MANILA Back in 2009, the Asian Development Bank estimated the region would need $8 trillion worth of infrastructure investment between 2010 and 2020. Now, for the 15 years from 2016 to 2030, the bank reckons $26 trillion is in order to sustain current levels of growth.
Where is the cash going to come from?
The bank's new report on "Meeting Asia's Infrastructure Needs" says the region's to-do list includes building electricity networks to deliver power to the more than 400 million people who still live without it. All told, infrastructure investment in Asia currently meets only about half the demand.
The report calls on regional economies to provide financing through fiscal measures and to make use of private-sector money.
Explaining the heavier burden, compared with 2009, the document notes that continued economic growth naturally boosts infrastructure demand. The latest report also factors in climate change and covers all 45 of the bank's developing members; the previous report covered only 32 economies.
By region, 61% of demand is expected to come from East Asia, which needs investment in transportation and communications in addition to electricity.
In terms of the ratio of infrastructure demand as a share of gross domestic product, Pacific countries have the highest rates, such as Fiji at 9.1%. Countries like Vanuatu and Tuvalu, which face rising sea levels, need investment to improve roads and other infrastructure, according to the report.
Among the 25 major countries that are home to 96% of the people covered in the report, the amount of investment currently stands at an estimated $881 billion annually -- about half the demand. The gap between projected demand and actual investment in those 25 countries over the five years from 2016 to 2020 is expected to equal 2.4% of estimated GDP over the same period. Without China, the remaining 24 countries would need to invest an additional amount equivalent to just over 5% of their collective GDP.
In 2015, the ADB supplied $10 billion for infrastructure, while the World Bank provided $6.6 billion and the International Finance Corp. chipped in $3.2 billion. Although the China-led Asian Infrastructure Investment Bank arrived on the scene in 2016, it loaned only $1.7 billion in its first year.
The ADB suggested it would be possible to fill 40% of the shortfall for the 24 countries -- not including China -- by pushing fiscal reforms to increase infrastructure spending. The remaining 60% could be supplied by the private sector, if it quadrupled annual spending from around $63 billion to $250 billion through 2020.
It is essential to tap private-sector money to solve infrastructure shortages, ADB President Takehiko Nakao said, adding that reforms by member economies could spur public-private projects.