Region Needs $1 Trillion for Infra Investments A[euro]" ADB

Article excerpt

Byline: EDU H. LOPEZ

East Asia will need $1 trillion in investments to fund infrastructure over the next several years, a level of investment far beyond the capacity of governments.

"We must intensify our efforts to build rails, roads and other cross-border infrastructure and coordinate the associated laws, rules and regulations. Financing will be a major challenge," said Haruhiko Kuroda, president of the Asian Development Bank (ADB).

Kuroda told participants of the Asia Business Conference that mobilizing the necessary resources will require further strengthening of Asiaas capital markets.

"It is ironic that Asiaas massive needs for infrastructure investment go unmet while excess savings find their way to the global capital markets."

"One reason for this is that Asian savings are not being efficiently put to work by the regionas financial system. It is difficult for investors to find the right investment opportunities in the region," said Kuroda.

He noted that market infrastructure is underdeveloped in many respects, and investor concerns include efficient pricing and liquidity.

"Perceived weaknesses in legal certainty and in regulatory frameworks could also be discouraging wider investment. These issues obviously need to be resolved."

By ensuring that more of Asiaas savings remain in the region, Asia can also make a significant contribution to correcting global imbalances. There will, of course, be ramifications for international financial markets, said Kuroda.

He expects that change will be gradual because its high savings will ensure that Asia continues to provide capital to international markets for the foreseeable future.

"The region also needs to broaden trade and investment initiatives to reduce the spaghetti bowl effect and ensure that Asian regionalism contributes to strengthening the global economic system. …