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Transportation

Chinese contractor to build subway for 'Manila's Wall Street'

$1.2bn deal comes as Philippines says it needs Bejing's cash despite US pressure

The Makati business district of Manila is slated to have a subway up and running in 2025.    © Getty Images

MANILA -- A Chinese contractor has clinched a $1.2 billion deal to build a subway for Manila's premier business district, marking the latest inroad by a Chinese company into the Philippines, which recently stressed that investments from its maritime rival are welcome.

China Construction Second Engineering Bureau will start building the 8-km Makati City Subway "when travel restrictions are lifted," Antonio Tiu, CEO of Philippine Infradev Holdings, the local company spearheading the project, told the Nikkei Asian Review. The underground railway is targeted to be completed by 2025, he added.

The contract, which covers the civil, mechanical, electrical and plumbing works for the project, was sealed this week during the 2020 International Fair for Trade in Services, The Belt and Road and Overseas Projects in Beijing, Philippine Infradev told the local stock exchange.

China Construction Second Engineering Bureau is a sole unit of China State Construction Engineering, the world's largest construction company, which was blacklisted by the World Bank in 2009 over alleged corruption in a Philippine road project. The company had insisted it followed local laws and opposes corrupt practices in doing business.

Tiu told Nikkei that several state-owned enterprises gave notice of their intent to participate as a contractor in the Makati project, but "China Construction Second Engineering gave the best terms for the contract." 

Tiu said the subway will have an initial length of 8 km and eight stations, but can be expanded. It will run around the city, which is home to the Makati business district, considered Manila's version of the Wall Street. It will be able to accommodate up to 700,000 passengers daily in a city that has a daytime population of around 4 million, according to earlier reports.

The project, which is a joint venture with the Makati city local government, will be partly financed by Chinese investors.

The deal comes as President Rodrigo Duterte's administration recently stressed that the Philippines needs infrastructure investment from China after the U.S. blacklisted Chinese companies for their role in Beijing's reclamation in the disputed South China Sea. Beijing claims nearly the entire vital waterway, including areas that Philippines considers as part of its territory.

State-owned China Communications Construction Co., one of the companies sanctioned by Washington, is involved in a $10 billion airport project south of Manila. That project will proceed, according presidential spokesperson Harry Roque, who emphasized last week that the Philippines is an independent nation and "not a vassal state of any foreign power."

The Philippines plunged into recession last quarter due to the pandemic and is banking on its $180 billion "Build, Build, Build" infrastructure program to bounce back.

The national government is also building 35-km subway with 15 stations for Metro Manila. Preparatory work for the 357 billion peso ($7.35 billion) project, which is being bankrolled by Japan, started last year and is eyed for completion by 2025.

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