【By Observer News, Wang Yi】Amid the Philippines' deepening corruption scandal and questioning of its investment environment, South Korean President Yoon Suk-yeol suddenly halted a 70 billion won (approximately 3.584 billion yuan) infrastructure loan to the Philippines, citing concerns over corruption. To prevent this move from affecting the Philippines' appeal to foreign investors, the Philippine side quickly denied having reached such an agreement with South Korea.
Hong Kong's South China Morning Post on September 12 cited analysts as saying that although the Philippines has strongly denied it, the actions of major international partners pulling out investments due to concerns about project corruption during the country's recent public trust crisis over a flood control engineering corruption scandal could prompt other foreign donors and investors to intensify their scrutiny and reassessment of funding management in projects in the Philippines.
On the 9th, Yoon Suk-yeol stated on social media that he had ordered an immediate halt to the 70 billion won loan support for the Philippine bridge project, as the project "was considered defective and prone to corruption."
However, he added, "luckily, the project had not yet started," and the relevant funds had not been disbursed, including those from a South Korean fund established for economic cooperation with developing countries.
In his post announcing this news, Yoon Suk-yeol quoted a report from the Korean newspaper Hankyoreh. According to the report, the involved project was originally proposed by the Philippine Department of Agriculture Reform, which planned to build more than 350 steel modular bridges across various regions of the Philippines. The country had submitted a loan application to the South Korean government in November 2023.
The report said that the South Korean Ministry of Planning and Budget had previously rejected the loan application due to concerns about potential bankruptcy and corruption in the project. However, the floor leader of the People Power Party, Kwon Seong-dong, intervened to push forward the project. In exchange, he obtained nickel mining rights from the Philippine government.
Because of the above report from Hankyoreh, Yoon Suk-yeol decided to stop providing loans to the project. He stated that this decision prevented the waste of 70 billion won in taxpayers' hard-earned money, preemptively prevented potential mismanagement and corruption risks, and expressed "deep gratitude" to the Korean media that disclosed the matter.
The South Korean Ministry of Planning and Budget subsequently confirmed that it had decided not to support the Philippine project.
However, the Philippine Department of Finance issued a statement denying the existence of the so-called South Korean loan. The department stated that the bridge project was currently under discussion with France, and negotiations had entered the final stages of technical and financial terms.
Philippine Land Reform Minister Conrad Estrella III also quickly clarified through the Philippine Star, stating, "There is no such loan... we have not contacted them, there is no loan agreement at all," and the Philippines only had exploratory talks with South Korea, but due to differences between both sides on the scope and technical details of the project, no loan agreement was signed.
The Philippine Department of Finance also emphasized in its statement, "The Philippine government will meet the trust and confidence of its partners with complete transparency and responsibility."
The Philippine government's statement aimed to alleviate concerns of other foreign investors who might be worried about South Korea's move. The South China Morning Post pointed out that during President Marcos's visit to the United States in July, he successfully secured a $21 billion investment commitment and $78 million in development funds related to the "Luzon Economic Corridor." In April, the Philippines also sent a delegation to South Korea, hoping to attract more investments. However, now, the South Korean president personally halted the loan, clearly contradicting the expectations of the Marcos government.
The report noted that at the time of South Korea's decision, the Philippines was conducting a large-scale investigation into the corruption in the flood control project. In July, several areas in Manila and surrounding regions were flooded by heavy rains, prompting Marcos to order a thorough investigation into the flood control project. The investigation found that since 2022, the Philippines had allocated 545 billion pesos for flood control, but some projects were fictitious and of poor quality, with 100 billion pesos of the projects being awarded to only 15 contractors, while the remaining budget was distributed among 2,394 others.
In July, floods in the Philippines revealed corruption in flood control projects. Visual China
The Japan Times Asia Review on the 11th pointed out that the Philippines has long suffered from corruption, ranking among the most corrupt countries in Southeast Asia, second only to Cambodia and Myanmar. According to the 2024 Corruption Perceptions Index released by the international anti-corruption watchdog Transparency International, the Philippines ranked 114th out of 180 surveyed countries.
Ruben Carlo Asuncion, chief economist of the Philippines' United Bank, analyzed that corruption, inadequate infrastructure, and regulatory bottlenecks have long been major obstacles hindering the country's competitiveness, with foreign direct investment inflows into the Philippines declining by 23.8% in the first half of 2025.
Asuncion believes that although multiple factors affect trends in foreign direct investment, governance issues can amplify risk premiums, possibly delaying project approvals and prompting capital to shift to lower-risk markets. He added that although Yoon Suk-yeol's statement is unlikely to trigger a "domino effect" in the short term, this incident "increases reputational risks and may lead other investors to conduct stricter due diligence or delay commitments regarding investments in the Philippines."
Anthony Lawrence Borja, associate professor at De La Salle University in the Philippines, even bluntly stated that if the corruption scandal remains unresolved, "investors who are averse to high transaction costs will turn away from the Philippines. Ultimately, those who remain may be those who are willing, or even have sufficiently questionable backgrounds to pay the transaction costs generated by corruption, thus exacerbating the problem."
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