Saturday, 15 July 2017
ADB looks at the investment gap in infrastructure in developing Asia
«The demand for infrastructure across Asia and the Pacific far outstrips current supply,» says ADB President Takehiko Nakao in a press release introducing the report in February. «Asia needs new and upgraded infrastructure that will set the standard for quality, encourage economic growth, and respond to the pressing global challenge that is climate change.» The sectors identified by the report as being most in need of investment include as energy, for $14.7 trillion; transportation, for $8.4 trillion; telecommunications, for $2.3 trillion; and water and health services, for more than $800 billion.
WHERE TO INVEST
Geographically, the report sees East Asia making up 61% of investment needs through to 2030. As a percentage of gross domestic product (GDP), however, the Pacific leads every other sub-region, requiring investments equivalent to 9.1% of GDP. It is followed by South Asia at 8.8%, Central Asia at 7.8%, Southeast Asia at 5.7% and East Asia at 5.2%. By contrast, China has a much smaller gap at 1.2% of GDP when taking into account the cost of mitigating or adapting to climate.
MORE THAN DOUBLE
The $1.7 trillion estimate provided by the ADB is more than double the $750 billion recommended in its previous report published in 2009. The reasons for the jump are rapid economic growth, inclusion of climate-related investment requirements, and the reference to 45 rather than the 32 countries singled out in the previous report.
REFORM AND INVESTMENT
The report’s recommendations, like any other, are hard to apply by any given country. Multilateral development banks (MDB) have helped, financing an estimated 2.5% of infrastructure investments. Excluding China and India, their contribution rises above 10%. ADB encourages regulatory and institutional reform to attract more private investors, who are always searching for worthwhile places to put their money.