Philippine government seeks 2 loans from Beijing’s AIIB

THE PHILIPPINES is seeking two loans, worth over USD 900 million in total, from Beijing-based Asian Infrastructure Investment Bank (AIIB) to finance the Manila Metro Rail Transit Line 4 (MRT-4) project and a program that will support the economy’s post-pandemic recovery.

In a document on its website, the AIIB said the Philippines is seeking a USD 537.4-million loan that will fund the construction of a high-capacity mass transit railway system serving the eastern part of Metro Manila.

The MRT-4 will cover 12.7 kilometers from the Epifanio de los Santos Avenue (EDSA) Ortigas Ave. junction to Taytay, Rizal. It will have 10 stations.

The project is aimed at improving urban mobility and reducing greenhouse gas emissions. Once operational, the MRT-4 is expected to serve more than 400,000 passengers daily, the Transportation department said earlier.

AIIB said the loan will be up for final review by the fourth quarter.

The first phase of the MRT-4 project is jointly co-financed by the AIIB and the Asian Development Bank (ADB).

Data from the ADB website showed that the project is expected to be fully operational by 2028.

The ADB also earlier said the project is expected to reduce travel time from Taytay to the Ortigas central business district to less than half an hour by rail.

Meanwhile, the Philippines is also seeking a USD 400-million policy-based loan from the AIIB to support tax reforms as the country recovers from the pandemic.

The proposed Domestic Resource Mobilization program also aims to ramp up the digitalization of tax administration and strengthen international tax cooperation.

The Philippines seeks to sustain public spending for recovery by creating the legal frameworks for tax policies. This includes three critical tax reform laws — the proposed value-added tax on digital transactions, the carbon emission trading system, and the Ease of Paying Taxes bill.

It also sought an executive order that mandates tax agencies to adopt secure digital modes of revenue collection, as well as adopt a competency framework for local treasurers.

The Philippine government is also looking to use the loan proceeds to fund the Bureau of the Internal Revenue’s (BIR) digital transformation initiative.

“It focuses on operationalizing the Internal Revenue Integrated System to enable the BIR to use taxpayer data systematically to enhance gender-sensitive taxpayer services; establishing a Data Analytics Unit to undertake data analytics for promoting taxpayer compliance, and formulating sex-differentiated tax policies, and strengthening tax audit functions,” it said.

The loan will also finance measures to advance international tax cooperation, such as implementing a gender-responsive international tax competency program and introducing tax transparency standards, among others.

The program is also co-financed by the ADB, while the loan is set to be reviewed by the fourth quarter.

In 2021, the AIIB was the Philippines’ fourth-largest source of official development assistance (ODA), with loans and grants amounting to USD 1.5 billion or 4.68% of total ODA. — Luisa Maria Jacinta C. Jocson