The agreement was signed by Trade and Industry Secretary Peter B. Favila and his counterpart Chinese Minister of Commerce Bo Xilai and witnessed by President Arroyo at the opening of the first Philippine-China Economic Partnership Forum at the historic landmark Manila Hotel.

"The MoU calls for the establishment of a long-term framework that would define our economic partnership," Favila said as he quoted Bo Xilai’s statement, "We are turning all the green lights on."

Chinese embassy spokesman Niu Jitao said the memorandum of understanding is an initial step that would facilitate the discussions between the two countries on "a framework agreement that would be signed by the end of the year."

Favila said the Chinese government is considering a Philippine proposal for another loan from China for the construction of the R6.6-billion South Rail mass transit project.

Favila, however, said China would like to "rush" first the North Rail Project, to which it has allocated a $  900-million loan, before funding the South rail project.

"They are willing to look at another concessional loan for the South Rail, but we have to finish the North Rail Project first because they want to see that we could finish this project before we move on to the next," Favila said.

Mrs. Arroyo and Minister Bo held talks after the opening ceremonies for the economic partnership forum to discuss the areas where the two countries may immediately cooperate.

Favila said the Philippines and China have extensively discussed China’s possible investment in a mass housing program for informal settlers in Metro Manila.

"Minister Bo is considering the proposal. We need about four million housing facilities all over the country, but we think we may start with just one million within this year," Favila said.

National Economic Development Authority Director-General Romulo Neri said China is also looking at helping the Philippines in the area of agriculture and energy.

"They will also support us in agricultural and productivity enhancing measures, in terms of technology and investments. Of course, they are also looking at strengthened cooperation on energy," Neri said.

Neri said the two countries are expected to complete negotiations on several agreements by December when Chinese Premier Wen Jiabao is scheduled to visit the Philippines.

"It’s a basic framework in which China has agreed to invest in areas where we feel that they should invest in and in areas that are mutually beneficial," Neri said.

The proposed framework would include joint cooperation in various areas including agriculture and fishery, tourism, public works, infrastucture, energy and power, rehabilitation and investments in textile and garments industry, industrial estates, mining, and container inspection machine among others.

Based on the MoU, China agreed to make available financing arrangement to make the agreed areas of cooperation viable.

Both parties also agreed to sign the framework agreement for the economic partnership before the end of this year after completing all domestic legal documents.

"There are lots of areas of cooperation between our two countries and this visit is a very fruitful one," the Chinese Minister said.

In his speech, Bo Xilai projected bilateral trade volume to reach $  30 billion this year surpassing the $  23 billion target for the year. He also projected that two-way trade would reach $  50 billion level by 2010.

Federation of Filipino Chinese Chamber of Commerce and Industry president Francis Chua said the original financing package from the Chinese as presented by Speaker Jose de Venecia, who initiated the forum, was placed at $  32 billion.

But Chua said the initial commitment that is on the table is at an estimated $  5 billion.

Both sides, however, have agreed not to put the needed financing to the proposed projects in the MoU.

The financing package would be a 25-year concessional loan with an interest rate of 3 to 3.5 percent annually, but Chua said that if the Chinese view a project as extremely vital they can lower the rates to as low as 2 percent. The Chinese would even consider as grant a portion of a loan package for education.

Some of the new projects being approved in principle include the $  200 million South Rail project wherein the Chinese would fund the second phase from Calamba to Quezon and even up to Sorsogon.

The Chinese may also fund the construction of an elevated super highway from the North Luzon Expressway in Balintawak through Araneta to C3 connecting to the South Luzon Expressway and bypassing the already congested Epifanio delos Santos Ave. (EDSA). Chua said this project alone is estimated to cost P10 billion. The Chinese party has also identified the China Road and Bridge as contractor for the project.

Chua said the Chinese have already committed for an additional $  500 million financing for the extension of North Rail all the way to Dagupan. The proposed $  503 million North Rail project of which the China Eximbank is extending $  400 million loan is only up to Clark.

The Philippines is also urging the Chinese to invest in the tourism sector, including access roads, airports in the islands and 30 to 40 small hotels. Each local government unit is expected to make a proposal for possible financing.

GMA urges China to invest in mining and tourism in RP

By GENALYN D. KABILING

President Arroyo yesterday enticed the business community of China to invest in mining, tourism, infrastructure, and other lucrative business sectors in the Philippines.

The President offered a safe and competitive business climate, including less red tape in bureaucracy and a wealth of skilled Filipino workers, to enhance "mutually rewarding" trade and investments between the Philippines and China.

Addressing the delegates of the Philippines-China economic partnership forum at the historic landmark Manila Hotel, the President made a strong pitch for possible investment areas that complement the needs of Chinese businessmen with the resources of the Philippines.

"We want you to go everywhere, but we have some special invitations for some special areas. We have a number of priorities where we feel we could have a mutually beneficial relationship," she said.

