Asia needs $1t to fund infrastructure projects

Asia needs $1t to fund infrastructure projects

MANILA (Reuters): Asia will need up to US$1 trillion over the next 10 years to fund infrastructure development, Asian Development Bank (ADB) chief Tadao Chino said on Friday.

Governments and international financial institutions must attract these funds while avoiding the volatility of past capital flows, he told the annual Asia Society conference in Manila.

He said the private sector would supply the bulk of the funds and that overseas capital alone could not meet the task.

"International financial institutions, together with others including those in the private sector, must strike carefully a balance between liberalizing capital flows and the stability of international capital markets," Chino said.

"The needs for external financing are tremendous. Infrastructure of many countries in the region is still under- developed and has become one of the bottlenecks of its further economic development," he added.

Chino noted other forecasters had made higher estimates of the region's infrastructure-funding needs over the next decade than the ADB's estimate of one trillion dollars. But he said they would be revised down because of Asia's financial crisis.

He said Asia's high domestic savings rates must be tapped.

"We cannot therefore over-emphasis the importance of developing capital markets in the region," Chino said.

He called on international financial institutions to back crisis-hit nations with adequate liquidity while governments focus on structural reforms without contracting the real economy.

He also said institutions should not to be sidetracked from their primary purpose of fostering development in the region.

"The issues that need to be addressed include poverty reduction, economic growth, financial-sector development and environmental protection," Chino said.

"While immediate support to the affected economies in response to the outbreak of the crisis has been timely and necessary, we cannot let the crisis blur our vision over the long run's development objectives," he said.