Accessibility/Mobile Features
Skip Navigation
Skip to Content
Editorial News
Business
Classified Sites

The Canadian Press - ONLINE EDITION

ADB says private role in financing Southeast Asian infrastructure has lagged since 1997 crisis

Asian Development Bank Vice President Stephen Groff gestures during an interview with The Associated Press on the sidelines of the World Economic Forum on Asia which opened Thursday, May 22, 2014, at the financial district of Makati city, east of Manila, Philippines. Groff warned Thursday of a largely unnoticed crisis in Southeast Asia: private investment in infrastructure has not recovered in the nearly two decades since the Asian financial crisis. (AP Photo/Bullit Marquez)

Enlarge Image

Asian Development Bank Vice President Stephen Groff gestures during an interview with The Associated Press on the sidelines of the World Economic Forum on Asia which opened Thursday, May 22, 2014, at the financial district of Makati city, east of Manila, Philippines. Groff warned Thursday of a largely unnoticed crisis in Southeast Asia: private investment in infrastructure has not recovered in the nearly two decades since the Asian financial crisis. (AP Photo/Bullit Marquez)

MANILA, Philippines - An Asian Development Bank official warned Thursday of a largely unnoticed crisis in Southeast Asia: private investment in infrastructure has not recovered in the nearly two decades since the Asian financial crisis.

Stephen Groff, ADB Vice-President for operations, said in an interview on the sidelines of the World Economic Forum on East Asia, that private funding for infrastructure in five of the biggest Southeast Asian members has declined steeply. It was $38 billion in 1997 and around $25 billion in 2010.

"It's coming up but it's nothing like it was in 1997," he told The Associated Press. "Essentially, the ASEAN financial crisis led to a crisis of confidence with governments, a crisis of confidence in the private sector, and there hasn't been enough investment or discussion or development of tools that allow risk-sharing to be used appropriately."

The five members he referred to were Indonesia, Malaysia, the Philippines, Thailand and Vietnam. The other members are Singapore, Cambodia, Laos, Myanmar and Brunei.

Groff said while private investors assume risks, there are other types of risks that governments and financial institutions need to assume "and that hasn't yet come into play as much as it needs to."

The region, which will launch next year a common market comprising 600 million people, needs to spend $60 billion yearly until 2020 to meet its infrastructure needs. But Groff said ASEAN currently spends only about half that.

He said while there has been some progress in a number of countries in recent years in helping facilitate private investments in infrastructure by addressing legal and regulatory issues that restrict private participation, the process is not easy and takes time.

There is a need to think about financing interest mechanisms, mechanisms to mitigate risks, developing bankable projects that attract private investments and bringing back home the region's extra savings that have been invested in low-yielding treasury bonds in the U.S. and Europe, he added.

To bring back some of those funds, the ADB has helped develop the ASEAN Infrastructure Fund which began lending last year. Two infrastructure projects in Indonesia have been funded while more projects throughout the region are in the pipeline, Groff said.

The fund is being managed by the ADB, with funding coming from ASEAN members and the bank.

Indonesian Finance Minister Muhamad Chatib Basri said infrastructure is the "first priority" for his country after it had established political stability under outgoing President Susilo Bambang Yudhoyono.

However, he said the " main challenge in the future is not only sustainable growth but also shared growth."

Philippine Finance Secretary Cesar Purisima said the region's relatively young population, natural resources and its geographic location are factors that would contribute to growth. But to make sustainable growth a reality the "capital surplus region" has to make more infrastructure investments, he added.

"We have the money ... but we need to make our financial markets more efficient and more connected," he said. "Governance is the most important ingredient because businesses want predictability, want open economy, want to be able to reduce the risks."

  • Rate this Rate This Star Icon
  • This article has not yet been rated.
  • We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.

    You can also register and/or login to the site and join the conversation by leaving a comment.

    Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.

Sort by: Newest to Oldest | Oldest to Newest | Most Popular 0 Commentscomment icon

You can comment on most stories on brandonsun.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

There are no comments at the moment. Be the first to post a comment below.

Post Your Commentcomment icon

Comment
  • You have characters left

The Brandon Sun does not necessarily endorse any of the views posted. Comments are moderated before publication. By submitting your comment, you agree to our Terms and Conditions. New to commenting? Check out our Frequently Asked Questions.

letters

Make text: Larger | Smaller

Brandon Sun Business Directory
Sudden Surge: Flood of 2014
Opportunity Magazine — The Bakken
Why Not Minot?
Welcome to Winnipeg

Social Media

Canadian Mortgage Rates