Asian infrastructure needs $1t in investments<\/p>\n
MANILA (AFP): Asia needs about one trillion dollars in
\ninvestments to ease infrastructure bottlenecks by the end of the
\ncentury, with regional giant China gobbling up half of the funds,
\nthe Asian Development Bank (ADB) said.<\/p>\n
The Philippine-based lending institution said in a paper
\nobtained by AFP that infrastructure investment in the region is
\nto increase from the current five percent of gross domestic
\nproduct (GDP) to seven percent.<\/p>\n
\"Of the one trillion dollars, transport will account for $350
\nbillion, telecommunications for about $150 billion, power for
\nabout $350 billion and water supply for about $100 billion, \" it
\nadded.<\/p>\n
Bruce Murray, ADB programs manager for China, Hong Kong,
\nMongolia and Taipei, told AFP in an interview that China will
\naccount for almost half of the investments, followed by India and
\nIndonesia.<\/p>\n
The communist behemoth, whose sterling growth has made it
\nAsia's economic superstar, needs more than 500 billion dollars to
\nimprove the transportation and communications sectors alone over
\nthe next 10 years, Murray said.<\/p>\n
\"Infrastructure in China is a tremendous challenge,\" he said,
\nnoting that an efficient transportation and communication system
\nis essential to the country's shift to a market economy.<\/p>\n
The Chinese economy expanded by 11.8 percent in 1994, from
\n13.4 percent in 1993, and is projected by ADB to slow down to 9.8
\npercent and 8.9 percent respectively in 1995 and 1996.<\/p>\n
Freight traffic volume has been doubling every nine years and
\npassenger traffic every seven years. Demand for telecommunication
\nservices has been growing by 15 percent annually, the ADB paper
\nsaid.<\/p>\n
In power, the country needs to install 115,000 megawatts (MW)
\nto meet its target of churning out 300,000 MW by the year 2000,
\nsaid ADB senior programs officer Edgar Cua. Each megawatt costs
\nroughly one million dollars in infrastructure costs.<\/p>\n
Murray said a large portion of the investment in China's
\nenergy sector would be geared to technological innovations to
\nreduce the environmental pollution caused by coal-fired power
\nplants.<\/p>\n
\"You can't get away from coal,\" he said, explaining that it
\nwould remain China's main source of energy.<\/p>\n
With the huge financial requirement, Murray said \"it is fairly
\nclear\" that funds cannot be generated through the traditional
\nmeans such as official development assistance and government
\nresources.<\/p>\n
\"A large portion will have to come from the private sector,
\nboth domestic and foreign,\" he said, citing bonds and the equity
\nmarkets as \"major sources of funding to complement joint
\nventures, equity investments\" and the build-operate and transfer
\n(BOT) scheme.<\/p>\n
However, since China has to compete with other countries for
\nfinancing, ADB said Beijing has to adopt several measures to
\nmaximize foreign funding mobilization.<\/p>\n
These measures include taming inflation and further developing
\nthe domestic capital markets and the banking system.<\/p>\n
Beijing also needs to improve the investment climate, ensure
\ncareful selection of projects, and conduct feasibility studies to
\nmake sure that these are \"technically sound, economically viable,
\nfinancially rewarding\" and not harmful to the environment.<\/p>\n
Murray allayed fears that China's huge funding requirement
\nwould drain money from the rest of region, saying that \"at the
\nend of the day\" smaller Asian nations must also implement similar
\nreforms in their economies in order to get a fair share of
\nforeign funds.<\/p>\n
He said easing the infrastructure bottlenecks would likewise
\nsolve a migration problem from China's less developed inland
\nareas to the more vibrant coastal cities brought about by uneven
\ndevelopment.<\/p>\n
About 130 million inland residents have migrated to the
\ncoastal areas, \"putting tremendous pressure on urban
\ninfrastructure,\" he said.<\/p>",
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