Asia Needs US$26 Trillion in Infrastructure until 2030

Highway and rail to Medan Kuala Namu Airport in Indonesia

BLOOMBERG- Asia’s infrastructure race is just getting started. Emerging economies across the region will need to invest as much as US$26 trillion on building everything from transport networks to clean water through 2030 to maintain growth, eradicate poverty and offset climate change.

That is according to an Asian Development Bank report that highlights the need for massive construction and upgrading of public works and for much greater private sector investment.

Leaving out spending to mitigate climate change, some US$22.6 trillion would still be needed over the same period, the ADB said.

 Big-ticket investment of US$14.7 trillion is needed for power, US$8.4 trillion for transport, US$2.3 trillion for telecommunication costs and US$800bil for water and sanitation, adjusted for climate change.

The bulk of infrastructure work is needed in East Asia, which accounts for 61% of the ADB estimate. As a percentage of gross domestic product (GDP), the Pacific leads all other sub regions needing investment valued at 9.1% of GDP, followed by South Asia at 8.8%.

The new projection of a US$1.7 trillion annual infrastructure need, adjusted for climate change, is more than double the US$750bil that the Manila-based development bank estimated in 2009 – though the latest report looks at 45 of the ADB’s developing members compared with 32 last time and uses 2015 prices compared with 2008 ones.

Governments around the region are promising major new spending on public works, often with competing promises of heavy investment from China and Japan. At the same time, the new China-backed Asian Infrastructure Investment Bank has also begun funding projects, offering an alternative to the US-influenced World Bank and Japanese-driven ADB.

Philippine president Rodrigo Duterte has embarked on an ambitious US$160bil infrastructure plan as he seeks to sustain growth of about 7%, among the fastest in the world. Malaysia, which already boasts world-class infrastructure, is pushing ahead with more projects including new rail lines in Kuala Lumpur, the 2,000km Pan Borneo Highway and the West Coast Expressway.

While Indonesian president Joko Widodo struggled to get infrastructure off the ground in his early years in office, momentum is now building with the government speeding up projects including an uninterrupted toll-road connection in the country’s main islands and construction of a 720km railway from Jakarta to Surabaya.

(Source: Bloomberg)