MANILA, Philippines — The Asian Development Bank (ADB) is planning to boost infrastructure investments in ASEAN, in a bid to capitalize on the economic growth in the region.
“ADB will increase financing throughout the ASEAN region, based on its eight principles for infrastructure investment,” ADB president Takehiko Nakao said in a speech at the 21st Association of Southeast Asian Nations (ASEAN) Finance Ministers’ and Central Bank Governors’ Meetings in Singapore last week.
He said the ADB would further bolster policy advice and capacity building for governments, enhance collaboration with the private sector and other partners, and strengthen cooperation with the ASEAN Infrastructure Fund (AIF).
AIF is a dedicated fund established by ADB and ASEAN member nations to address the region’s infrastructure development needs by mobilizing regional savings.
Last year, AIF approved a total of $520 million for nine projects, all co-financed with ADB. Among the approved AIF projects are an ASEAN Highway Network transport project in Myanmar and three ASEAN Power Grid projects in Indonesia and Vietnam.
Nakao emphasized the need for continued investment in infrastructure in ASEAN, including public-private partnerships, due to the region’s infrastructure gap.
The ADB recently estimated the region would need to invest $210 billion per year through 2030 to meet its infrastructure needs. Also, over 52 million people lack access to electricity, 61 million remain without safe drinking water, and 200 million do not have basic sanitation.
“More and better infrastructure will help ASEAN unleash the region’s economic potential and reduce poverty,” the ADB said.
Nakao outlined ADB’s eight principles for supporting infrastructure investment: (1) alignment with national development strategy; (2) economic feasibility, life-cycle costs, and debt sustainability; (3) high level of technology and innovative solutions; (4) social and environmental safeguards; (5) climate resilience and mitigation; (6) good governance; (7) jobs, capacity building, and gender mainstreaming; and (8) catalyzing and mobilizing financial resources.
ASEAN should take advantage of its economic growth momentum. The ADB projects ASEAN’s economic growth could reach 5.2 percent in 2018.
“We see continued robust economic growth across ASEAN countries, supported by domestic demand as well as a synchronized recovery in global trade,” Nakao said.
“ASEAN can take advantage of the current growth momentum to deepen reforms, while building fiscal space and financial resilience. Strengthening and deepening trade links with global and regional value chains could provide ASEAN a buffer against global uncertainties,” he added.
Moreover, Nakao discussed how fintech could help promote financial inclusion in Asia.
At present, about two billion people in the world still do not have access to finance and half of them live in Asia and the Pacific.
“By advancing innovations in financial services – such as smartphone-enabled financing, crowd-funding, and blockchain technology – fintech could greatly reduce transaction costs and improve access to financial services, particularly for underserved populations,” Nakao said.