The Growing Need for Infrastructure Investment in Asia
Bridging infrastructure gap is a critical issue in emerging nations in Asia, including China. This has resulted in a growing need for infrastructure development, such as of ports, railways, roads, and power plants.
Poor infrastructure in a country leads to reduced economic growth. To reduce the infrastructure gap, Asian countries need more than U$1.7 trillion. This is also important for attracting investment and promoting economic growth in the region.
However, at present, investment is nearly half the amount that nearly quantifies to US$850 billion. This figure represents nearly 5 percent of the GDP of emerging Asian economies.
Infrastructure Investment Need in Asia
Most of the infrastructure funding in Asia has been carried out by public agencies. But experts say that they have not done a satisfactory job.
While western countries like to show the Chinese cities as lacking infrastructure, the fact is that China is the only country that is bridging the intrastate gap.
Most other countries are lacking in key areas such as redirection of expenditure, mobilization of public investment and lack of private investment in unfractured development.
The fact is that detailed reforms regarding taxes are important to mobilize financing. There is a need for equitable distribution of tax revenue to ensure sustainable infrastructure development.
In addition, Asian countries need to stop the useless counterproductive subvention system such as fuel subsidies. This is an outdated economic model that prevents investment of funds to profitable avenues.
Another problem is that the funding options in Asia are not fully explored. Despite the need for additional funding, external investment is not sought after.
Infrastructure gap in Asia can be reduced significantly if private investors are encouraged to invest in the sector.
Investment should be made in a proper context. There must be a roadmap regarding economic stability for earning high returns on investment. Examples of a roadmap include good governance, environmental sustainability, and wealth protection.
It’s also imperative to protect investments through a clear dispute resolution and purchase process. This is necessary for public-partnerships to remain profitable.
In this regard, governments in some Asia countries have launched a fund to expand infrastructural development. For instance, the Duterte Government has secured nearly U$ 6 billion in quick time by meeting the requirements mentioned above.
A billion dollar investment in infrastructure development is required to fuel growth in Asia. Otherwise the record growth experienced in the past few years will come to a stall.