Private sector must invest $1t in infrastructure: ESCAP

Private sector must invest $1t in infrastructure: ESCAP

JAKARTA (JP): The private sector is expected to shoulder most infrastructure development in the Asia-Pacific region, as governments can only provide one-third of the funds required over the next five years.

Executives from the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) revealed here yesterday that only a portion of the estimated US$1.5 trillion needed for infrastructure development was readily available.

"The resources available are only $500 million," said Ravi Sawhney, the director of ESCAP's International Trade and Economic Cooperation Division.

Speaking after the opening of the sixth Steering Group meeting of ESCAP's Committee for Regional Economic Cooperation, Sawhney explained that the findings were a result of a recent study conducted to define the infrastructure needs of the region.

Seiko Takahashi, ESCAP's acting executive secretary, also stressed the need for private sector funds saying that the region would "depend heavily on the private sector."

"That's where the funds are available," she said, while explaining the need to "pinch the finances of the private sector."

Takahashi acknowledged that such an approach is something of a departure for many countries in the region where such development traditionally stemmed from governments, but she underlined that private sector participation is crucial to fill the financial gap.

Private financing is also necessary in many places in the region as public sector savings are insufficient to finance infrastructure development. This would then prompt the regional governments to borrow the required funds which would lead to an escalating debt burden and higher inflationary pressures.

ESCAP was established in 1947 under the name of the Economic Commission for Asia and the Far East (ECAFE) before assuming its present name in 1974.

Headquartered in Bangkok, Thailand, ESCAP currently groups 48 member countries along with 10 associate members.

The four-day meeting of the steering group is aimed at formulating proposals and ideas to be brought later to the 51st ESCAP meeting in Bangkok on April 24.

One of the meeting's tasks is to continue and possibly revise the results of a previous ESCAP meeting in New Delhi last year, which drew up the "New Delhi Action Plan for Infrastructure Development."

Facilities

According to ESCAP's report on the development of infrastructure as a key to economic growth, the funds acquired would be used to develop much needed facilities in the region such as the construction of two million kilometers of roads.

Other infrastructure development would also include laying over 40,000 kilometers of railway tracks, creating a 140 new container berths and increasing the number of telephone connection lines by 180 percent.

Apart from that, there would also be a doubling in the capacity to generate electricity.

A two-fold approach is thus advocated. The first, as mentioned, is to generate funds from the private sector and the second to improve efficiency.

Though much of the onus to provide financing for infrastructure now falls on the non-public sector, Sawhney stated that government will now be expected to focus more on efficiency.

Apart from improved management and administration, higher efficiency can also be accomplished by a better maintenance, which could lead to better productivity. (mds)