Comments on Emirza Adi Syailendra "The end of the line for Japanese influence in Indonesia", 13/10/2015
This is just one infrastructure project in Asia and it went China's way. Japan needs not to be too disappointed and there will be many projects in Asia that Japan can be a successful bidder, as the high speed rail project in India has showed.
China has as strong the adequate capacity to build safe high speed rails as Japan does. It is reported that the total length of high speed rails in China is as long as the total of all other countries, although I have not checked for its accuracy.
Any concerns of China's capacity to build safe high speed rail would amount speculation.
Showing posts with label infrastructure. Show all posts
Showing posts with label infrastructure. Show all posts
2015-12-13
2015-06-21
Infrastructure crisis and AIIB
Comments on Nicholas Morris and Irene Tsjin "How to solve Indonesia’s infrastructure crisis", 10/06/2016
This infrastructure crisis, as an example in possibly many developing countries, highlights the urgent need to improve the international lending institutions and facilities. In that context, the initiative for an international infrastructure bank, namely the Asia Infrastructure Investment Bank (AIIB), is both timely and constructive. China should be praised for its role in that endeavor.
This infrastructure crisis, as an example in possibly many developing countries, highlights the urgent need to improve the international lending institutions and facilities. In that context, the initiative for an international infrastructure bank, namely the Asia Infrastructure Investment Bank (AIIB), is both timely and constructive. China should be praised for its role in that endeavor.
2014-02-25
Effective decision making key to regional infrastructure investment
Comments on Mahendra
Siregar, BKPM, Andrew Elek, ANU, and Maria Monica Wihardja “Seizing the global
infrastructure opportunity in Indonesia”, 25/02/2014, http://www.eastasiaforum.org/2014/02/24/seizing-the-global-infrastructure-opportunity-in-indonesia/
If I were an Indonesian charged with managing the economy, I
would probably put more emphasis and focus on the most likely and feasible
options that are likely to be outside the G20 and possibly APEC exist multilateral
frameworks. Some commentators have commented that the G20 has become a
talkfest. And it seems indeed very difficult for the G20 to come to a common
position with strong commitment to the issues discussed in the article, given
the very different situations of the members' domestic economies and politics.
On the other hand, the AIIB initiative may be helpful to
regional infrastructure investment, given that China is the sponsor or
initiator and it has the money to invest overseas, as well as its links to the
regional economies and its desire to show leadership with its financial
resources outside of the IMF and world bank frameworks where it does not have
adequate weight of influence due to under-weighted voting power.
Certainly it would be much easier to make decisions among
the parties involved, given the needs for investing in regional infrastructure
and the financial resources available that is fairly concentrated in terms of
decision making, as compared to the IMF or the world bank where understandably
there are more disparities among the major stakeholders.
The authors’ discussion on that may bear more fruit to
advance infrastructure investment in Indonesia and indeed the East Asia region.
And that is likely to contribute to enhanced growth of the region.
In short, the desire for using
existing multilateral organisations to invest in infrastructure is one thing,
the reality of difficulties in getting agreement is likely to be another, not
too dissimilar to the world trade organisation negotiations and other bilateral
or regional free trade agreements negations.
2013-02-25
A more balanced approach to PPPs
Comments on Stephen King "As another toll road bites the dust, what is the future for PPPs?", 25/02/2013, https://theconversation.edu.au/as-another-toll-road-bites-the-dust-what-is-the-future-for-ppps-12386
The solution mentioned in the second last paragraph is a bit of too one sided in terms of risk bearing, because it would leave the future users and the government bear all the risks and the private partners virtually none.
A more balanced one is that a solution also make the private partners bear at least half of the risks and the government as the public partner bears half, similar to the Henry mining tax design, but differs to that design in a crucial and fundamental way, that is, the risk sharing is built in in the design before a project starts.
Unlike the Henry mining tax which would come into play in the middle after a lot of risky private investments have already been made and factored into the price of those mining venture as reflected in the share price.
Only in this way it would be a fair deal and the private partner will put likely maximum efforts into those PPP projects. Otherwise, moral hazard may arise, because, in most cases when government is involved and where the responsibilities are not clearly defined, the government (taxpayers) would end up if the projects go wrong, but the private partners will gain if the projects go upside.
As to the case that Australian governments can borrow at much lower rate, why don't they borrow and then quasi lend to the private partners to share the savings, say half and half, so that it does not change/affect the balance sheet of the government but the public partner (government, that is the taxpayers) can benefit from it?
The solution mentioned in the second last paragraph is a bit of too one sided in terms of risk bearing, because it would leave the future users and the government bear all the risks and the private partners virtually none.
A more balanced one is that a solution also make the private partners bear at least half of the risks and the government as the public partner bears half, similar to the Henry mining tax design, but differs to that design in a crucial and fundamental way, that is, the risk sharing is built in in the design before a project starts.
Unlike the Henry mining tax which would come into play in the middle after a lot of risky private investments have already been made and factored into the price of those mining venture as reflected in the share price.
Only in this way it would be a fair deal and the private partner will put likely maximum efforts into those PPP projects. Otherwise, moral hazard may arise, because, in most cases when government is involved and where the responsibilities are not clearly defined, the government (taxpayers) would end up if the projects go wrong, but the private partners will gain if the projects go upside.
