Arroyo freezes US$2.45b projects funded by Beijing after ZTE scandal

Mainland-funded projects worth US$2.45 billion have been suspended by Philippine President Gloria Macapagal-Arroyo following a bribery scandal that scuttled a US$329 million telecommunications deal with ZTE Corp, the mainland's top listed telecommunications equipment maker.

In a statement yesterday, ZTE denied wrongdoing and re-affirmed that it would continue operating in the Philippines.

The three projects in the pipeline, to be financed by the mainland's official development assistance or ODA programme, were put on hold pending a review by a five-man special committee formed by Mrs Arroyo.

Mrs Arroyo stressed that 'even as we defer the said projects, this should not be construed as a precedent for every disgruntled project proponent and his backers to undermine undertakings that comply with the law and benefit the nation.'

Despite the mainland's eagerness to extend aid, Manila tapped only US$460 million worth of concessional loans from Beijing for the whole of 2006, or a mere 5 per cent of the total aid borrowed from other countries and foreign multilateral institutions that same year, according to the National Economic Development Authority.

The China Projects Oversight Panel would ensure 'transparency' in order to avoid the bruising controversy that hounded the approval of the ZTE contract, said Cerge Remonde, chief of the presidential management staff who sits on the panel.