Japanese development agency to continue funding Philippines rail expansion

Out-Law News | 02 Jul 2019 | 1:39 pm | 1 min. read

Japan's international development agency, Japan International Cooperation Agency (JICA), still has 900 billion yen ($8.32bn) remaining of the 1.3 trillion yen it has pledged to lend to support the development of the Philippine railway system.

The Japanese government, through JICA, had previously allocated the funding to the Philippines to build more railways and ease traffic congestion.

 “In total, actually, we have only committed about 400 billion yen, so far, so at least for the railway sector, 900 billion yen [will go towards completing] the ongoing railway projects,” JICA senior representative Kiyo Kawabuchi said late last week, according to Businessworld.

The JICA is currently supporting five priority railway projects of the current government of the Philippines, with a total loan commitment of 595 billion yen. They include the first tranche of the Metro Manila Subway Project; the North-South Commuter Railway (NSCR) Project, plus the first tranche of the Extension Project; the Metro Rail Transit Line 3 Rehabilitation Project; the Light Rail Transit (LRT) Line 1 Cavite Extension Project; and the LRT Line 2 East Extension Project, according to Manila Bulletin.

Tseng I-Ching

I-Ching Tseng

Senior Associate

Japan has been a long term supporter and investor of infrastructure projects in Southeast Asia, both through public and private entities.

The Philippines government's 'Build, Build, Build" (BBB) infrastructure development programme could help address the estimated P3.5 billion ($6.8 million) lost to road congestion, according to Businessworld.

The government of the Philippines launched the BBB programme in April 2017, aiming to raise public spending on infrastructure to 7% of gross domestic product by 2022 from less than 2% ten years ago, with total required investment estimated at $158 billion.

Japan has become the biggest investor in Southeast Asia's infrastructure and its projects in Southeast Asia are valued at $367 billion, with its focus in the Philippines, Singapore and Vietnam, according to Forbes.

Dispute resolution expert I-Ching Tseng at Pinsent Masons, the law firm behind Out-Law, said: "Japan has been a long term supporter and investor of infrastructure projects in Southeast Asia, both through public and private entities. Through its role as the Japanese government agency that coordinates Official Development Assistance (ODA) for the government of Japan, parts of the JICA's mandate is coordinating and promoting international cooperation, including promoting economic and social growth of countries it cooperates with."

"Increased investments in significant infrastructure projects internationally are welcoming news.  Investments in infrastructure not only promote economic growth and job opportunities, but also improve much needed transportation accessibility and mobility to people," she said.