Building resilience into projects
China has stunned the world with its infrastructure development. The tallest buildings, longest bridges and subways, fastest trains and highways that appear to hang in the sky have all drawn admiration and envy from around the world.
The gigantic effort to create the most expansive urban infrastructure of our times has also had its dark side, with critics likening the build- up to a sarcophagus of steel and concrete for entombing its newly- found wealth. A series of accidents and crashes have further put a question mark on the quality of work and planning that has gone into these monuments of modern engineering.
An alarming new report on China’s infrastructure development shows that the massive infrastructure build- up has in turn led to the creation of mountains of debt for the local governments undertaking these projects, many of which are turning out to be incapable of yielding sufficient return on the investment. According to China’s National Audit Office report, indebted local governments owe nearly $ 3 trillion ( Dh11.02 trillion), prompting analysts to raise an alarm.
According to the report, this leaves China with total government debt of around 58 per cent of gross domestic product ( GDP) and raises the prospect of default, with its grim effect on banks that have financed these projects. Some of the local governments are already said to be using new loans to repay the debt and relying on heavy selling of land to pay off old loans. The crux of the problem is that money has been sunk into projects that do not pay off in the longer run.
The findings of the report are particularly relevant in the context of Dubai, which is set to embark on a sizeable infrastructure build- up ahead of Expo 2020, although the scales are smaller and the likely results different. Dubai may appear to have an issue on how best to utilise the infrastructure for the Expo beyond the six- month- long event, but past experience shows considerable success in integrating facilities created for specific purposes.
The biggest global event hosted in the UAE as yet was Dubai 2003, the annual meeting of IMF- World Bank Group. The development of the Dubai International Convention Centre as part of the World Trade Centre complex was primarily to host the prestigious event.
Infrastructure build- up
In terms of size or scope, a project like the Convention Centre can in no way be compared to the mass of infrastructure build- up that Dubai has since undertaken. But considering that it was in a different age and at a different phase of Dubai’s developmental scale, the project was highly futuristic and the funding had to factor in the revenue potential of a long period in future.
Today, the Convention Centre is just a small part of the complex as the facility encompasses a much bigger area and amenities and has seen several times more investment.
The infrastructure requirements of the Expo are obviously on a different scale; so are the investment requirements. But for an emirate which has all along followed the policy of building first before the need is actually felt, optimum utilisation of any additional infrastructure has never been a problem.
This is as true of the Jebel Ali Port as it is of the series of new free zones, new cities, or new airports that have been added. Perhaps the only occasion when a major infrastructure project seemed out of step with the developing situation was the launch of Dubai Metro at a wrong time as the timing of completion coincided with the peak of the financial crisis. Sceptics were in a hurry to write off the Gulf region’s fist urban metro network as a failure, associating it with problems similar to some of the Chinese projects now considered flops. But ultimately, the Metro prevailed as it scaled one milestone after another.
In less than five years, Dubai Metro has become the showpiece of public transport infrastructure, entering the Guinness World Records book as the longest driverless metro network in the world and a finest example of Dubai’s resilience.