The Economic Impact of the Loughor Marine Lake Development - Essay Example

 The Economic Impact of the Loughor Marine Lake Development    ABSTRACT  Loughor Marine Lake Development Project envisages connecting Swansea with Llanelli and special development project in the area around lake.  The project has excellent potential for the growth and development of the region as a whole with good scope for tourism, leisure and sports, of national importance.  The project is proposed in 1200 acres of land and the construction activities phased over 30 years. The project includes business parks, housing and commercial buildings, golf club and holiday village.  EXECUTIVE SUMMARY  The Master plan was drawn up 20 years ago for a barrage across the mouth of the Loughor estuary.  The tidal lake water front would create opportunities for leisure activities such as sailing and boating.  Generation of electricity for the use in the development area is also included as a part of the master plan.   The project is expected to act as a catalyst for the economic development of the region benefiting Llanelli and Swansea as well.   The employment opportunities arising out of the project will benefit the community in Swanse and the surrounding areas such as Port Talbot, Neath, Lianelli, parts of Lliw Valley and the District of Dinefwr. The mobility on account of tourism, leisure and other related activities would create an excellent climate for the business and trade development in the region as a whole in the long term. The long term jobs created will be in Manufacturing and Commercial sector.  The second major sector will be Services covering retail, wholesale, distribution, personal services, tourism and leisure.  It is proposed to construct 250,000 Sq. feet area for commercial purposes in the development project. The consortium’s interest in obtaining grants from Europe under the European Regional Development Fund for which tourism is seen as a prime means of economic regeneration. Weaknesses and shortcomings of the project is also analysed in this paper.  The study also covers recommendations for a comprehensive strategy to develop the region as an economic hub and a tourism spot of national importance, and recommended program of implementation. ..2 2  1.   Terms of references This report is written as part of the Appendix F of ‘the economic impact of the    proposed Loughor Marine Lake Development. 2.   Brief note on the scale of the project  The proposed Loughor Marine Lake Development Project is stretched to 1200 acres of land phased over 30 years with break up of development in each phases consists of 5 years each.    3.   Scope of the study  The study analyse and reports the project in terms of its scope, limitations or shortcomings, and arrive at general conclusions and give recommendations for a comprehensive strategy for the development of the project and implementation of the program.  3.1 The Project   The Master Plan of the Marine Lake Development consists of two independent and related projects. The first one is related to infrastructure development. The project envisages connecting Swansea with Llanelli, as well as generating electricity for use in the project area, and to create permanent tidal lake in the estuary, and water ways.  Barrage and the associated infrastructure   This can be broadly classified as below:  Exclusion Barrage  Transportation Network Dredging Edge Treatments Sewer Diversions  Onshore Project Development  Onshore project refers to the developments around the lake.  The funding for this project offers ..3 3 an excellent scope for private participation or government-private partnership, and hinges on the core project.  These special development sites are expected to be the drivers of the economic development in the long run with good demand potential for tourism, leisure, sports and fishing. Proposal for Special Development Sites and Themes for Community Living   Budget Lodge Accommodation – Special Development Site A Budget Family Accommodation- Special Development Site B Country Club – Special Development Site C 4 Star Golf/Leisure Hotel – Special Development Site D Business Park       Holiday Village Golf Club Low Density Housing Medium Density Housing High Density Housing Mixed Housing/Commercial Development  3.2 Limitations  Acquisition of land for the project, environmental and other legal issues related to the project are not covered.   There are other limitations as well. Total cost of the project with detailed break-up, time table for completion of the various components of the project, funding of the project, mode of funding proposed, role of private sector, etc. are yet to be finalized.    There are various authorities and governmental departments involved in the project in addition to budgetary allocation.  The project specific central administrative structure is yet to be established.   The conflicts and lack of coordination among the various partners are expected to arise in a project involving different user groups.  The political will to accomplish the objective is very important. ..4 4 4.2 General conclusions   The short term and long term economic impact of the Marine Lake Development Project is assessed based on the Barrage and the associated infrastructure and the Onshore Project Development proposed with certain assumptions in the absence of data in this regard.    