Meeting Asia's Infrastructure Needs

By Asian Development Bank

Infrastructure is essential for development. This report presents a snapshot of the current condition of developing Asia's infrastructure---defined here as transport, power, telecommunications, and water supply and sanitation. It examines how much the region has been investing in infrastructure and what will likely be needed through 2030. Finally, it analyzes the financial and institutional challenges that will shape future infrastructure investment and development.

• Language: English
• Publisher: Asian Development Bank
• Release date: Feb 1, 2017
• ISBN: 9789292577544

Book preview

MEETING ASIA’S

INFRASTRUCTURE NEEDS

Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO)

© 2017 Asian Development Bank

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Some rights reserved. Published in 2017.

Printed in the Philippines.

ISBN 978-92-9257-753-7 (Print), 978-92-9257-754-4 (e-ISBN)

Publication Stock No. FLS168388-2

http://dx.doi.org/10.22617/FLS168388-2

Cataloging-In-Publication Data

Asian Development Bank.

Meeting Asia’s infrastructure needs.

Mandaluyong City, Philippines: Asian Development Bank, 2017.

1. Infrastructure.

2. Climate change.

3. Infrastructure gap.

4. Infrastructure needs.

I. Asian Development Bank.

The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent.

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Contents

Foreword

In 2009, the Asian Development Bank (ADB) and the ADB Institute projected infrastructure needs for developing Asia from 2010 to 2020 in Infrastructure for a Seamless Asia (Seamless Asia). The study covered 32 of ADB’s 45 developing member countries (DMCs) and four sectors: transport, power, telecommunications, and water supply and sanitation. It projected that total investment needs for the four infrastructure sectors would be slightly above $8 trillion (in 2008 prices) over the 11-year period, or almost $750 billion a year.

This report updates these estimates by presenting infrastructure investment needs for all 45 DMCs from 2016 to 2030, the final year of the United Nations Sustainable Development Goals. Two sets of estimates are presented. The first includes the costs of climate mitigation and adaptation (climate-adjusted estimate). Using this set of estimates, developing Asia will need to invest $26 trillion over the 15-years from 2016 to 2030, or $1.7 trillion per year. The second set of estimates does not include climate-adjusted costs (baseline estimate), and amounts to $22.6 trillion, or $1.5 trillion per year.

The baseline estimates are generated closely following the methods of Seamless Asia, but using more refined data and deriving key parameters from ADB project experience and the latest literature. The climate-adjusted estimates add the costs of climate mitigation and adaptation to the baseline estimates based on recent ADB studies. Incorporating the effects of climate change on infrastructure investment needs is one important contribution of this report.

The second contribution of the report is that it provides a detailed analysis of infrastructure investment gaps. The estimates of infrastructure needs are compared with current investment levels to get a concrete sense of the gaps countries need to bridge. Based on an assessment of how much the public sector can invest in infrastructure with public finance reforms, the report provides a sense of how much private finance will be required for developing Asia to meet its infrastructure needs and what policies will allow this to happen.

The third contribution of the report relates to measurement of infrastructure investment. Given the lack of comprehensive data on actual infrastructure investment data across countries, this report seeks to better understand how much countries have been investing in infrastructure by considering several ways of measuring infrastructure investments. It adopts a benchmark measure that relies on country infrastructure expenditures from government budget documents plus information on private investment in infrastructure from a World Bank database. There is certainly room for improvement on measurement of infrastructure investments, and the report suggests a way forward through collaboration between national accounts statisticians in the region and international agencies.

The preparation of this report was helped by the active cooperation of colleagues from many different parts of ADB. Staff from ADB’s regional departments and resident missions provided insights on country budget data to better capture public sector investments in infrastructure. Experts from ADB’s sector and thematic groups shared data and provided assistance in estimating the costs of different types of infrastructure. Many colleagues also contributed to the report’s policy discussion and boxes highlighting special issues. This collaborative approach should provide a good basis for future ADB dialogue and engagement with relevant authorities.

As ADB celebrates its first 50 years of operations, I am confident this report will be useful for both experts and policy makers as they search for efficient and effective ways of providing the infrastructure that is prerequisite to sustainable and inclusive growth in Asia and the Pacific.

Takehiko Nakao

President Asian Development Bank

Acknowledgments

This report was prepared by the Development Economics and Indicators Division (ERDI) of the Economic Research and Regional Cooperation Department (ERCD) as a special supplement to ADB’s Key Indicators for Asia and the Pacific. Valuable contributions were made by ADB sector and thematic groups—energy, transport, water, climate change and disaster risk management, finance, and regional cooperation and integration; the five regional departments; the Office of Public-Private Partnership and Private Sector Operations Department; and ADB Country Offices.

