Asian boom needs infrastructure<\/p>\n
HONG KONG (DPA): The numbers speak volumes: 120 million
\npeasants now living in China's big cities, 85 percent of
\nIndonesians without sanitary facilities, the average Bangkok
\nresident losing a total of 44 days annually in the city's
\nappalling traffic jams.<\/p>\n
Asia's glittering success stories are known throughout the
\nworld and often justly admired, but experts warn that growing
\ninfrastructure problems in large parts of the booming region are
\npiling up social dynamite and threatening future growth.<\/p>\n
The conclusion drawn from a conference of those experts here
\nwas that only bigger investments in infrastructure can ensure the
\nsuccess continues.<\/p>\n
The renowned economist Lester Thurow, a professor at the
\nprestigious Massachusetts Institute of Technology, pointed out
\nthat not only have 120 million people poured out of the
\ncountryside and into China's booming coastal cities, but the
\nnumber is expected to more than double to 300 million before
\nlong.<\/p>\n
\"If China does not improve conditions in the interior in the
\nnext few years,\" he predicted, \"what has until now been a success
\nstory will soon become a disaster.\"<\/p>\n
A quick look at figures from East and Southeast Asia
\nhighlights the neglect of infrastructure, even though spending on
\nit has risen from three to four percent of gross national product
\nin most countries in the region 20 years ago to about six percent
\nnow. In China, it has even reached seven percent.<\/p>\n
\"Yet the region -- above all Vietnam, the Philippines, China
\nand Indonesia -- is lagging far behind the investments other
\ncomparable countries, those in South America, say, are carrying
\nout,\" East Asian expert Harinder Kohli of the World Bank told the
\nconference.<\/p>\n
Just where \"underinvestment\" in infrastructure can lead, in
\neconomic terms, can be seen in the setbacks suffered in some
\ncountries in the region. According to the World Bank, a decline
\nof two percent in the Philippines' growth rate in 1995 could be
\nblamed on insufficient infrastructure investment.<\/p>\n
The South Korean government even estimates that defects in, or
\na lack of, infrastructure means an economy 16 percent smaller
\ntoday than it otherwise might have been. And in China, widespread
\ntransportation bottlenecks entail huge economic losses.<\/p>\n
At the same time, Kohli warned, underinvestment can trigger a
\nvicious circle with unforeseen social consequences. Above all, a
\nhuge disparity exists in the level of infrastructure development
\nbetween Asian cities and the countryside: the imbalance is
\ntypical of the region, with only a few exceptions such as the
\ncity-state of Singapore, or Hong Kong, with its relatively small
\nland mass.<\/p>\n
This is as true for energy and water as for transport and
\ntelecommunications. In the Chinese metropolis of Shanghai, for
\nexample, the number of automobiles has increased so steadily that
\ntraffic congestion is a huge problem, and the living standards of
\nregistered, permanent residents is relatively high. Yet out in
\nthe countryside, most Chinese have access to neither sanitation
\nfacilities nor electricity.<\/p>\n
A natural consequence is that everywhere across China's vast
\nhinterland, an ever-increasing flood of migrant workers is
\nstreaming toward the cities. Similar forces are at work
\nthroughout the region, with the result that more than 100 cities
\nin East and Southeast Asia now have populations of at least one
\nmillion.<\/p>\n
One-third of Southeast Asia's approximately 500 million people
\nis already living in urban areas -- and some 20 million are
\njoining them every year. By 2020, cities will be home to a
\nmajority of people across Asia.<\/p>\n
\"Only rapid and sufficient investment in the building of
\ninfrastructure can cope with this onrush,\" said Kohli.<\/p>\n
Yet the sums required will be vast. According to World Bank
\nestimates, East Asia will need to invest 1.2 to 1.5 trillion
\ndollars in the sector over the next decade alone. And experts are
\nagreed that the hand of government cannot remedy the situation in
\nany of the countries.<\/p>\n
\"Not only money, but also the necessary administrative and
\nmanagement knowledge is often lacking\", Kohli said, adding that
\nonly private investors could provide it. Yet in the past year the
\nshare of infrastructure work carried out by private investors
\nbarely reached 10 percent.<\/p>\n
One dilemma is that the private sector is generally interested
\nonly in those projects expected to recoup their outlay in seven
\nor eight years, and shuns the many large-scale projects that can
\nbe profitable only in the longer term.<\/p>\n
In fact, said Thurow, the public and private sectors can work
\ntogether - and the long-term public interest can only be served
\nwhen they do so. Governments can look after essential services,
\nas well as the provision of water and transport to more remote
\nareas, he explained. \"Private investors, on the other hand, can
\ngo into the more lucrative areas, such as energy and telecoms.\"<\/p>\n
Speaking later to Die Welt, Kohli said Asia should keep its
\ndistance from a type of thinking about infrastructure that has
\nfor decades been well entrenched, especially in Europe. \"Only
\nwhen infrastructure is no longer seen as something free, but as a
\nbusiness, will there be more investment,\" he said.<\/p>\n
In that way, initial skepticism over road tolls in Indonesia
\neventually gave way to support after the public saw that service
\nhad improved immensely, the World Bank advisor said, adding that
\nstreet user fees for drivers in traffic-choked Asian cities such
\nas Bangkok and Manila, combined with better traffic controls,
\nwould quickly result in considerable improvement.<\/p>\n
Thurow said the Chinese will also have to accept higher
\ninfrastructure user fees.<\/p>\n
\"Energy, water and transport costs were allowed to remain low
\nduring the first, economically successful phase of development.
\nThere was hardly any competition\", he said. \"But only through
\nhigher incomes, and also higher investments and better service,
\nin transport, say, will the high economic growth rate be
\nmaintained in the second phase.\"<\/p>\n
China has long had strong competition from India, Pakistan and
\nSouth American countries, and the assumption that higher user
\nfees and charges will automatically scare industrial investors
\naway is false, he said.<\/p>\n
\"What's most important here is service. Already today, huge
\nquantities of goods are sitting for months in railway stations
\nbecause of a lack of transport,\" Thurow stressed.<\/p>\n
\"If that does not change, investors will go away, despite low
\ncosts for infrastructure and wages.\"<\/p>",
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