Philippines budget minister Benjamin Diokno talks about the importance of working with China.

Q: International partnerships with countries including China and the US are very important for the Philippines, yet there is a lot of tension at the international level now. How does that affect the Philippines’ investment relationships?

A: We’re getting a lot of offers from Japan and China, but we’re very selective with our projects. It has to go through a rigorous process. For example, the minimum rate of return we expect from our projects is 10%. Since we can borrow at much lower than that — we can borrow money for 0.1% with 40 years to pay from Japan and China maybe three per cent — so that’s a no-brainer. As long as the internal rate of return on the project is much higher than the cost of money, it’s working... Unlike other countries where they borrow money and then just put projects in the hometown of the mayor or the president, we don’t do that.

Q: There has been some pushback in public opinion in the Philippines on the many projects this government has embarked on with China. How will this play out?

A: This is the first time in a long time that we are getting [investment] from China. The previous administration was not on good terms with China, so they did not borrow from them. We’re very careful with our market money and where we borrow. We make sure it is worthwhile.

Like many developing countries, the Philippines has a large youth population. What kind of programmes can help ensure they are ready to join the workforce?

We invest 40% of our budget for elementary and secondary education, and free tertiary education. We invest in universal healthcare. We want to make sure we are developing an agile, competent workforce. In an ageing world, that is an asset.

This article is sourced from fDi Magazine
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