Infrastructure financing in Asia

An ADB report has estimated the infrastructure demand in developing Asia and the Pacific will exceed $22.6 trillion through 2030, which will rise to over $26 trillion when climate change mitigation and adaptation costs are incorporated. To tackle the challenge of financing infrastructure investment, the Report reviews and offers a variety of innovative financing solutions and policy approaches to unlock long-term funding to finance infrastructure. This Report will set forth some concrete and specific directions for infrastructure financing.

The Report examines Asia’s current practices and novel solutions that can help meet the infrastructure gap. It explores alternative financing methods such as wide-ranging public finance and institutional reforms to create a stronger enabling environment for public–private partnerships. It provides out-of-the box solutions in the form of taxing the increase in land and property values that benefit from mass transit investments to finance these investments, and smart energy grids investments to foster energy infrastructure. It also dives into the efforts of some Asian countries in developing local currency bond markets to provide long-term local currency financing. It also examines the use of green bonds to finance sustainable growth in Asia.

In summary the Report:

1. reviews past and future role of infrastructure in Asia’s development and presents theoretical and empirical evidence on Infrastructure financing, growth and development

2. highlights factors that matter for closing Asia’s infrastructure financing gap, such as institutional environment.

3. explores novel financing solutions to obtain long-term funding to finance infrastructure investments, such as smart grids, spillover capturing tax revenue, public–private partnerships, infrastructure bonds and green bonds.

Speakers

Dr Donghyun Park, Principal Economist, Economic Research and Regional Cooperation Department (ERCD), Asian Development Bank (ADB)

Image: Courtesy photo on the U.S. Indo-Pacific Command website