Meeting proposes forum to boost infrastructure

JAKARTA (JP): The five-day World Infrastructure Forum-Asia 1994 concluded here yesterday with an agreement to form a communication forum to boost infrastructure development in Asia.

Chairman of the closing ceremony M. Rahmatullah said the forum, called the Asian Infrastructure Development Align (AIDA), will be designed to find ways of financing infrastructure development in Asia.

"The AIDA is to follow up the results of this symposium and to help countries in Asia with their infrastructure development," he said after the closing session.

Rahmatullah, director of the Transport, Communications and Tourism Division at the United Nations, noted that the forum will also promote cooperation among the governments, the private sectors and multilateral financial institutions in Asia.

Both President Soeharto and Philippine President Fidel Ramos acknowledged that cooperation among the three magnitudes is sorely needed to construct infrastructure in the developing world.

"Building infrastructure needs effective alliances and partnerships among the governments, private sectors and multilateral institutions. This is the gate for achievement of future progress," Ramos said on the second day of the conference.

Among the three, the governments turn out to be the strongest bidders in the infrastructure development. Thus, the forum calls on governments to ease investment procedures so that the private sectors will be encouraged to take part.

Asian countries are expected to focus their energy on building a dynamic economy through rapid infrastructure development. "Infrastructure represents, if not the engine, the will of economic activities."

Spending

Asian countries are forecast to spend some US$2.5 trillion to build infrastructure projects in the continent by the year 2000. To anticipate the high spending on infrastructure, the Asian Development Bank (ADB) is assigned to raise $1 trillion or more.

John Taylor, director of the Private Sector Department at the ADB, said yesterday that every country is encouraged to raise funds through capital markets since international financial institutions cannot provide all the funds needed for all infrastructure projects.

"Through capital markets, governments can generate local resources effectively for their infrastructure development," Taylor noted.

Meanwhile, Greg Ingram, a World Bank expert on infrastructure, suggested that governments should be careful in offering incentives to attract private investment, especially if the incentives are given in the form of risk guarantees.

"Guarantees need to be analyzed with care to ensure that the entity which has the most control over the risk should bear the risk," Ingram said yesterday.

He noted that governments should normally provide guarantees for policy risks or exchange rate risks, while service providers should carry commercial risks.

When asked, Ingram declined to comment on the deal between the Indonesian government and Esso Natuna Inc., an affiliate of the U.S. Exxon Corp., on a multi-billion dollar natural gas liquefaction project in Natuna of Riau, in which the Esso insisted that the government share the environmental risks whenever there is an explosion at the gas plant.

"It's clear enough, however, that the one who has the most control over the risks should bear the risks." (rid)