The Indo-Pacific is evolving and has become “the power center of world geopolitics.” The region is responsible for two-thirds of global economic growth and has three of the world’s four largest economies – China, Japan, and India. Likewise, Southeast Asia, which is at the heart of the Indo-Pacific, has more than half a billion people and boasts among the world’s fastest-growing economies. The vast region is thus central to the global value chain, international trade, and investment flows - 40% of global trade passes through the Strait of Malacca and 30% through the South China Sea (SCS). At the same time, current dynamics in the Indo-Pacific featured tensions over contested territories and waters and rising geopolitical rivalries which have spilled over the economic, political, and security areas. Therefore, in light of these new realities, the European Union (EU) was compelled to reassess its engagement strategy towards the region.

On 16 September 2021, the Council of the European Union published the EU Strategy for Cooperation in the Indo-Pacific. It marked the beginning of the EU’s new approach to the region, diversifying its relations beyond traditional regional partners like China, Japan, and members of the Association for Southeast Asian Nations (ASEAN), to include India, Australia, South Korea, Taiwan, and other “like-minded“states.

On February 1, 2021, the Tatmadaw, Myanmar’s military, arrested members of the country’s ruling National League for Democracy (NLD) party, as well as other democratically elected officials. By the next day, the Tatmadaw announced the creation of the State Administrative Council, taking over all functions of government, and named Senior General Min Aung Hlaing as Chairman. Months later, and after the shuttle diplomacy efforts of Indonesian Foreign Minister Retno Marsudi, the ASEAN Secretariat hosted an emergency summit with leaders and representatives of ASEAN member states and General Hlaing to address the situation in Myanmar. The summit resulted in the Five-Point Consensus, which is still awaiting implementation.

With former President Donald Trump’s inward-focused approach, the United States left international organizations at the sideline of its foreign policy in the last four years. Meanwhile, China embraced multilateralism - going all-out to emphasize its importance and underscoring the principles that govern international organizations. But with the new team in the White House bent in reclaiming America’s place in the world, in what ways can China manage to keep up?

Abstract

Since its unveiling to the public last April 2017, the Duterte administration’s Build, Build, Build (BBB) program has stoked fierce discussion and debate. Yet of the various facets of the program’s implementation, few issues have achieved the same salience and staying power as that of the implications of its China-funded projects. From the administration’s “pivot to China”, concerns have been often raised concerning the “debt trap” risks of China-funded infrastructure, as well as their putative linkages with worsened corruption, social, and environmental dynamics.

This paper examines the development of the Duterte administration’s present and prospective China-funded projects, focusing specifically on the risk of generating ‘white elephant’ projects. While the drivers underlying the selection and implementation of unviable projects have cut across administrations, the economic bureaucracy’s limited absorptive capacity to meet the demands of an infrastructure spending surge, along with ‘exceptionalist’ procedures in the procurement of China-assisted projects, have amplified the risk of generating white elephant megaprojects in the Duterte administration. The advent of the COVID-19 pandemic has further underscored the need for shifting away from unviable megaprojects towards more cost-effective and resilient infrastructure for the foreseeable future, which may require deferring some of the largest prospective China-funded projects. There is likewise scope for institutional reform in infrastructure governance processes, such as by involving third-party experts for independent verification and auditing of project approval and implementation procedures.