Manila—Dr Tun Mahathir Mohamad, Malaysia’s Prime Minister, issued a warning to the Philippines concerning loans from China. Drawing from Malaysia’s experience of what he termed as “unfair” infrastructure initiatives backed by China.
Last year, after being re-elected in May, he canceled approximately S$30 billion worth of initiatives financed by China, awarded in the time of former Prime Minister Najib Razak, who Dr Mahathir unseated in the General Election.
Mr Razak is facing multiple counts of graft and corruption due to financial scandals.
The Malaysian Prime Minister is currently in Manila, the country’s capital, for a two-day visit. He told ANC Television in an interview that the Philippines should not make the same mistakes other nations have made in receiving infrastructure investments from China, countries that are now suffering due to debts that they cannot sustain.
Dr Mahathir said, “This is something that of course China has been accused of, but it is also the country’s concern which can regulate or limit all these influences from China.
If you borrow huge sums of money from China and you cannot pay—you know when a person is a borrower he is under the control of the lender. So we have to be very careful with that.”
Rodrigo Duterte, the Philippines’ strongman President, has expressed admiration for China, and indeed has given the world’s second-largest economy preferential treatment.
His “build, build, build” plan for the nation involves pouring billions of dollars into infrastructure for the Philippines, with many of the projects funded by China and other nations.
This has alarmed critics, who have issued warnings that the country could be ensured into “debt trap diplomacy.” China has recently had a track record of lending money to poorer nations for the purpose of infrastructure initiatives, and the countries end up giving up control of their own assets.
Mr Duterte and his policy staff have denied these allegations.
In 2018, Capital Economics, a think tank based in the United Kingdom, also warned that the account gap that the Philippines has is “already approaching unsustainable levels,” and that because of “corruption problems” connected to Chinese infrastructure, further investments from China could just make the issues that the Philippines is facing even worse.
According to Capital Economics, “The upshot is that while improvements to the country’s infrastructure are desperately needed, the pace of increase needs to be managed properly in order to avoid further balance of payments strains.”
Dr Mahathir was also asked about the flood of workers from China who have come to the Philippines, an issue that is under Senate investigation.
He said, ”Foreign direct investments should not involve bringing huge numbers of foreigners to live in the country because that might disturb the political equations in the country.
So long as they’re not going to be permanent residents, it’s not a danger to the Philippines, but if huge numbers of any of our foreigners are coming to live and stay in the country or even influence the economy of the country, then you have to do some rethinking as to whether it is good or bad or the limits that you have to impose on them.”
The Malaysian Prime Minister’s visit to the Philippines includes a forum with the business community, as well as meetings with both Senate President Vicente Sotto III, and former President and current Speaker of the House, Gloria Macapagal Arroyo.
He will also lay a wreath at the statue of the country’s national hero, Dr Jose Rizal, a custom that all visiting heads of state follow.
Dr Mahathir had two meetings with President Duterte. One of these will be strictly between the two heads of state, and then another where they are joined by ministers and Cabinet members.
The two leaders also released a joint statement.