Paying for infrastructure

Cebu’s infrastructure needs have become so glaring that any promise of relief is welcome. To the taxpayer who spends two to four hours on the road each day, the projects identified to ease traffic congestion can’t come soon enough. To business owners who have paid through the nose for delays in delivery of supplies or finished goods, word of a new and larger port sounds good.

The Department of Transportation (DOTr) recently announced it would implement a traffic and transportation program in Cebu with five components, including a Light Rail Transit from Carcar to Danao and from Mandaue to Mactan Airport, as well as two bus systems. Some leaders of the Cebuano community welcomed the announcement.

Last month, the Regional Development Council endorsed five priority projects identified in an urban transport master plan for Cebu by the Japan International Cooperation Agency (JICA). These include a fourth bridge between Cebu and Mactan Island and two Mass Rapid Transit lines.

Two challenges present themselves. First, the transportation and public works agencies will have to align their plans and gain buy-in from local officials whose cities and towns will need to prepare for the impact of these projects. Second, Government will have to secure financing for big-ticket projects.

In Tokyo three weeks ago, Finance Secretary Carlos Dominguez III invited managers who handle pension and sovereign wealth funds to invest in the 75 flagship projects the Duterte administration has promised to pursue in its infrastructure program. Of the 75, 35 projects are supposedly ready for execution.

In that same forum, the finance secretary explained that the Build, Build, Build program will be financed by a combination of China, Japan and Korea’s Official Development Assistance; investments from the Asian Development Bank and the Asian Infrastructure Investment Bank (AIIB); bond flotation; and public-private partnerships. Government will draw from tax reform’s gains to provide its counterpart.

Good for China: its efforts to lead infrastructure-building through the AIIB are already giving it a more powerful role in global trade. It also expands its influence in more territories that can absorb its excess capacity in raw materials, machinery, and construction expertise.

Our end of the bargain is more complicated. We need more infrastructure so badly that it seems obstructionist to ask how we’re going to pay for all these projects. And yet, ask we must. What measures are in place to limit the state’s exposure to amounts we can afford to pay back? What, if it comes down to it, are we willing to lose?