Wanted: Leni’s depth

BY SASS ROGANDO SASOT ON OCTOBER 26, 2017

SHE did it again — talking without saying anything substantial.

Vice President Leni Robredo raised worries about the Bicol Express railway system, one of the major infrastructure projects of the Duterte administration. The Bicol Express is part of the North-South Railway Project (NSRP)-South Line, which was been unbundled into two in July 2017.

Connecting Tutuban, Manila and Los Baños, Laguna, the first part of the NSRP-South Line will be financed by Japan; while the second part, which connects Calamba, Laguna and Matnog, Sorsogon, will be funded by China. The project has been unbundled in order to accommodate financing from both the Japanese and Chinese governments (“Manila-Bicol railway split for China, Japan financing, says Neda chief,” Inquirer, July 17, 2017).

Robredo’s fear: We might suffer the same fate as Sri Lanka, whose Chinese-funded infrastructure projects led it to a debt trap.

At first blush, this warning sounds fair. But it’s really just one of Robredo’s countless motherhood statements — all shine but lacking in substance. How exactly are we going to end up like Sri Lanka? Will taking a loan from China inevitably doom us into a debt trap?

Answering those questions would require Robredo to actually study what happened in Sri Lanka. If she did, she would have offered a more sophisticated comment commensurate with the dignity of her government position.

Sri Lanka’s debt trap was caused by large-scale infrastructure projects of the administration of President Mahinda Rajapaksa. Some of these are the Hambantota port and the Mattala Rajapaksa International Airport (MRIA). Both were largely funded by loans from China.

These projects aimed to make Hambantota, Rajapaksa’s home region, become the second Colombo. As Wade Shepard wrote in Forbes magazine (May 28, 2016), “the idea was that Hambantota would be transformed into Sri Lanka’s second most prestigious city. It would become a place built on international trade and commerce, that would be full of joint ventures, [foreign direct investment], and everything a modern city could desire.”

Yet both projects failed to generate economic returns.

Since it operated in March 2013, with a handful of flights every week, MRIA didn’t generate “enough revenue to pay back the $190 million of loans that were provided by the Exim Bank of China to build it” (Forbes, “For sale: The world’s emptiest international airport,” July 18, 2016). Consequently, it hemorrhaged the Sri Lankan government.

The Hambantota port also suffered the same fate. As BBC reported on May 26, 2017, “Hambantota has struggled to make money, partly because it is fairly isolated. With no industrial hub nearby, there are no natural customers on its doorstep.” Like MRIA, the Hambantota port became a liability to Sri Lanka.

To unload these burdens, the Sri Lankan government would now be leasing the Hambantota port to a Chinese company for 99 years, while an Indian company is set to lease MRIA (livemint, “Sri Lanka’s opposition warns against proposed airport deal with India,” October 9, 2017).

Based on this information, what led to the Sri Lankan debt trap? Is it the mere act of financing these projects with Chinese loans? Or is it the failure of these projects to generate revenues? If sinophobia doesn’t frame one’s analysis, one can easily see that Sri Lanka fell into a debt trap because the infrastructure their debt built were useless. They failed to become catalysts for economic growth in the Hambantota region.

So, Madam Vice President, how exactly are we going to end up like Sri Lanka? Do you fear that the Bicol Express railway system would become as useless as MRIA and the Hambantota port? Are you not convinced that the project would generate sustainable revenues that could help in repaying the debt that built it? Can you tell us how the Bicol Express financed by Chinese loans would fail to aid the economic development of your region?

Without persuasive answers to these questions, Madam Vice President, your crude use of the Sri Lankan analogy is nothing but fear mongering.

http://www.manilatimes.net/wanted-lenis-depth/358699/