South Korea pledges $1.9 billion in infrastructure loans to Philippines

South Korea has committed to providing $1.9 billion in low-interest loans to the Philippines, marking a major boost in economic cooperation as the two countries seek to elevate their relationship to a “strategic partnership.”

The announcement was made during South Korean President Yoon Suk Yeol’s historic visit to Manila on Monday, where he and Philippine President Ferdinand Marcos Jr. witnessed the signing of key infrastructure deals.

The loans, facilitated through South Korea’s Economic Development Cooperation Fund, will finance two major infrastructure projects. The first, a $905 million loan, will support the construction of a ring road around Metro Manila, aimed at alleviating traffic congestion in the capital. The second project involves more than $1 billion for a 13-kilometer bridge connecting two islands in the central Philippines, a crucial initiative for improving regional connectivity.

At the signing ceremony, President Marcos emphasized the significance of deepening ties between the two nations in light of the shifting geopolitical landscape. “The time has come to elevate the ties between the Philippines and the Republic of Korea to a strategic relationship… as the geopolitical environment is only becoming more complex,” Marcos said, underscoring the importance of collaboration in promoting a “rules-based order governed by international law.”

President Yoon, the first South Korean leader to visit the Philippines since 2011, echoed the sentiment of strengthened ties. He highlighted South Korea’s readiness to support the Philippines in nuclear energy development, referencing the Memorandum of Understanding (MOU) signed to conduct a feasibility study on reviving the Bataan Nuclear Power Plant. The facility, originally launched under the late Ferdinand Marcos Sr., was never operational. “We took note of the importance of nuclear power as a carbon-free energy source, and agreed to lay the foundation for nuclear energy cooperation,” Yoon stated in his joint remarks with Marcos.

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In addition to the infrastructure loans, Yoon’s visit saw the signing of agreements on maritime cooperation between the countries’ coast guards and further exploration of economic opportunities, including a focus on helping South Korean companies secure a foothold in the growing Southeast Asian infrastructure market. South Korea’s finance ministry pointed out that only South Korean builders will be eligible to bid for the funded projects, which could pave the way for further business ventures in the region.

“We expect the deals to play the role of stepping stones for Korean companies to enter overseas markets as they are expected to win orders in subsequent projects,” the ministry said in a news release, signaling broader ambitions for South Korea’s economic footprint in Southeast Asia.

President Yoon’s visit to the Philippines is part of a larger regional tour that includes stops in Singapore and Laos, where he will participate in discussions during the ASEAN summit. Notably accompanying Yoon is Samsung Electronics Chairman Lee Jae-yong, who visited a Samsung Electro-Mechanics facility in Calamba, south of Manila, on Sunday. Lee’s visit focused on the production of multilayer ceramic capacitors, essential components for semiconductors, underscoring the growing tech collaboration between the two nations.

This new wave of South Korean support not only cements the Philippines as a critical partner in Southeast Asia but also sets the stage for greater economic and energy cooperation in the future.