REGIONAL INFRASTRUCTURE DEVELOPMENT OPTIONS FOR FINANCING International CEO

REGIONAL INFRASTRUCTURE DEVELOPMENT: OPTIONS FOR FINANCING International CEO Forum IV Dr. Ravi Ratnayake Director Poverty and Development Division UNESCAP 17 December 2007, Bangkok 1

Structure of the Presentation Role of Infrastructure Challenges Infrastructure investment needs Regional cooperation for financing infrastructure 2

Infrastructure & Economic Growth Infrastructure is key to: Production of goods & services Trade & investment Regional integration 3

Infrastructure & MDGs Infrastructure promotes: Sharing the benefits of growth Income generation Education & Health 4

Challenges Transport Rural connectivity is an issue in some countries Water & Sanitation Access to safe drinking water & sanitation is low Energy One billion people lack access to electricity 5

Challenges ICT Very visible digital divide Natural Disasters The Asian & Pacific region is the most disaster-prone region of the world 6

Infrastructure Investment Requirements Aggregated Demand & Limited Coverage 600 500 >600 B 400 300 200 100 228 B Annual Needs (US$ bill. ) Sectoral Projections & Broader Coverage 0 7

UNESCAP Estimates (Annual Needs in US$ billion) Energy ICT 201 B (33. 0%) 21 B (3. 4%) Telecom Transport Wat-San Disaster TOTAL 224 B (36. 8%) Energy Transport 107 B (17. 6%) W&S 56 B (9. 2%) > 600 B 8

Financing Gap: Sectoral Distribution UNESCAP-based Estimate GAP: US$ 220 B / yr WATER US$ 66. 0 B / yr (30%) ICT ENERGY US$ 60. 7 B / yr (28%) US$ 14. 4 B / yr (7%) DISASTER MANAGEMENT US$ 27. 1 B / yr (12%) TRANSPORT US$ 52. 0 B / yr (24%) 9

Financing Gap & Regional Resources US$ billions UNESCAPbased Gap Surplus Forex 220 B / yr 200 B / yr >3 T 10

Regional Cooperation How to intermediate financial resources in the region to infrastructure investment ? The Study puts forward four options for regional cooperation in financing infrastructure development 11

Institutional Arrangements 1. Asian Development Bank Expand its mandate: Give higher priority to infrastructure development ASIAN DEVELOPMENT BANK Facilitate its access to capital markets 12

Institutional Arrangements 2. Subregional Development Banks & Funds Operationalize, reinvigorate & consolidate existing proposals: North East Asian Development Bank South Asian Development Fund 13

Institutional Arrangements 3. Asian Bond Fund Expand its mandate to increase geographical coverage financial scale 14

Institutional Arrangements 4. A New Institution New financial institution modeled after the EIB Raise funds from capital markets Provide financing & guarantees Assist in the identification & evaluation of projects 15

Benefits for SMEs Potential is high Globally account for 50% of GDP, 30% exports 60 -75% of private employment Major source of innovation and economic and social cohesion Growth of SMEs hampered by infrastructure deficit Regional development bank could take a lead in financing the infrastructure gap 16

Thank you United Nations ESCAP 17