ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter

Japan's overseas railway-building heightens rivalry with China

Crowded Philippine trains benefiting from Tokyo's cash and know-how

| Philippines

Congested highways filled with Jeepneys, buses and trucks are a common sight in the Philippines because Filipinos only have two, both unpalatable, choices when it comes to rail travel.

They can either take the overcrowded Philippine National Railway, with its limited services of scratched and faded diesel trains, or the relatively new but already packed elevated railway.

But Filipinos will enjoy quicker and smoother train rides in a better connected network if infrastructure projects being separately funded by Japan and China come to pass. The Japanese and Chinese have both commercial and geopolitical motives for their investments, but China -- for once -- stands to gain less than Japan.

The Philippines' railway dates from the colonial era, with trunk lines running north and south from Manila, which also has a tram network. Manila's first light rail transit line opened in 1984, with another in 2003 and a metro line in 1999, but the PNR's service has been radically cut back in the past 30 years. There are often disruptions on the southern line thanks to typhoon and earthquakes.

In addition, the PNR's rolling stock is aging fast and its freight service is minimal. Trains donated by Japan and diesel cars from South Korea and Indonesia do not really help. The expansion of Manila's rail network has fallen far behind the metropolitan area's growth.

In short, the Philippines' rail sector cannot match the rapidly rising demand for surface transport, leading to more road traffic and consequent congestion and pollution: since 2016, the annual growth of registered vehicles on highway has been more than 10%, according to government data.

The problem is Manila has neither the financial nor the technological capacity to improve its rail network, which is why it has looked for foreign investment.

Since the inauguration of President Rodrigo Duterte in 2016, a variety of rail projects have been proposed and many contracted to Tokyo and Beijing. The Japan International Cooperation Agency, or JICA, has helped to coordinate schemes including the repair/upgrade of Manila's third metro line, the extension of two lines of the capital's light railway and more.

At the same time, Chinese contractors will build the railway on Mindanao island, the Clark-Subic line north of Manila and the rebuilt southern main line.

Beijing is building longer tracks than Tokyo, but Tokyo's projects have broader benefits.

Although China's three rail projects are hundreds of kilometers long, they are either outside Manila or connect to the south of Luzon island, with less economic significance.

In contrast, the Japanese contracts are mainly in the Metro Manila area or connect the capital and major economic locations, such as Laguna and the new city development at Clark. In addition, the staff of the Philippine Railway Institute have begun their training in Japan.

There are several reasons for this Japan/China split. Several years back JICA conducted research for the Philippine government on various projects, giving Tokyo important intelligence and perhaps building a sense of trust with Manila.

Meanwhile, the poor bilateral relations between the Philippines and China before 2016 meant China did not have the opportunity to understand the Philippines' needs.

China's focus is elsewhere too, with the ongoing fever of the Belt and Road Initiative. Chinese rail experts are occupied with various projects in Central Asia, Indochina and Africa. The Philippines, a chain of islands, does not have the ability to connect with China's Asia-wide system of land transport.

The Philippines' practical approach to modernizing its rail sector reduces China's trump card, cheap high-speed railway, or HSR. Unlike Bangkok and Jakarta, where China is building HSR, Manila has not proposed any HSR project, and this may reflect financial constraints, uneven urban development and the nature of an island nation.

China does not have a definite upper hand over Japan when it comes to politics either. Despite Duterte's friendship with Beijing and soured relations with Western countries, Tokyo and Manila have retained cooperative ties across the latter's different administrations.

The Philippines is benefiting from easier loan terms from Japan and China than other countries in the region. Although the total cost of these rail projects, at less than 1.4 trillion Philippine pesos ($28 billion), is more than a third of the government's 2019 budget, much of their funding comes from soft loans, with low interest rates and long repayment terms. This is still a burden, however.

For Manila, the question underlying the sustainability of its repayments and the railways themselves is whether the country can sustain its economic growth and revenue from passengers and freight. As congestion suggests high demand for both passenger and freight services, rail alternatives with proper prices would work well.

At the moment, the Japanese rail projects are closer to the Philippines' economic center of gravity, and they are progressing considerably faster than the Chinese ones too. Unless Beijing makes up with attention and resources, its influence on Manila's rail blueprint will fall behind Tokyo.

But China, wealthy and able to build infrastructure on several fronts at once, may look beyond the Philippines' rail sector, at other capital projects or even at its trading relationship, to ensure its influence does not wane.

Wu Shang-Su is a research fellow of the Regional Security Architecture Programme at the S. Rajaratnam School of International Studies, Nanyang Technological University in Singapore.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more