The south component, on the other hand, is a 653-km (478-km main line and 175-km extension) long haul passenger rail line from Tutuban to Legazpi, Bicol, with possible extensions from Calamba to Batangas City and from Legazpi to Matnog, Sorsogon.
The north component is worth Php777.5 billion and is co-funded by JICA and the ADB. For Phase 1 alone (worth Php149.1 billion), construction contractors are Taisei Corporation, DMCI, and Sumitomo-Mitsui Construction. NSTren Consortium, which is led by Oriental Consultants Global, is the construction supervisor. CPCS Transcom, a Canada-based infrastructure management firm, is the lead transaction advisor. Sumitomo Corporation is the supplier of 104 train sets, and SMEC together with Oriental Consultants Global are the general consultants.
The south component, otherwise known as the PNR South Long Haul Project, is a China ODA worth Php175.3 billion. Project start-up was supposed to take place in August 2019, but the DOTr is still seeking bidders from China’s shortlist at this time. This is almost three years since the design contract had supposedly been awarded to the China Railway Design Group. It may also be recalled that the Philippine National Railways (PNR) scrapped its contract for the supply of a fleet of diesel multiple unit (DMU) trains with China’s SOE, CRRC Zhuzhou, because the latter apparently violated the procurement law according to the Commission on Audit (COA).
At this rate, the Philippines may be able to see only the completion of Phase 1, and that is definitely after 2023. The promised economic benefits from having inter-regional heavy rail and the unimaginable development potentials this may bring have remained elusive.
Not even for COVID response
The Council for People’s Development and Governance (CPDG), a network of Philippine civil society organizations (CSOs), recently held a series of webinars for a midterm review of the Philippines’ implementation of the SDGs. The CPDG noted that the COVID-19 pandemic has wiped out whatever little gains underdeveloped countries such as the Philippines may have achieved for the SDGs. The various CSOs however underscored that the Philippines was already in a crisis even before the pandemic and the Duterte government has been consistently pursuing profit-seeking partnerships with foreign investors and local economic oligarchs instead of programs for sustainable development.
When COVID-19 hit the Philippines, government’s gross borrowings tripled from Php1 trillion in 2019 to Php3 trillion in 2020. As of May this year, the outstanding national government debt stood at Php11.1 trillion from Php8.89 trillion in the same month in 2020, an addition of Php2.21 trillion. But the CSOs have every reason to believe that the government just used the pandemic to increase borrowings in order to maintain the country’s creditworthiness. Emergency relief and economic stimulus are both scanty even to this day as the country faces another hard lockdown.
ODA supposedly for pandemic response has reached US$18.4 billion, or almost Php900 billion in peso terms. The ADB is the top funder, followed by the World Bank. However, closer scrutiny reveals that only 8.3% of the amount is definitely for COVID, 28.3% is not necessarily for COVID, and 63.4% is definitely not for COVID. Most of the ODA is earmarked as “budgetary support” in anticipation of the economic impact of COVID. With the meager social amelioration or ayuda for the poor majority and the non-existent support for micro, small and medium enterprises (MSMEs), this so-called budgetary support is actually meant to cushion the impact of the pandemic on big business.
ODA could have been crucial for the country to recover fast. But in pandemic and even pre-pandemic times, the characteristics of ODA utilization have always been problematic. Most of ODA is in the form of loans. Most of it is multilateral aid which comes with policy recommendations from the multilateral institutions. Also, most of it is intended to support the profits of foreign and big local corporations. And all of these could be under the veil of supporting the SDGs.
Unveiling neoliberalism and SDGs
Agenda 2030, in the words of the United Nations, is a “shared blueprint for peace and prosperity for people and the planet, now and into the future”. But as signatory to Agenda 2030, the Duterte government did not really make much adjustments to serve such lofty ideals. It simply shoehorned the SDGS into the Philippine Development Plan (PDP) 2017-2022, which is the same package of neoliberal policies that have worsened Philippine poverty.
The development framework of the Philippine government has been skewed since the beginning. The pandemic has further highlighted that, despite how much neoliberal policies have substantially weakened the economy and rendered the country’s health system incapable of addressing the pandemic, the Duterte government would still stubbornly present these policies as its priorities.
It is certainly a relevant time for the CPDG to launch a people’s review of the country’s progress with the SDGs. A closer look has also shown that the SDGs themselves may be as unambitious for genuine development as the Duterte administration’s PDP 2017-2022. SDG 17 for instance endorses the same neoliberal framework of taxation, debt sustainability, investment promotion, open and rules-based multilateral trading system, exports and imports liberalization, multi-stakeholder partnerships, and ODA utilization. It ultimately makes Agenda 2030 remain silent about how the unchanged neoliberal policies have brought the world to the brink of economic, social and ecological collapse. It is always a crucial time for CSOs to raise their voices.