On a roll with Japan as Duterte ‘re-calibrates’ foreign policy

How has the Philippine government's controversial rebalancing act in the international stage affected its relations with the ASEAN? An essay from the finance department looks at the positive effects on the country's ties with what's been held as the world's largest creditor-nation: Japan.

Bilateral relations between the Philippines and Japan, particularly in the field of economic cooperation, have emerged stronger amid increased efforts by the Duterte administration  in 2017 to rebalance its foreign policy  towards Asia. 

The Department of Finance said that aid, concessional financing, and investment pledges made by Japan after its Prime Minister, Shinzo Abe met with President Duterte in 2016 have progressed into agreements, several of them to help fund the government’s “Build, Build, Build” infrastructure modernization program and beef up the Philippines’ maritime capabilities.  

Finance Secretary Carlos Dominguez III had coined another term for the President’s pivot toward Asia, describing it as a “recalibration” of the Philippines’ foreign policy, which, he said, “opens up a lot of opportunities for us.” 

“I would not say the foreign policy is changing, I think it’s just being recalibrated so that were are more open to other markets,” Dominguez said at a Senate hearing in 2016. 

The President's foreign policy rebalancing has, as Dominguez had said then, led to numerous opportunities for the Philippines in 2017, not only in terms of concessional financing, grants and aid from Japan for the the Duterte administration’s priority programs, but also in terms of business deals. 

When President Duterte returned to Japan  in October 2017,  a year after his official visit to that country in 2016, he witnessed the signing of 18 letters of intent by  20 Japanese companies to invest in the Philippines, which represent about $6 billion worth of  new investments. 

These include deals between Philippine and Japanese firms in the areas of  manufacturing, shipbuilding, iron and steel, agribusiness, power, renewable energy, transportation, infrastructure, mineral processing, retailing, information and communication technology, and business process management.  

During President Duterte’s October 2017 visit, Japan Prime Minister Shinzo Abe  said he considered the Philippine leader as “family.”

“We have been like family in deepening our close ties over time and I am very pleased with such warm relationship,” Prime Minister Abe said in his remarks during a dinner he had hosted for President Duterte at that time. 

President Duterte, meanwhile, had described Japan as the Philippines’ “true friend.” 

A month later, after attending the 31st ASEAN Summit and its Related Meetings in Manila hosted by President Duterte,  Prime Minister Abe stayed behind for an official visit  to personally witness the signing of several agreements with the Philippines, most notable of which was the Exchange of Notes for the JPY104.5 billion loan (about $929.1 million) to fund the first tranche of loan requirements for the construction of the Metro Manila Subway Project (Phase 1) of  the Department of Transportation (DOTr). 

Japan has committed a total of $1.26 billion in grants and soft loans to the Philippines in 2017. 

When he first traveled to the Philippines in January 2017, Prime Minister Abe became the first head of government to visit the country under the term of President Duterte 

Under Prime Minister Abe’s leadership, Japan has committed to provide some JPY1-trillion yen (about $8.8 billion) in Official Development Assistance (ODA) and investments to the Philippines during the term of President Duterte.

A Philippines-Japan High-Level Committee on Infrastructure and Economic Cooperation was formed in March 2017 to discuss in detail the Philippine infra projects qualified for possible Japanese financing, the first time such a forum was created between the two countries. 

Upon his return to the Philippines in November for the ASEAN Summit, Prime Minister Abe was ready to witness the signing between Tokyo and Manila of agreements worth a combined total of 132.33 billion yen or about $1.18 billion. 

Dominguez, on behalf of the Philippines, signed  a 15.93 billion yen (approx. $142 million) loan agreement with Japan International Cooperation Agency (JICA) Chief Representative to the Philippines Susumu Ito for a project that aims to control and mitigate flooding in several areas in Cavite that host economic zones and residential communities.  

The Cavite Industrial Area Flood Risk Management Project, which will be implemented by the Department of Public Works and Highways (DPWH), stands to benefit some 8,000 households as well as manufacturing plants in the cities of General Trias and Imus and the municipalities of Kawit, Noveleta and Rosario in Cavite.

Manila and Tokyo also signed the Exchange of Notes for the first tranche loan of  JPY104.5 billion loan (about $929.1 million) for the Metro Manila Subway Project (Phase 1) of  the Department of Transportation (DOTr); the JPY9.399 billion  loan (about $89 million) for the Arterial Road Bypass Project (Phase III) of DPWH in Plaridel, Bulacan;  and the JPY2.5  billion (about $22.2 million) grant for the Non-Project Grant Aid for the  Economic and Social Development Programme, which will benefit the Philippine Coast Guard’s anti-terrorism efforts  and DPWH’s quick rehabilitation program for Marawi City.

These agreements were signed by Foreign Affairs Secretary Alan Peter Cayetano and Japanese Ambassador Kojie Haneda.

Photo: Japan Prime Minister Shinzo Abe interacts with neighbors of President Duterte before entering the latter's residence at Doña Luisa Village in Davao City on January 13, 2017. Abe visited the President's residence as part of his two-day official visit to the Philippines. SIMEON CELI JR./Presidential Photo