The Senate, tackling the 2017 budget of the Department of Foreign Affairs (DFA) in another marathon session on Wednesday night, approved an additional P1.86 billion in the DFA budget proposal as initial payment for the required $1-billion equity for the Philippines to join the China-led Asian Infrastructure Investment Bank (AIIB).
Sen. Francis G. Escudero, chairman of the Senate Committee on Banks and Financial Institutions, said the approved initial allocation setting aside funding for the required paid-in capital reaffirms the Philippine government’s commitment to join other founding members of the AIIB.
He noted that membership entry fee in the AIIB allows payment of $1-billion equity in installments, of which $200 million, representing 20 percent, could be “paid in tranches” over five years. The senator clarified that the Philippines is not required to make a “onetime payment” of the total capital allocation, as the Senate proceeded to approve initial payment of the AIIB entry fee to allow the country to start availing itself of development funding for various projects from the China-led counterpart of the World Bank.
According to Escudero, membership in AIIB allows the Philippines to tap additional sources of development funding to bankroll various public-works projects, apart from the Japan International Cooperation Agency (Jica) and the Korean Export-Import (Exim) Bank. The Senate’s concurrence with the payment of initial paid-in capital tucked in the budget bill reaffirms the government commitment to join AIIB.
“We can now borrow money from additional sources,” Escudero told the BusinessMirror. The senator suggested earlier that Congress should encourage the government to always be open to all levels of engagement with neighboring countries in the region, including China, “any political differences with any such neighboring country notwithstanding.”
Escudero added he does not see “any real disadvantage [in joining], compared to being part of an initiative that seeks to help develop the Asian and Asean region.”