[OPINION] White elephant watch: Infrastructure politics
May 18, 2017 at 17:30
White elephant watch: Infrastructure politics
Thinking Beyond Politics by Victor C. Manhit | Posted on May 17, 2017
The One Belt One Road Summit in Beijing has provided us with another occasion to look at the pay-off in the president’s friendly approach to our relations with China. His approach emphasizes the importance of taking a quieter stance on our sovereign rights as the key to gaining greater benefits overall. These benefits may come in the South China Sea issue itself, or in the form of better economic outcomes. The infrastructure-driven Belt and Road Summit, which dovetails with the administration’s infrastructure plans, points more strongly to the latter possibility. If so, however, the Philippines must be especially diligent in ensuring returns to its investment.
POSSIBLE WIN-WIN
The summit was an interesting display of China’s desire to improve the physical links between itself and its surrounding regions. In principle, the Belt and Road Initiative can help China export its construction services to countries needing infrastructure. It’s a good situation for China: the country’s trade will benefit from the better connections, its corporations (many of which are state-owned) will get construction contracts and, ultimately, participating countries will foot the bill. China advances the cash, limited only by its faith that borrowers will pay back the loans.
If the OBOR participating countries play it right, they should also see benefits. Cash-strapped countries needing to upgrade their infrastructure can borrow money to finance the roads, rails, and ports that could boost their economic edge. If the projects aren’t viable or if implementation is poor, then their taxpayers get stuck paying for crumbling bridges or ports with no boats. On the flip side, if crucial projects get implemented, then the returns to participating economies could outweigh the cost of the loans. Yet, while the principles can be simplified, there’s no understating how proper implementation can be a gargantuan task.
QUIET SUMMIT
Despite the amount of press that went into the summit, nothing too novel has emerged since the president returned from Beijing. Although he witnessed the signing of a P3.6-billion ($7-million) grant for two bridges in Metro Manila, there seems to be no new movements on the big-ticket projects that the two countries began working on this year. In context, the $7 million is small in comparison to the $9 billion in loans pledged by China to President Duterte in Beijing last year. At this stage, we’re waiting to see how much of the billions will be used and if these projects can be completed without scandal or taint of corruption.
GEOPOLITICS AND GEO-ECONOMICS
Before thinking too narrowly about the Philippines, we should look across ASEAN to get a sense of some of the projects that have been completed in recent years or are already underway. While our government weighs its options, rivalry continues to brew between two heavyweights. Beijing and Tokyo have engaged in stiff competition to win contracts for the financing and construction of mega-infrastructure projects in the region.
Inside ASEAN, much like throughout the OBOR participating countries, these initiatives are aimed at boosting connectivity. For China and Japan, these efforts also allow them to promote their construction businesses overseas. In many cases, the cost of some standalone projects already approach or even exceed the total $9-billion package offered to the Philippines.
China seems to have gained the upper hand in Laos and Malaysia. In Laos, for example, China is building a China — Laos high-speed rail ($5 billion), expanding the Vientiane airport, and working on urban transport and logistics projects. In Malaysia, China is set to spearhead the Melaka Gateway ($7.3 billion) and the East Coast rail line ($12.74 billion).
In Cambodia, China has the contracts for the construction of two bridges (Koh Thom and Stung Treng Mekong River) and a national road. In Thailand, China will construct another Thai — Lao Mekong Friendship Bridge; Japan will work on the Bangkok — Chiang Mai high-speed rail ($13 billion). In Myanmar, China has twelve projects, including a Myanmar-China gas pipeline and a Myanmar-China oil pipeline, which opened in April this year after reportedly seeing years of delays. In addition to these two, the projects also include six bridges, a couple of roads, and a shipyard. Japan has a terminal project (Thilawa) and the Yangon-Mandalay railway upgrade.
In Indonesia, Chinese construction looks set for two dams and two reservoirs, three toll roads and a tunnel. Unfortunately, long-held plans for a Chinese-financed high-speed rail ($5 billion) have been repeatedly delayed for reasons that should be familiar to Filipinos: getting land along the route. Japan is in charge of the Jakarta Mass Rapid Transit project, Jabodetabek railway project, and two other roadways. Finally, Japan has bagged many big-ticket items in Vietnam: two ports (Lach Huyen and Cai Mep), three bridges (Nhat Tan, Can Tho, and Red River), and several other roadways.
WHAT’S IN STORE
The Philippines has an opportunity to make the most of the international financing available for it to work on its infrastructure. Our citizens are well-aware of our needs to improve connectivity within our archipelago. At the same time, foreign loans are not a silver bullet to our infrastructure problems, nor to our foreign policy puzzles. Moreover, given the complexities of infrastructure financing and construction, new loans from China should be appreciated in context of what both our countries want to achieve in that field alone — separate from other issues.
