Olivier and Mann – According to a report made by the Asian Development Bank (ADB), emerging Pacific and Asian nations will need to spend up to US$1.7 trillion a year to develop their infrastructure and sustain Asia’s growth. The amount was more than twice the last projection made eight years ago.
The Philippine-based bank’s report covered 45 countries in the Asia-Pacific region, however, even after the substantial improvements that have been made in infrastructure that resulted in poverty reduction and economic progress, a huge divide still persists.
The infrastructure spending in the region needs to address power generation problems as more than 400 million people still don’t have electricity, and 1.5 billion people in the region still need basic sanitation and 300 million people in the region access to safe drinking water.
The ADB report also said that most of the countries in the region will need modern ports, roads, and railways to connect them to local and global markets.
The demand to improve and expand the region’s current infrastructure still far exceeds supply and is needed to underpin quality, spur financial development, and address the pressing issue of global warming, said the bank’s top officials.
The 25 countries that have almost 96% of the population currently spend a combined amount of US$881 billion in infrastructure annually.
A large part infrastructure expenditures should be used to adapt to global warming, such as changing from fossil fuel dependent vehicles to mass transportation, raising road embankments, strengthening existing structures and flood control networks to protect against rising ocean levels and unpredictable weather patterns.
The report also showed that including the climate change issue, the region will need to spend US$1.7 trillion on infrastructure per year.
The ADB report suggested that governments should put in place institutional changes which will enable infrastructure investment to be more attractive to investors, which in turn would generate more revenue for the government in the form of taxes together with other policy changes to put infrastructure spending at the top of the agenda.