[sustran] FW: New World Bank report : "CONNECTING EAST ASIA: A NEW FRAMEWORK FORINFRASTRUCTURE"

[Paul Barter]

Subject: New World Bank report : "CONNECTING EAST ASIA: A NEW FRAMEWORK
FORINFRASTRUCTURE"

East Asia needs $1 trillion in roads, water, communications,
                          and power over next five years



   Developing countries in East Asia need to spend more than a trillion
dollars
   over the next five years in roads, water, communications, power, and
other
   infrastructure to cope with rapidly expanding cities, increasing
populations,
   and the growing demands of the private sector, says a new study
released in
   Tokyo today by the Asian Development Bank (ADB), Japan Bank for
International
   Cooperation (JBIC), and the World Bank.

   Government and private investment in infrastructure has been vital to
growth
   in East Asia, providing the regional and international links for
trade, and
   connecting rural and urban areas to help share the benefits of rapid
growth.
   After the economic crisis of the late 1990s, private investment in
   infrastructure dropped off for countries like Indonesia and the
Philippines,
   resulting in a serious infrastructure gap after years of little or no
   investment.  Poorer countries in the region like Lao PDR and Cambodia
   continue to attract little or no private infrastructure funds.

   Now, developing countries in East Asia face a massive infrastructure
funding
   challenge. The study estimates that the 21 countries covered will
need more
   than US$200 billion per year to fund new investment and maintenance
of roads,
   power plants, communications, and water and sanitation systems. China
is
   expected to require 80 percent of the total investment.  A more
active
   citizenry across the region is also demanding better services,
including
   rural roads and bridges to access markets, and clean water and
sanitation
   services.

   "Connecting East Asia: A New Framework for Infrastructure," the first
joint
   study by ADB, JBIC, and the World Bank, notes that companies
investing in
   infrastructure, both inside and outside of the region, say they are
keen to
   invest where government policies and regulations are predictable.

   The  study  is  based  on  extensive  regional  consultations with
government
   officials,  private  investors, NGOs, academics and development
partners.  In
   addition,  in-depth  interviews  with  officials  from 48 companies
from both
   inside  and  outside  of  the  region  were  conducted  to gauge the
level of
   interest  in  infrastructure  investment  (power and gas,
telecommunications,
   water  and  sanitation,  and  transportation)  and  to identify what
criteria
   companies use when deciding where to invest.

   Among  the  constraints  to  investment,  the  companies  cited  the
lack of
   enforcement  of  contracts, inconsistencies in regulations and in the
courts,
   and corruption.


   "Governments   clearly   have  significant  incentives  for
improving  their
   investment  climates  and  making  sure  that reliable public
policies are in
   place to attract the right kind of investment," said ADB Vice
President Geert
   van  der  Linden.   "In  the  past,  infrastructure  has been a key
driver of
   economic  growth  and  for  reducing  poverty.  Getting the policies
right is
   clearly  going  to  be  a priority for countries in the region to
attract the
   private  funds needed to promote economic growth and to share the
benefits of
   that growth with poorer groups."

   This  is  particularly important as the region is increasingly
interconnected
   through  supply  chain  production networks and expanding
cross-border trade,
   fueled by China which has served as a magnet for regional exports.

   "In order to continue the growth trend, East Asian countries must
keep up
   with the demands of companies which need energy, reliable
transportation
   links, and other services," said JBIC Governor Kyosuke Shinozawa.
"Along
   with new investments, this will require a new kind of regional
cooperation,
   both in infrastructure and logistics, to maximize the benefits,
particularly,
   for the poorer countries."

   Although the private sector will provide a portion of the financing,
and
   public-private partnerships will also be critical, the public sector
itself
   also has an important role to play where private financing is
insufficient,
   unavailable, or too expensive, particularly in the smaller countries.
The
   emphasis must be on selecting the right investments and putting in
place the
   right institutional and policy structures to make them worthwhile.

   The three institutions supporting this study intend to play a major
role in
   supporting its findings and in helping countries meet their growing
   infrastructure ? and institutional needs.

   "Over the course of our consultations, people we talked with
emphasized the
   long-term nature of infrastructure development, a process which
requires
   dedicated and reliable partners," said Jemal-ud-din Kassum, the World
Bank?s
   Regional Vice President for East Asia and Pacific. "Although official
lenders
   and donors provide a small fraction of the financing in this sector,
usually
   for more complex projects or new approaches, the organizations
responsible
   for this study are contemplating stepping up our engagement, both in
terms of
   the funds we provide and the scope of the projects we support.  It is
   critical that we seize this opportunity to contribute to the region?s
ability
   to reduce poverty, expand opportunities, and share the benefits of
future
   growth."
                                        ###
          The study is available online at:
http://www.worldbank.org/eap,
                  http://www.jbic.go.jp, and http://www.adb.org/


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