Dynamics: power to the people

Asia: the infrastructure challenge

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Asia’s economic growth has been meteoric, but challenges remain around the region’s infrastructure, says Bill Banks.

Lack of basic infrastructure holds back economic development, increases health problems and reduces life expectancies.

Despite the booming economy, South Asia has the world’s largest concentration of poor people, with more than 500 million people living on less than US$1.25 a day, according to The World Bank. A key cause of this systemic poverty lies with the region’s infrastructure.

City slickers

A key factor in the increasing need for better infrastructure is the rise of urbanization — not just in Asia but around the world.

In many developing economies, meeting basic human needs for potable water, wastewater treatment and electricity remains a challenge. Lack of this basic infrastructure holds back economic development, increases health problems and reduces life expectancies.

The costs of multimodal mass transit systems — including light rail, subways and bus rapid transit — are universally steep and the alternative of car dependence merely delivers traffic gridlock. Power generation is another key priority.

Underpinning these concerns is the increasing need to maintain and overhaul existing infrastructure. Even if the funding is available for these investments, convincing a public tired of austerity to agree to increased taxes and user fees can be tough.

Adapting to new realities

Policy-makers continue to look to public-private partnerships (PPPs) as a key way to address these myriad issues.

Finding the necessary funds is the first step. Governments often have little option but to work with not only the private sector to fund the necessary investments but also international donor agencies such as The World Bank and the Asian Development Bank.

These multilateral organizations are increasingly lending directly to projects or assisting these economies with the establishment and implementation of private financing policy and procurement advice.

Robust economic and cost-benefit scrutiny is also critical to the success of any infrastructure project. Such analysis will reassure policy-makers that their investments will deliver maximum economic impact. However, to ensure this happens, projects must be properly selected on sound economic grounds and then delivered within a robust procurement framework.

PPPs, then, are best understood as an infrastructure delivery mechanism, implemented after the detailed planning has already occurred. For PPPs to work, governments should fine-tune procurement models and make the process more efficient, encouraging the adoption of best practices.

Infrastructure development, by its very nature, remains in continual flux. New technologies, funding needs, construction methods and changing demographics continually shape and impact infrastructure’s priorities and processes.

In Asia, and indeed other regions around the world, the flexibility to adapt to changing circumstances is crucial both today, and into the future.