Rana Hasan, Director of ERDI, headed a core team of staff in preparing the report: Yi Jiang and Zhigang Li led much of the analysis; Abdul Abiad served as advisor and contributed the analysis on fiscal space; and Orlee Velarde and Priscille Villanueva provided essential research and administrative support. Important contributions were made by Kaushal Joshi, Kijin Kim, Trevor Lewis, Mahinthan Mariasingham, Thiam Hee Ng, and Vivek Rao. Additional inputs were provided by Eileen Capilit, Melissa Pascua, Iva Sebastian, and Eric Suan.

A team of consultants, namely, Christine Ablaza, Erik Jan Eleazar, Paul Feliciano, John Paul Flaminiano, Janine Lazatin, and Rhea Molato provided research support, with additional inputs from Mel Lorenzo Accad, Renz Adrian Calub, and Angelica Maddawin.

Technical advice and inputs on estimating infrastructure needs were provided by Tyrrell Duncan, Vijay Padmanabhan, David Raitzer, and Yongping Zhai. Additional contributions were provided by Sharad Saxena and Naren Singru.

Material for the boxes on special issues were contributed by Noritaka Akamatsu, Charlotte Benson, Johanna Boestel, Alexandra Pamela Chiang, Saugata Dasgupta, Maria Vicedo Ferrer, Kanupriya Gupta, Aziz Haydarov, John Cheong Holdaway, Xinglan Hu, Yoshiaki Kobayashi, Trevor Lewis, David Ling, Rommel Rabanal, Abhijit Sen Gupta, Manoj Sharma, Gurjyot Singh, Akiko Terada-Hagiwara, Frederic Thomas, James Michael Trainor, Norio Usui, Hanna K. Uusimaa, and Qingfeng Zhang. Outside contributors Marco Gonzalez-Navarro, Eui-Young Shon, and Zhirong Zhao conducted independent studies which were condensed into boxes in the report. Grateful acknowledgment is also given to Koki Hirota (Chief Economist of the Japan International Cooperation Agency) and his team, Takeshi Saheki and Ishizuka Fumiaki for contributing boxes for this report.

Other written contributions and/or advice on private finance were provided by Arup Chatterjee, Georg Inderst, Alexander Jett, Lars Johannes, Sung Su Kim, and Lotte Schou-Zibell.

Preety Bhandari, Sekhar Bonu, Bruno Carasco, Chen Chen, Xiaoxin Chen, Joao Pedro Farinha, Jesus Felipe, Robert Guild, Abid Hussain, Andrew Jeffries, Utsav Kumar, Dan Millson, Kee-Yung Nam, Jiangbo Ning, Olly Norojono, Rajesh Poddar, Charles Rodgers, and Jiro Tominaga provided advice on various topics related to the report.

The external advisors to this report were Douglas Brooks (who also contributed to the writeup) and Stephane Straub. Anupam Rastogi provided analytical inputs and contributed to the discussion on private sector finance.

Thanks are due to participants at the workshop on infrastructure finance held on 18–19 August 2016, Du Huynh, Edgare Kerwijk, Richard Michael, Alma Porciuncula, and Raman Uberoi, who gave presentations and provided background materials used in the report.

Guy Sacerdoti edited the manuscript extensively and ensured coherence and consistency. Rhommell Rico designed the cover and typeset the publication. Ma. Roselia Babalo, Oth Marulou Gagni, and Aileen Gatson provided administrative assistance in the workshop.

We also thank the national statistics offices of developing member countries, especially Fiji, India, and Pakistan, for providing detailed data on gross fixed capital formation compiled for the national accounts statistics.

Finally, the team also acknowledges Artur Andrysiak, Aniceto Orbeta, and Guntur Sugiyarto who helped initiate this study on Asia’s infrastructure needs, and colleagues from ADB’s Department of External Relations for their strong support on the report’s dissemination.

Juzhong Zhuang

Officer-in-Charge and Deputy Chief Economist

Economic Research and Regional Cooperation Department

Highlights

•   Developing Asia will need to invest $26 trillion from 2016 to 2030, or $1.7 trillion per year, if the region is to maintain its growth momentum, eradicate poverty, and respond to climate change (climate-adjusted estimate). Without climate change mitigation and adaptation costs, $22.6 trillion will be needed, or $1.5 trillion per year (baseline estimate).

•   Of the total climate-adjusted investment needs over 2016–2030, $14.7  trillion will be for power and $8.4  trillion for transport. Investments in telecommunications will reach $2.3  trillion, with water and sanitation costs at $800