A new flagship report by the Asian Development Bank (ADB), Meeting Asia’s Infrastructure Needs, notes that infrastructure needs in developing Asia and the Pacific will exceed $22.6 trillion through 2030, or $1.5 trillion per year, if the region is to maintain growth momentum.
The report focuses on the region’s power, transport, telecommunications, and water and sanitation infrastructure. It comprehensively examines current infrastructure stocks and investments, future investment needs, and financing mechanisms for developing Asia.
Infrastructure development in the 45 countries covered in the report has grown dramatically in recent decades — spurring growth, reducing poverty, and improving people’s lives. But a substantial infrastructure gap remains, with over 400 million people still lacking electricity, 300 million without access to safe drinking water, and about 1.5 billion lacking access to basic sanitation. Many economies in the region lack adequate ports, railways, and roads that could connect them efficiently to larger domestic and global markets.
The estimates reportedly rise to over $26 trillion, or $1.7 trillion per year, when climate change mitigation and adaptation costs are incorporated.
Of the total climate-adjusted investment needs over 2016-2030, $14.7 trillion will be for power and $8.4 trillion for transport, according to the report.
The report says that investments in telecommunications will reach $2.3 trillion, with water and sanitation costs at $800 billion over the period.
Currently, the region annually invests an estimated $881 billion in infrastructure (for 25 economies with adequate data, comprising 96% of the region’s population). The infrastructure investment gap—the difference between investment needs and current investment levels—equals 2.4% of projected GDP (climate-adjusted) for the 5-year period from 2016 to 2020.
Regulatory and institutional reforms are needed to make infrastructure more attractive to private investors and generate a pipeline of bankable projects for public-private partnerships (PPPs). Countries should implement PPP-related reforms such as enacting PPP laws, streamlining PPP procurement and bidding processes, introducing dispute resolution mechanisms, and establishing independent PPP government units. Deepening of capital markets is also needed to help channel the region’s substantial savings into productive infrastructure investment, the report says.
Multilateral development banks (MDBs), have reportedly financed an estimated 2.5% of infrastructure investments in developing Asia. Excluding China and India, their contributions rise above 10%. MDBs are scaling up operations with a growing proportion financing private sector infrastructure projects. Beyond finance, MDBs are also playing an important role in Asia by sharing expertise and knowledge to identify, design and implement good projects. They are integrating more advanced and cleaner technology into projects and streamlining procedures. MDBs are also promoting investment friendly policies and regulatory and institutional reforms.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members—48 from the region.
