Yokohama, Japan (BBN)– Asia must be creative in finding ways to tap its multi-trillion dollar savings and to mobilize private sector support for new infrastructure needed to sustain growth in the coming years, Asian Development Bank (ADB) President Haruhiko Kuroda said on Sunday.
“The infrastructure challenge for developing Asia is one of the most daunting we face today. We must work diligently to be innovative, yet financially responsible, in mobilizing Asian savings to deliver successful, sustainable and robust infrastructure projects,” Mr. Kuroda told delegates at the Infrastructure Finance Forum.
The event, jointly sponsored by ADB, the APEC Business Advisory Council and Japan Bank for International Cooperation, is being held in Yokohama, Japan on the day.
Gross domestic savings in emerging Asia reached close to $4 trillion in 2009. Much of this large cash pile has been underutilized, with regulatory obstacles, currency mismatches and underdeveloped capital markets hindering broader financing of essential infrastructure.
The needs are immense with ADB calculating that about $8 trillion in new infrastructure investments will be required in the region through to 2020 to support current levels of economic growth.
Of the infrastructure needs, energy and electricity will take up 40 percent of the total, followed by transport at about 25 percent. Social infrastructure for education, health, water and sanitation, and other public goods will account for another 25 percent. The balance will be mainly investments in infrastructure for telecommunications.
With the public sector unable to meet the immense costs on its own, public-private partnerships are essential, and governments should look to strengthen existing legal and regulatory frameworks to attract more private investors and finance from funds and institutional investors.
Further development of domestic capital markets and more local currency lending will also help address currency mismatches which are a deterrent to investors in the sector.
ADB’s infrastructure-related investments are expected to exceed $8 billion annually – or about two-thirds of all its lending – over the next 10 years.
BBN/SSR/AD-07Nov10-3:15 pm (BST)