The President urged the Chinese investors to venture into the country’s profitable mining industry, which was recently opened to foreign ownership. "We have a reserve worth a trillion dollars. We are among the largest in reserves in gold, copper and nickel," she said.

She also encouraged Chinese businessmen to invest in tourism facilities and projects that provide access such as roads and airports. "China is our fastest growing market. The tourists from China last year were more than three times as many as the tourists who came the year before," she added.

Chinese investors could also place their money on infrastructure development "where we want to build roads, railroads, roll-on and roll-off ferries to make travel much faster in this second largest archipelago in the world," Mrs. Arroyo said.

Mrs. Arroyo also urged them to embark on agribusiness, noting the government intends to develop two million hectares of idle lands in the next five years.

Another "very productive and very profitable" investment areas are the skill-intensive sectors such as electronics, energy, shipbuilding and shipping, health and wellness, and jewelry, the President said.

In attracting the investors, Mrs. Arroyo assured that the Philippine government would continue to ensure business-friendly policies, particularly simplified state regulations for investors.

She said the government has invested on the training of skilled Filipino workers as well as on the construction of modern infrastructure for fast travel of people and goods to key economic hubs in the country.

"Friends from the People’s Republic of China, with your participation in these Philippine investment areas and other investments where you may wish to do businesses supported by the skilled Filipino workers, I’m very sure we should be able to drive up an even more mutually rewarding relationship between our two nations in this golden age of friendship between China and the Philippines," she added.

De Venecia proposes houses, classrooms as China investments

Speaker Jose de Venecia yesterday proposed that China establish factories to build one million houses and address simultaneously the Philippines’ perennial classroom shortage by building 100,000 new schoolhouses nationwide "so that development can reach the great masses of our people."

At the same time, de Venecia sought to increase China’s tourist arrivals, expand its participation in the railways modernization program, boost farm production of Chinese-bred hybrid rice and corn varieties, and create a large Chinese industrial park in Clark to house its manufacturing plants and small and medium companies.

Trade and Industry Secretary Peter Favila and NEDA Secretary-General Romulo Neri described the immediate Chinese response to de Venecia’s proposal as "extremely positive and enthusiastic."

But De Venecia said the Beijing government has proposed a joint committee of its Ministry of Commerce and the Philippine Department of Trade and Industry and NEDA to "review each project as to its actual timetable, cost, return on investments, and benefits to the peoples of both countries."

De Venecia spoke at the opening of the first-ever Philippines-China Economic Partnership Forum at the historic landmark Manila Hotel, where some 400 Filipino business and government leaders joined a huge Chinese delegation that included high-level commercial and business missions.

The Forum seeks to transform Chinese-Philippine economic cooperation into partnership for which de Venecia earned plaudits from Minister of Commerce Bo Xilai, head of the Chinese delegation, for promoting "a great vision and a practical and pragmatic partnership" between the two countries.

In inviting Chinese investments in the housing sector, where the country’s housing backlog has reached 4.5 million, de Venecia stressed that China explore main areas of "cooperation and partnership" in which the two countries could draw up 5-10- year programs.

"An economy such as ours should be clever, flexible, and nimble if it is to prevail in today’s world. We have a favorable balance with China, but China should perhaps buy more and invest more in the Philippines," de Venecia said.

Two-way trade between the Philippines and China has been growing by an average of 30 percent every year, and the Philippines enjoys a surplus of $  8.1 billion. The Philippines has recorded the fastest-growing trade with China among all Asean states, de Venecia said, and trade is projected this year to reach $  23 billion, close to the magnitude of Philippine trade with the United States and Japan.

De Venecia unveiled four other proposals, including creating a large Chinese industrial park to house its manufacturing plants and small and medium companies in Clark, and a smaller one in Port Irene in Cagayan Valley, which is closest geographically to China.

De Venecia also called for expanded Chinese involvement in the Philippine railways modernization program "beyond the mountains of Sorsogon and to the Ilocos." China has extended concessional financing for the building of Phase I of the Northrail project, and is looking at a greater participation in the Southrail that would extend all the way to the Bicol peninsula from which the provinces of Rizal, Laguna, Quezon, Camarines Sur, Albay and Sorsogon stand to benefit tremendously.

The Speaker said the Southrail expansion and modernization has been the request of more than 70 congressmen, governors, municipal mayors and local officials in Southern Tagalog and the Bicol peninsula.

De Venecia also called for the building of regional hotels in 20-30 of the most promising island-provinces to spur tourism growth and especially Chinese tourist arrivals, which reached 100,000 last year but is "only a fraction" of Chinese travelers to Malaysia, Thailand and Singapore.

The Speaker also proposed a further expansion of farms planted to hybrid Chinese rice and corn by at least 500,000 hectares for each crop because Chinese-bred hybrid varieties have already produced "record rice and corn yields" in many parts of the Philippines.

"Cooperation with China is particularly attractive for our efforts to modernize agriculture, which is our basic strategy for eradicating rural poverty," de Venecia told the Forum.