By Elliot Wilson and Rashmi Kumar
Public-private partnerships remain paramount to Asia’s efforts to narrow a yawning infrastructure gap, senior officials at the Asian Development Bank told GlobalMarkets.
ADB president Takehiko Nakao said it was imperative to further boost growth rates and create new jobs across emerging Asia, but both factors were dependent on the construction of new highways, roads and power plants. Finalising chunky new PPPs were central to that process, he said.
Nakao said a new office, created in 2015 by the Manila-based multilateral and devoted to finding and funding new PPPs, was bearing fruit. “We are advising on a number of new projects, with a focus on mobilising private sector resources.” The new system was, he said, designed expressly to accelerate the process of getting PPPs from drawing board to completion. “It’s all about speed,” he said, noting that while the development bank “supported and designed the frameworks for projects”, it didn’t always put its own money to work.
Infrastructure building remains crucial to the region, with the ADB warning that developing Asia had to spend $26tr on new projects by 2030, or $1.7tr a year, just to maintain the current rate of growth. Right now, they spend $881bn a year combined. “All countries in Asia except China need more [infrastructure],” Nakao added. He pointed to the examples of Thailand, India, Pakistan and Bangladesh, all of which suffered from “a huge infrastructure gap in terms of power plant, highways, and railways”.
ADB chief economist Yasuyuki Sawada said doubling the volume of PPP-related finance in Asia would extend much-needed access to electricity and water to millions of people. He pointed to ADB data, which says doubling PPP spend in Asia to 1% of regional GDP from 0.5% at present, would give 12 million more people access to safe drinking water, and plug 14 million into national power grids.
The concept of PPP is not new to Asia. The number of projects in developing Asia rose by a compound rate of 11% a year between 1991-2015, and the region accounts for half of all completed public-private projects the developing world.