As to the case that Australian governments can borrow at much lower rate, why don't they borrow and then quasi lend to the private partners to share the savings, say half and half, so that it does not change/affect the balance sheet of the government but the public partner (government, that is the taxpayers) can benefit from it?
2010-12-15
Debt, tax, wastes and infrastructure
Comments on Peter van Onselen “Unlike a household budget, the national economy goes on forever”, 15/12/2010, http://www.theaustralian.com.au/business/opinion/unlike-a-household-budget-the-national-economy-goes-on-forever/story-e6frg9if-1225971141902
Peter, what you said is obviously true. However, you ignored a few important points.
Firstly, the combination of wastes and increasing government debt is never to be a good look. Under such circumstances, arguing against increasing public debt is not a bad thing to do. That is because there is available fund to do the things you argued which can be done using public debt.
Secondly, the politics of governing and opposition is very different. The opposition's main job is to hold the government to account and expose any shortcomings, weaknesses and mistakes of the government. It is the job of the government to determine what direction to take and what the priority should be.
In this instance, whether there is a need to increase government debt to fund any infrastructure building. Even under this scenario, the government has had difficulties in arguing its case because of its inability to put a business case and cost benefit study for its NBN that it argues is the largest nation building infrastructure project ever.
Thirdly, it is always better to have no debt or lower debt than higher debt, other things equal. The argument that the nation lives forever and grows forever cannot be used to have government debt for that sake. One must prove that the benefits outweigh the costs of having debt.
Fourthly, there is also a trade off between government debt and higher tax and the net benefits between using the two, just as private companies do in terms of using equity and debt financing. That also has an inter-generational dimension. It is interesting that you have not put any reason using debt is superior to more tax.
In summary, it appears that the opposition has done a very good job in its argument against increasing the nation’s public debt and forced the government to take a more cautious approach to spending than otherwise it would do.
Regrettably, the government is continuing its NBN white elephant project in spite of its exposed wastes in pink batts and BER. That is deplorable.
That should be applauded and supported, as opposed to your half rational argument to the contrary.
Peter, what you said is obviously true. However, you ignored a few important points.
Firstly, the combination of wastes and increasing government debt is never to be a good look. Under such circumstances, arguing against increasing public debt is not a bad thing to do. That is because there is available fund to do the things you argued which can be done using public debt.
Secondly, the politics of governing and opposition is very different. The opposition's main job is to hold the government to account and expose any shortcomings, weaknesses and mistakes of the government. It is the job of the government to determine what direction to take and what the priority should be.
In this instance, whether there is a need to increase government debt to fund any infrastructure building. Even under this scenario, the government has had difficulties in arguing its case because of its inability to put a business case and cost benefit study for its NBN that it argues is the largest nation building infrastructure project ever.
Thirdly, it is always better to have no debt or lower debt than higher debt, other things equal. The argument that the nation lives forever and grows forever cannot be used to have government debt for that sake. One must prove that the benefits outweigh the costs of having debt.
Fourthly, there is also a trade off between government debt and higher tax and the net benefits between using the two, just as private companies do in terms of using equity and debt financing. That also has an inter-generational dimension. It is interesting that you have not put any reason using debt is superior to more tax.
In summary, it appears that the opposition has done a very good job in its argument against increasing the nation’s public debt and forced the government to take a more cautious approach to spending than otherwise it would do.
Regrettably, the government is continuing its NBN white elephant project in spite of its exposed wastes in pink batts and BER. That is deplorable.
That should be applauded and supported, as opposed to your half rational argument to the contrary.
2009-10-28
Building infrastructure effectively and efficiently
Comments on Paul Kelly “Building from the base”, 28/10/2009, http://www.theaustralian.news.com.au/story/0,25197,26268751-12250,00.html
Rudd government has shown a poor attitude toward being responsibly building infrastructure projects and avoiding cost benefit analysis is a key manifestation of that attitude.
The approach by the Rudd government to infrastructure will cause a lot of damage to Australians’ welfare by building uneconomic projects and cost blowout and loss of opportunities.
There is no question that government needs to manage Australia’s infrastructure. But the key is how to manage it and build it in the most cost effective way.
It does not necessarily mean that all investment must come from the government. It means the government should ensure there is adequate infrastructure in place and create enough incentives for the private sector to be involved in building it.
Whether the Productivity Commission is suited for cost and benefit analysis is a question. But there needs an independent agency or organisation to do that. It does not have to a fixed organisation for all projects.
Further independent cost benefit analysis must be made public for the public to scrutinise it, so the government cannot cheery picking projects.
Rudd government has shown a poor attitude toward being responsibly building infrastructure projects and avoiding cost benefit analysis is a key manifestation of that attitude.
The approach by the Rudd government to infrastructure will cause a lot of damage to Australians’ welfare by building uneconomic projects and cost blowout and loss of opportunities.
There is no question that government needs to manage Australia’s infrastructure. But the key is how to manage it and build it in the most cost effective way.
It does not necessarily mean that all investment must come from the government. It means the government should ensure there is adequate infrastructure in place and create enough incentives for the private sector to be involved in building it.
Whether the Productivity Commission is suited for cost and benefit analysis is a question. But there needs an independent agency or organisation to do that. It does not have to a fixed organisation for all projects.
Further independent cost benefit analysis must be made public for the public to scrutinise it, so the government cannot cheery picking projects.
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