Tue | Oct 23, 2018

Editorial | The infrastructure revolution

Published:Saturday | October 13, 2018 | 12:10 AM

The focus on public-private partnerships (PPPs), as articulated by Prime Minister Andrew Holness, has taken another step in the ongoing efforts to bridge Jamaica's infrastructure gap.

Infrastructure deficit, being the difference between what a country has and what it really needs, has been hampering Jamaica's growth for many decades. Successive governments have long acknowledged that infrastructure development is necessary to move the country forward and achieve sustainable prosperity.

However, decades of underinvestment in the road network, for example, means that there is now a breathless scramble to catch up, as multiple projects are being undertaken all at once to the discomfort and sometimes inconvenience of the commuting public.

But the demands for new and improved infrastructure could not easily be satisfied by a government straddled by huge debt commitments. Besides, the traditional sources of borrowing, taxes and aid were never going to be enough to address the scale of investment required.

Moreover, the local private sector has tended to shy away from large infrastructure projects, maybe because of their demand for upfront construction financing, or the fact that they are long-term in nature and are vulnerable to policy changes and environmental impact.

 

CHINA FILLS GAP

 

New platforms of investment were, therefore, needed to fill the gap. Resource-rich countries like China have responded with a virtual infrastructure revolution in the developing world. In 2017 alone, China offered a US$60-billion loan and aid package to Africa, which includes creating new trade routes, as well as reviving old ones throughout the Middle East and Asia. Despite criticisms that it is engaging in debt-trap diplomacy, China barrels on with investment in more than 30 African nations.

Here in Jamaica, we have witnessed a swirl of frenetic road-building and construction projects being executed by the Chinese, who pride themselves on being very competitive.

But as the Government taps into PPPs for resources to meet its development goals, criticisms of poor labour practices and lack of environmental safeguards against the Chinese have been conveniently ignored.

This week, too, the Government celebrated another PPP project relating to the divestment of the Norman Manley International Airport to a Mexican entity that will undertake a US$100-million modernisation of the island's oldest airport. Under a 25-year concession agreement, the Mexicans will make improvements, thus enhancing aviation and tourism.

It is no secret that negotiations for the divestment of the Norman Manley International Airport have been taking place over many years. We understand that the complex bidding process takes time and that the legal and administrative elements have to be properly covered, but we wonder whether the Government did enough to lift red tape in order to expedite that project. To facilitate these huge infrastructure projects, transparency and speed are of paramount importance.

Successful implementation of other PPPs such as the divestment of the Port of Kingston and the construction of the North-South Highway are indicators of the seriousness of this Government in closing the infrastructure gap. Bringing these projects to a successful conclusion will provide economic benefits and be a boost to investor confidence, and will hopefully spur other development across land, air and seas.

Lessons learnt from PPP agreements should be heeded going forward. For example: How to balance the interest of investors against the consumers' interest? Is the project economical? Is it necessary?

Let's take the North-South Highway as an example. The high toll charged to use the highway has been a source of discontent among the travelling public. Even with an independent regulatory authority, there is concern that the steep increases are unwarranted.

It is instructive that Sierra Leone has recently cancelled a US$300-million Chinese contract to build a new airport. The aviation ministry reportedly said it was "uneconomical to proceed with the construction of a new airport when the existing one is grossly underutilised".

At the end of the day, infrastructure development undertaken by Government will remain for the people's benefit. These infrastructure projects have to be relevant, necessary and well-thought-out in order for the country to enjoy the long-term benefits.