Railway Poor's Loss is China's Gain

While the North Luzon railway rehabilitation project is expected to ease transportation woes between Manila and north and central Luzon provinces, it is also expected to open wider the Philippine trading doors to China.

BY DABET CASTAÑEDA
Bulatlat
First of two parts  

A typical scene along the rails

The rehabilitation of the North Luzon railway, expected to start before the year ends, has provided China a prime route to premiere Philippine trading posts from Manila to Northern Luzon. 

The Philippine Trade and Investment Center said in a report (www.ecdc.net.cn) that from January to February 2002, China was the Philippines’ ninth biggest trading partner, 10^th as export market and seventh as import supplier.”

It said that from 1997 to 2001, trade with China grew consistently from US$ 1.11 billion to US$ 1.7 billion at an annual rate of 8.56 percent. 

The report further said the two countries traded semi-conductor devices and parts and accessories of automatic data processing machines. The Philippines exported copper cathodes, fresh bananas and fuel oils to China while importing its motor spirit (gasoline), fabrics for manufacture of outer garments, wheat and muslin.

President Gloria Macapagal-Arroyo’s visit to China on Sept. 4 brought the trade relations between the two countries to a higher level, with China’s commitment to finance the rehabilitation of the Philippine railway system that covers the northern part of Luzon. China has in fact immediately released to the cash-strapped Philippine government a loan of $503 million for the project’s first phase.

The project

The Northrail’s first phase will run from Caloocan City to Malolos City, the capital of Bulacan province, while the second phase will extend the line from Caloocan to the Fort Bonifacio Global city in the Taguig, Rizal.  The third phase will run from Malolos to the Clark Special Economic Zone while the fourth phase extends the line all the way to San Fernando, La Union in northern Philippines. 

In an interview with Bulatlat last week, Jose Cortez Jr., Northrail president, confirmed that the railway will eventually be used to transport cargos, not just commuters.

The Chinese government has agreed to undertake a feasibility study on the first phase, as stipulated in a Supplemental Memorandum of Understanding signed by Cortez for the Philippines and Ren Hongbin, chairman of the China National Machinery and Equipment Corp. or CNMEG, a state-owned corporation of the People’s Republic of China.

Cortez confirmed that the Chinese government has also agreed to fund the three other phases.

The fund from China will be paid in 20 years with a three percent interest. Cortez said payment will be generated from revenues from the passenger fares. He said the National Economic Development Authority (NEDA) has already approved the minimum fare charge of P10 with an additional P1 per kilometer. A passenger shall thus pay a total of P42 for a full distance ride for the first phase.  The fare of passenger jeepneys and FX is cheaper at P36 and P 40, respectively. 

Cortez clarified however, that China is only funding the rehabilitation of the railways but is not sure if it will continue to maintain and operate the transport system once it is finished. 

He said that if rehabilitation starts this year, the project should end in the last quarter of 2006.

China as main beneficiary

The transportation system, like the railway, is another significant investment of the Chinese government in its trade relations with the Philippines. 

Anakpawis (Toiling Masses) Representative and former labor leader Crispin Beltran, in an interview with Bulatlat, said the rehabilitation of the rail tracks is the Chinese government’s key to a swift and more convenient transportation of Chinese products in the Philippines. 

According to Beltran, China is now one of the world’s biggest monopoly-capitalists and it is eyeing the Philippines as a market for its surplus goods. He said it is important that it has control over the transportation system in the country through finance and operation of the project.

“The railway is one good investment for the Chinese,” he said. 

Cortez agreed. Asked if the Chinese government intends to use the railway system to transport its products within the country, Cortez said, “In the future, yes.”  

But he also said that the maintenance and operation of the railway system will be contracted to a local or foreign private company, chosen through the bidding system.

Beltran, however, assailed the government’s plan to privatize the railway system.  “It’s a basic service that should be provided by the government,” he said. 

Although the party-list congressman agrees to get loans for the railway’s rehabilitation, he said the maintenance and operations should be government’s responsibility once it starts operation. He believes the private company that shall operate the transit system will definitely turn the transport service into a profitable business.

There is no assurance that passenger fare will be as low as other land transport system, he added.

But, he insisted, “The commuters’ convenience is just incidental. The rehabilitation of the railway transit is purposely for greater profit of the private sector and foreign investors,” Beltran said. (To be concluded next issue) Bulatlat

Photos by Dabet Castañeda

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