The economic impact of the project is mainly discussed in terms of employment since the project is yet to be finalized, and the groundwork in terms of implementation is yet to be firmed up.  Moreover, motivation for the government to implement this project is dependent upon ‘employment’ as it is the central issue governing the decision of the government, not only in this project, but in any project of this nature and size.       Employment   The employment opportunities arising out of the project will benefit the community in Swanse and the surrounding areas such as Port Talbot, Neath, Lianelli, parts of Lliw Valley and the District of Dinefwr and the combined labour force in this area is about 130,000. (Para16 of page 6).  The highest ratio of unemployment is found in the unskilled jobs.  The unemployment problem as reflected in Table 6 will be effectively addressed by this project.  Direct Employment  The first and foremost economic impact arises out of direct employment of labour in the Barrage and the associated infrastructure and onshore development work. The project is labour intensive in the construction stage and enough unskilled labour is available in the project and the surrounding areas.   Long term Employment   The magnitude of the project and migration of skilled labour to the project site gives rise to development in other sectors of the economy.  After completion, the project gains importance in the national level.  The mobility on account of tourism, water ways, leisure and other related activities act as a catalyst for the business and trade development in the region as a whole in the long term.  In para 35 of page 17, it is stated that the developments as per assessment will, at maturity, generate 4713 full time equivalent jobs within the local area.  Types of Employment  Majority of the long term jobs created will be in manufacturing and commercial sector.  The second major sector will be Services covering retail, wholesale, distribution, personal services, tourism and leisure.  Table 7 illustrates the structure of employment in the Tourism and Leisure Industry’s main sectors.    ..5 5 Trade and Commerce  It is proposed to construct 250,000 Sq. feet area for commercial purposes in the development project. The consortium’s interest in obtaining grants from Europe under the European Regional Development Fund for which tourism is seen as a prime means of economic regeneration.    It is expected, as mentioned in para 36 of page 17, at maturity, the developments will contribute €52.29 m annually to the local economy with.  Balanced economic growth  Migration of labour force, consequently the families, to the cities is an alarming phenomenon in the world. The statistics on population growth in the cities testifies this aspect.  The governments are constantly under pressure to invest heavily on infrastructure in towns and cities due to ever increasing population with no meaningful returns.  Therefore, the government should evolve suitable strategies to keep it in check, and the projects like Loughhor in this regard should be encouraged.  This will also help orderly development of the region as the growth is inclusive. 4.3 Limitations  The cost estimation would vary on account of mix or availability of material and labour force, viz, locally or outsourced, if outsourced the percentage thereof, further classified into unskilled and skilled in respect of labour. Deployment of wages earned and the plough back of profits by the firms engaged in the project would be the major catalyst for the economic development of the area.    The composition of labour and materials with regard to its source could not be precisely factored in the estimate. Also, the firms involved in the project would be based outside, and hence the profits transferred outside the local area.  Also, the cost of development estimated at €357.75 m. would be vitiated due to cost over run on account of passage of time.  The current estimates are also based on the projections in late eighties   5. Summary of recommendations  We have summarized our recommendations for a comprehensive strategy to develop the region as an economic hub and a tourism spot of national importance.   5.1 Splitting of the core project, the Barrage and the associated infrastructure   5.2  Private Participation  The projects should be divided into many components.  Leaving the core infrastructure to the government, private sector should be involved in the rest of the development projects.   ..6 6  5.3  Public Participation  Participation by the private companies act as a trigger for the public to invest in the government securities specifically issued in connection with the project.   5.4 Role of the Government   The government may with limited budgetary support, but firm commitment, is in a position to influence the project, and the representatives of the people should make note of this point.  5.4.1 Tax holidays & Concessions in tax rates  This is an important tool in the hands of the government, to induce private companies and public to participate in the project.  5.4.2 Categorising the project as ‘nationally important’  If the projects of these types are categorised as ‘nationally important’ by a special act in the Parliament, the status of the project would be enhanced, especially for funding purpose.  