Provision of Yen Loan to the Philippines (Advance Notification)
June 20, 2018
1. On June 20, Mr. Taro Kono, Minister for Foreign Affairs of Japan, expressed its intention to extend ODA loan financing, subject to the necessary Japanese and Philippine Government approval processes, for the MRT Line 3 Rehabilitation Project (total loan provision of up to 38.101 billion yen) and the New Bohol Airport Construction and Sustainable Environment Protection Project (II) (total loan provision of up to 4.376 billion yen) to H.E. Mr. Alan Peter S. Cayetano, Secretary of Foreign Affairs of the Republic of the Philippines at the Japan-Philippines Foreign Ministers’ Meeting held in Tokyo. Based on this pledge, the Government of Japan and the Government of the Philippines are scheduled to sign exchange of notes concerning the yen loans in the future.
2. Overview of the target projects
(1) Financing for the rehabilitation and maintenance of the MRT Line -3 railway in Manila, the Philippines (yen loan for the MRTLine 3 Rehabilitation Project; total loan provision of up to 38.101 billion yen)
This project provides funds for rehabilitation and maintenance in order to upgrade the MRTLine 3 railway line in the capital Manila into quality infrastructure again. The MRTLine 3 (a total length of approximately 17 kilometers and a total of 13 stations) is a trunk line passing over the Circumferential Road 4 (the EDSA), one of the roads with the greatest traffic volume in the city, and the maintenance and management work for the railway line was implemented by Japanese companies from when it was opened in 2000 until 2012. From 2012 onwards, companies from other countries have been implementing the maintenance and management, but due to budget shortfalls and other factors appropriate maintenance and management work has not been implemented and currently the line and the rolling stock are in poor condition and there are frequent disruptions to train services.
For this reason, in response to a request from the Government of the Philippines, Japan will provide the funds necessary to rehabilitate the MRT Line 3 appropriately and utilize the technology of Japan to upgrade the line to quality infrastructure, thereby improving the safety and comfort of the railway. It is expected that due to the rehabilitation of the MRT3 Line, approximately twice as many trains as currently will run appropriately by 2022 (two years after the completion of the project), greatly improving their transport volume, alleviating the serious traffic congestion in Metro Manila, and contributing to the alleviation of air pollution and climate change.
(2) Additional financing for construction of a new airport in Bohol province (yen loan for the New Bohol Airport Construction and Sustainable Environment Protection Project (II); total loan provision of up to 4.376 billion yen)
In order to handle the rapidly-increasing passenger numbers in the Bohol province in the Visayas region of the central Philippines, Japan will offer additional funds for construction of a new airport.
Bohol province is proceeding with regional development that utilizes its abundant tourism resources. It is forecast that international passenger numbers will rapidly increase to 142,300 people per year by 2020. It is expected that due to the construction of the new Bohol airport the province will be able to handle nearly three times as many aircraft arrivals and departures as before, improving the convenience and safety of air transportation, and contributing to the revitalization and sustainable growth of the region.
In 2013 an exchange of notes was signed concerning the provision of a yen loan up to a total loan provision of approximately 10.7 billion yen for construction of the new Bohol airport. In the meantime, the construction costs grew due to the subsequent large currency exchange rate fluctuations and other factors, so this project provides the funds that have become additionally necessary.
3. Loan terms (common to both of the above projects)
- (1) Rate of interest: 0.1% per annum
- (2) Repayment period: 28 years after the grace period of 12 years
- (3) Procurement terms: STEP (Special Terms for Economic Partnership)
[Reference] Japan-Philippines Relations (Basic Data)
The Philippines covers an area of approximately 300,000 square kilometers (roughly 80% the size of Japan). It has a population of approximately 100.98 million (Philippines national census, 2015) and a gross national income (GNI) per capita of 3,580 U.S. dollars (World Bank, 2016).