Developing countries in Asia and the Pacific will need to collectively find $1.5 trillion per year until 2030 to finance sorely needed infrastructure developments.
That’s the message from the Asian Development Bank (ADB) which yesterday released a new book entitled ‘Infrastructure Financing in Asia.’
The book, edited by ADB’s vice president for knowledge management and sustainable development Bambang Susantono highlighted the urgent need for new funding models to continue the region’s growth in the face of global financial uncertainty.
Mr Susantono notes that few developing Asian nations are meeting the proposed 5 percent of GDP investment in infrastructure. He claims that $22.6 trillion will be needed up to 2030 to fund infrastructure across the ASEAN+3 collective, composed of Brunei, Cambodia, China, Indonesia, Japan, Republic of Korea, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
“Developing Asia must strive to find new, innovative, outside-the-box financing solutions to meet its huge infrastructure investment needs. I am confident that this rich collective volume prepared by experts from inside and outside ADB will set forth some concrete and specific directions for infrastructure financing, as well as provide food for thought,” Mr Susantono said at a book launch in Manila yesterday.
Each nation was urged to spend no less than 5 percent of their GDP on infrastructure each year over the next 11 years. This estimate shoots up to $1.7 trillion collectively should the impact of climate change hit sooner than expected.
Experts recommend seeking alternative models of financing such projects, with Cambodia having already set in motion the potential for PPP-style (Public-Private-Partnerships) financing, enabling the private sector to assist in the development of the Kingdom’s infrastructure.
Sam Vongsy, head of the Central Public-Private Partnerships Unit at the Ministry of Economy and Finance, hopes to see more PPPs taking off in Cambodia to stimulate growth in infrastructure beyond the limitations of the government’s budget.
“There has to be some sort of purpose and benefit for the public. These projects are for the public but we’re using the private sector to do a lot of those activities to provide to the public,” he said earlier this year.
The task of shifting investment from private property projects into more infrastructure-focused ones is not simple, but as the ADB warns, it is necessary.