5.4.3 Concept of Growth Centre  The area covered under the projects of this nature and the adjoining areas should be declared as ‘Growth Centres’ with a comprehensive long-plan for the development of the regions to avoid concentration of the population in the cities in the long term.   5.4.4 Linking the project to the nation  The accessibility factor of the region is very important and given due consideration.    6. Description of the present situation There has been no significant developments happened in connection with this project so far, as can be seen from a news article below.  Though there were changes suggested and demands for the revival, the government is yet to take any concrete step in this direction “Carmarthenshire council stressed the idea was still in its infancy but plans to ask the Welsh Assembly Government to help fund a feasibility study. …  The new proposal is contained within Carmarthenshire council’s economic development master plan. …It stressed no money had been spent or allocated to the project to date but said it would ..7 7 approach the assembly government to see if it would help finance a new feasibility study. (“Plans drawn up 20 years ago for a barrage across the mouth of the Loughor estuary are being looked at again”. Bbc.co.uk. Web. 8 Mar 2010. M.pag. Web. 7 Mar 2010) 7.  Analysis of the Weaknesses and Shortcomings  The strength and weaknesses of the projects of this type depends upon various factors.  !. Risks involved 2. The questions with regard to ecology in a project of this size and nature. 2. Commitment on the part of the Government 3. Political will Conflicting interests among the user groups with regard to a project that is expected to benefit a wide area is one of the risk that may prolong the finalization of the project details. The environmental issues in many cases decide the fate of the project.  In this project also, there are concerns with regard to habitat for birds and animals that live on the mud flats and coastal environment. Another criticism is on account of regular dredging that may be required due to sediments clogging the basin. After all, nowadays the government can only facilitate a project by giving preference, due to budget and other constraints such as competing demands from various parts of the country.  Therefore, the government’s role is restricted only to the creation of core infrastructure facilities. The next question is, as to how the concept could be justified for the government to implement the project giving preference over other development projects all over the country.      Political will for the cause of this development project gathers momentum only when the communities realise about the benefits. 8. Detailed recommendations    8.1 Splitting the core project  Since the gestation period in respect of the Onshore Development is dependent upon the implementation of the core project, Barrage and the associated infrastructure; it is advisable to split the later into two or three sections.  The implementation should start in all the divisions simultaneously to reduce the duration of construction.  ..8  8  The project is not vertical in nature, where splitting may not be possible on account of the processes involved such as ‘curing’, and every step is dependent upon the completion of the previous step. Pooling of the resources and facilities will in fact reduce the cost of capital, in such a situation.   8.2 Private participation The government should announce plans to encourage private participation in this project of the businesses houses with national presence, and the business houses with the local roots in the non-core components of the project, by earmarking the same exclusively to private sector to reduce the burden on exchequer.  The widely prevalent schemes like ‘Build, Operate and Transfer’ (BOT) may be introduced in specific projects related to tourism and leisure.  8.3 Public Participation  The projects with the purpose of development of a region will be successful only when the public appreciate its potential and benefits. Therefore, educating the public and secure their participation is very important in a project of this nature.  The private participation mentioned above acts as a trigger in this respect.  Issue of bonds specifically to meet the cost of this project ensures the community support for the project during implementation as well as in future.  8.4.0 Role of the Government  The government on its part, with limited budgetary support, can influence the implementation of the project by using the various arsenals available at its disposal. The private sector and the public intend to participate in this project should be rewarded by the government.  A package announced by the government with special reference to the projects of this nature will go a long way in the successful implementation of the project.  In fact this project may be referred as an example for all the projects of this type planned in future, for the balanced growth of the economy in the country.  8.4.1Tax holidays & Concessions or exemptions to investments in income tax   This is an important tool for in the hands of the government, to induce private companies and public to participate in the project.  The sacrifice made by the government will be more than compensated by revenue potential assured in future, in addition to the development of the region.  