Duterte Banks on China Ties to Repair War-Torn Philippine City

(Bloomberg) -- China will have a chance to showcase warmer ties with the Philippines if it wins a contract to rebuild a city ravaged by Islamic State-inspired terrorists last year, a cabinet member said.

The contract for rebuilding Marawi, the country’s only Muslim-majority city, is expected to be finalized by the end of May, as the two nations seek to improve relations strained by a territorial dispute in the South China Sea.

President Rodrigo Duterte’s government initially chose a group led by China State Construction Engineering Corp. to help in the 72 billion-peso ($1.4 billion) effort to rehabilitate the city. Among the five groups that submitted unsolicited bids, four are Chinese and one is Malaysian.

“It will be a status symbol for China if they get this project,” Housing Secretary Eduardo del Rosario said in an interview in his office in Makati City, citing the warming relations between the two countries. “They would like to showcase to the Philippines that they are here to help.”

The Philippines has shifted toward China under Duterte, and officials from both countries have been discussing boosting trade and investment while setting aside territorial disagreements. Duterte, who is in Hainan province for the Boao forum for Asia this week, is scheduled to meet with Chinese President Xi Jinping.

‘No Strings’

The world’s biggest construction and engineering firm, CSCEC offered to rebuild roads, schools, public buildings and utilities in the most damaged part of the city for 17 billion pesos.

Repayment for 40 percent of the cost is interest-free for one year, and 80 percent of the workers would be hired locally. China is also giving the Philippines a 1-billion-peso grant to rebuild structures and help provide a livelihood to Marawi residents.

Should the company come to a final agreement with the government, there’s a target start date of June, with the aim of completing the project before Duterte’s term ends in 2022.

Brushing aside concerns about the impact China’s offer might have on the nations’ competing claims on South China Sea, Del Rosario, 61, a retired army general, said the Philippines’ relationship with China was "even better" than with the U.S. “They don’t set conditions," he said. "A true friend is willing to help you without strings attached.”

To contact the reporters on this story: Ditas Lopez in Manila at dlopez55@bloomberg.net, Andreo Calonzo in Manila at acalonzo1@bloomberg.net.

To contact the editors responsible for this story: Ruth Pollard at rpollard2@bloomberg.net, Linus Chua at lchua@bloomberg.net, Jason Koutsoukis

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