Over the weekend, there were two contrasting developments on the economic front. First, it was announced by the Seoul-based daily newspaper Hankyoreh that South Korea would stop processing a loan totaling some 700 billion Korean won, intended for the PBBM Rural Modular Bridge Project unilaterally sought by the Philippine government. Second, the Philippine government initiated confidence-building measures to ensure continuity of Japanese foreign aid, the largest source of official development assistance (ODA) to the Philippines.

Figures compiled by the Department of Economic Development (DepDev, formerly NEDA) show that Japan is a significantly larger ODA provider than South Korea, extending tens of billions of dollars in assistance over the past five years, while South Korea's support was in the hundreds of millions, as of 2023. The Philippines’ Department of Finance (DOF) said that it has commenced discussions with the French government to fund the project, after it was “decided to halt previous discussions last year.”

The significance of ODA cannot be overemphasized. Major partners like Japan and South Korea provide significant assistance that propels economic development in terms of supplying infrastructure finance, enabling capital formation, as well as facilitating trade. Enhancing competitiveness, supporting human resource development, and augmenting pandemic response are vital areas of cooperation.

Parenthetically, the Philippines ordered from South Korea last June 12 FA-50 Block 70 light combat aircraft worth over $700 million to augment the existing squadron of similar aircraft procured during the administration of President Benigno S. Aquino III in 2017. Clearly, South Korea is emerging as a vital resource partner of the Philippines.

Notably, Seoul’s embassy in Manila issued a statement that the “suspension of the feasibility study on the project in question is unrelated to the Philippine government” and that the “decision was made solely to allow for the verification of matters that had been raised in Korean media reports.” Most importantly, it added: “Despite current circumstances, the Philippines remains one of Korea’s most valued partners, and Korea remains fully committed to advancing development cooperation partnerships between our two countries.”

On another front, the Philippines’ Department of Energy is actively wooing Japanese investors to participate in developing the renewable energy (RE) sector. Specifically, the DOE is targeting to attain a 35 percent RE share in its total energy mix by 2035 and to increase this further to 50 percent by 2040. This means securing investments in solar, wind and geothermal projects. Also taken up by the DOE with potential Japanese investors at a meeting with the Kansai Economic Federation (Kankeiren) are repurposing coal plants and expanding the electric vehicle (EV) fleet.

Anticipating presidential approval of the Philippine National Nuclear Energy Act that would establish the Philippine Atomic Regulatory Authority, the DOE is similarly eyeing partnerships with Japan which is one of the countries with the largest number of nuclear power generation facilities.

Indeed, the Philippines must seek to attain optimal benefits from tapping into ODA resources. These are dividends from the goodwill generated by Filipinos working overseas and contributing to the well-being and advancement of host countries. If there are doubts and uncertainties — such as those bring addressed by the South Korean government — these must be threshed out amicably and not be allowed to stand in the way of productive partnership between long-term allies.