To lift the GDP growth curve from 1 percent to 2 percent, the government is working on a development plan with massive spending on infrastructure projects. In response to lawmakers’ questions during a legislative session on Friday, Premier Lin Chuan (林全) said the government plans to use a special budget to pay for the public works and expects that an increase in public investment could help boost the nation’s economy.
How much the Democratic Progressive Party (DPP) government plans to earmark for the so-called “forward-looking infrastructure plan” and its expected time frame remains to be seen, as the Cabinet is still finalizing the details before it is submitted to the Legislative Yuan next month.
However, the government seems ambitious. The National Development Council set GDP growth targets of between 2 and 2.5 percent for this year, and 2.5 to 3 percent over the next four years. The targets are higher than the estimates made by several local and foreign research institutes, but are still conservative compared with the average annual economic growth rate of 3.6 percent Taiwan registered from 2010 to last year.
However, the rumored investment amount for the infrastructure plan — from NT$800 billion to NT$1.3 trillion (US$26 billion to US$42 billion) over four to eight years — have raised the eyebrows of many people, as it shows the government’s ambition to pursue higher growth despite the challenge of meeting its new growth objectives.
Infrastructure is the backbone of economic capacity and a test of how a government effectively delivers public works. Such plans not only set out a government’s vision for the economy, but also challenge its strategies and willpower. A well-developed plan details policymakers’ commitment to infrastructure investment in targeted areas (such as digital communications, transportation, “green” energy and water resources) and provides motivation for greater private-sector investment.
Therefore, project assessment, planning and selection are important. As local ministers rush to submit infrastructure project proposals, the Cabinet should seriously consider what it would take to support them. Without appropriate assessment and planning, some public facilities could be left unused and become nothing but a waste of space and resources. Project selection should involve less political interference and not be used as an attempt to woo voters. Taxpayers’ money should be spent generating more jobs and improving labor productivity, rather than paying off local political leaders.
Most importantly, the key to success is implementation, which means effectively carrying out the goals described in the plan — from the coordination of various activities to the supervision of project participants, and from the management of budgets to communicating with the public. Cooperation, transparency and accountability are essential for effective implementation.
With DPP lawmakers holding a legislative majority, approval for a massive public spending budget is unlikely to take much time, and then the Cabinet could work on fiscal stimulus and infrastructure spending. While most public works take time to complete and are not expected to work their magic on the economy in the short term, a well-developed infrastructure plan represents the government’s blueprint to rebuild the nation’s economy and a solemn pledge to achieve improvement in productivity, living standards and environmental protection, which it must take seriously.
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