Baku, Azerbaijan, Feb. 28
By Anvar Mammadov – Trend:
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, according to a new flagship report by the Asian Development Bank (ADB).
The estimates rise to over $26 trillion, or $1.7 trillion per year, when climate change mitigation and adaptation costs are incorporated.
The report “Meeting Asia’s Infrastructure Needs”, 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.
“The $1.7 trillion annual climate-adjusted estimate is more than double the $750 billion ADB estimated in 2009. The inclusion of climate-related investments is a major contributing factor. An even more important factor is the continued rapid growth forecasted for the region, which generates new infrastructure demand. The inclusion of all 45 ADB member countries in developing Asia, compared to 32 in the 2009 report, and the use of 2015 prices versus 2008 prices also explain the increase,” says the report.
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, according to the report.
“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,” says the report.
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, investments in telecommunications will reach $2.3 trillion, with water and sanitation costs at $800 billion over the period.
“East Asia will account for 61% of climate-adjusted investment needs through 2030. As a percentage of GDP, however, the Pacific leads all other sub-regions, requiring investments valued at 9.1% of GDP. This is followed by South Asia at 8.8%, Central Asia at 7.8%, Southeast Asia at 5.7%, and East Asia at 5.2% of GDP,” says the report.
Currently, the region annually invests an estimated $881 billion in infrastructure (for 25 economies with adequate data, comprising 96% of the region’s population), according to the report. 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.
“Multilateral development banks (MDBs) have financed an estimated 2.5% of infrastructure investments in developing Asia. Excluding the PRC 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,” says the report.