• By Mar-Vic Cagurangan

US, Australia, Japan to fund Palau's $30M undersea cable project


The United States has teamed up with Australia and Japan to bankroll the construction of Palau's $30-million undersea fiber optic cable, marking the first project collaboration under the Trilateral Partnership for Infrastructure Investment in the Indo-Pacific, Secretary of State Michael Pompeo announced this week.

Pompeo said the project "will ensure reliable, secure digital connectivity in Palau" and will connect to a new undersea cable financed by the U.S. International Development Finance Corp.

"That cable will be the world’s longest, spanning from Singapore to the United States," he said at the Indo-Pacific Business Forum held virtually from Oct. 28-29.

The U.S. is providing $4.6 million for the project, including $3.8 million from the U.S. Agency for International Development and $800,000 from the U.S. government’s Transaction Advisory Fund.

For its own share of the project cost, Palau will use $7 million in Compact funds, according to a facts sheet from the Office of the Secretary of State. Belau Submarine Cable Corporation, a wholly owned Palauan state-owned enterprise, will contribute nearly $1 million and will lead the spur cable’s construction.

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The new spur cable is Palau’s second major telecommunication project in three years.

Palau President Tommy E. Remengesau, Jr. first announced the plan for the second submarine cable project during his State of the Republic Address last year. he said, investing in the second cable would cost the government approximately $2 million per year, which is the current cost to back up Palau’s system with satellite services.

The Pacific nation upgraded its telecommunications infrastructure in December 2017 through a loan provided by the Asian Development Bank. This project connected Palau to the Southeast Asia-United States fiber optic submarine cable that also connects Guam to Indonesia and the Philippines, increasing available bandwidth by around seven times providing more than half of the population with internet connectivity.

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"However, Palau has no service connection back-up in times of fiber outages or service disruptions, an impediment to development. Connection to a second submarine cable will provide Palau with the redundancy it needs to realize the economic and development benefits of increased and strengthened digital connectivity," according to sfact sheet from the Office of State Secretary.

Australia will contribute approximately US$10 million to the project, including $1.4 million already invested in the marine survey and branching unit, and a loan of approximately $9 million from the Australia Infrastructure Financing Facility for the Pacific.

Japan is close to finalizing approval of their financing package through the Japan Bank for International Cooperation and Nippon Export and Investment Insurance.

"The Palau spur project is a practical demonstration of the partners’ commitment to meeting the infrastructure needs of the region and promoting secure, resilient, and trustworthy communications networks worldwide," according to the state department

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The Trilateral Infrastructure Partnership, established by the United States, Japan and Australia in November 2018, seeks "to promote an Indo-Pacific region that is free, open, inclusive, prosperous, and secure, through support for infrastructure projects that adhere to international standards and principles.

The state department said the partnership backs the U.S.'s Pacific Pledge, a $300-million commitment "to partner with the Pacific Islands on their most pressing challenges, including on economic and environmental resilience, maritime security, and good governance."

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Australia’s equivalent initiative, the Pacific Step-up, pledges AU$1.44 billion (US$1 billion) in aid to the region for 2020 and 2021, and its AU$2 billion (US$1.4 billion) Australian Infrastructure Financing Facility for the Pacific.

Japan's similar initiative, called “All-Japan," contributes about 61 billion Yen (US$580 million) in development assistance for the Pacific island countries since the 8th Pacific Islands Leaders Meeting in 2018.

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