Not only that, the government is, in this process, reduce the pressure on account of migration of people from these regions to cities.   ..9  9  8.4.2 Categoring the projects by national importance  If the projects of these types are categorised as ‘nationally important’ by a special act in the Parliament, the status of the project would be enhanced in the eyes of the public. The concessions and exemptions in tax should be made available in respect of these projects based on such categorisation.     8.4.3 Concept of Growth Centre  The area covered under the projects of this nature and the adjoining areas may be declared as ‘Growth Centres’ with a comprehensive long-plan for the development of the regions to avoid concentration of the population in the cities in the long term,  Here, the growth and not the national importance of the project is pertinent.   8.4.4 Linking the project to the nation  Linking of the region to nation is an important step in this direction, and the development plan of the rest of the country should incorporate this aspect by way of sharing of the burden or responsibility of the government in developing the region under question.  9. Specification of the Objectives  Evolving a comprehensive strategy for the implementation of Loughor Marine Lake Development, identifying the opportunities taking into account the inherent strengths and weaknesses that ensures successful completion with optimum effects on,   1. Economic development of the area 2. Tourism & Leisure 3. Employment generation in the long term 4. Environment and coastal development   We emphasize participation of the private sector and the public in the project finance, aiming minimum capital outlay by the government to deserve favourable treatment for revival of the proposal, as well as successful and speedy implementation.  10.  Recommended program of implementation  It is recommended that “Proposed  Loughor Marine Lake Development” is implemented as per the program stated below:                                 ..10    10  10.1 Organisation  Establishment of the Central Agency deriving authority and responsibility from the government with necessary budgetary allocation for its internal management and implementation of the project is very important. Structure of the organization should be clearly defined to avoid overlapping.  10.2 Break-up of the project into modules  Various contracts and subcontracts are interrelated.  The project should be broken down to components for effective control and coordination using PERT or other computer models. 10.3 Planning   Advance planning ensures smooth flow of the work and timely completion of the project.  Quality Control  Quality of the materials used and the processes involved etc. are very important for the strength and life of the project.  There should be effective program placed for quality control.  Budgetary Control  Budgetary control ensures proper authorisation and utilisation funds in the project. Efficient utilisation and regulation of economic resources avoid cost overruns.  Reporting and Management Information System   Management information system in a complex project involving various government authorities, contractors, subcontractors and employees is very important to avoid delays, and ensure proper coordination.  Coordinating Agencies  In order to fulfill the objectives, the government should open regional offices of the government departments and agencies in the project area, to remove the administrative difficulties in implementation.    A nodal agency should also be established to deal with the problems related to pollution control measures, land acquisition, community health, transport facilities, environmental issues, local authorities, permits, etc. ..11 11  11. Conclusion  Constant review and evaluation of the work completed, work-in-progress, the time schedule, bottlenecks for clearance, and giving support facilities to achieve the completion or time target is very important in a development project involving various suppliers, contractors, local communities and the government agencies.    Pooling and optimum utilisation of the resources and facilities avoid escalation of cost.  Alternative strategies in great exigencies should be contemplated and put in place to keep the cost under check and maintain the time schedule.  Financial control with reference to the progress of the project and forecasting the future needs for the efficient implementation of the project is of paramount importance.  Expanding the horizon of the project hinges on the availability of finance. The financial controller needs imagination and ability to negotiate better and novel financial arrangements within the country from various sources or outside the country, and it plays critical role in financial health and viability of the project in the long term.           Sources 1. Sources used in the study (Para 37 of page 17)  Inter Company Comparisons Data (1986/67) New Earnings Survey (April 1987) Family Expenditure Survey (1986) Survey of Personal Expenditure (1984/85) 2. External source “Plans drawn up 20 years ago for a barrage across the mouth of the Loughor estuary are being looked at again.” (http://news.bbc.co.uk/2/hi/uk_news/wales/south_west/7927972.stm, 8th March, 2009          Read More