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ADB to Asia: Tap savings, private sector for infrastructure


YOKOHAMA, JAPAN — Asia must be creative in finding ways to tap its multi-trillion dollar savings and to mobilize private sector support for new infrastructure needed to sustain growth in the coming years, Asian Development Bank president Haruhiko Kuroda said this weekend. "The infrastructure challenge for developing Asia is one of the most daunting we face today," the bank said in a statement released Sunday, quoting Kuroda. “We must work diligently to be innovative, yet financially responsible, in mobilizing Asian savings to deliver successful, sustainable and robust infrastructure projects," Kuroda told delegates at the Infrastructure Finance Forum here. The event, jointly sponsored by ADB, the Asia Pacific Economic Cooperation Business Advisory Council and Japan Bank for International Cooperation, is being held in Yokohama, Japan today, the bank said in the statement. Gross domestic savings in emerging Asia reached close to $4 trillion in 2009. Much of this large cash pile has been underutilized, with regulatory obstacles, currency mismatches and underdeveloped capital markets hindering broader financing of essential infrastructure, the Manila-based bank said. ADB calculated that about $8 trillion in new infrastructure investments will be required in the region in the 10 years to 2020 to support current levels of economic growth. Of the infrastructure needs, energy and electricity will take up 40 percent of the total, followed by transport (25 percent). Social infrastructure for education, health, water and sanitation, and other public goods will account for another 25 percent. The balance will be mainly investments in telecommunications infrastructure. With the public sector unable to meet the immense costs on its own, public-private partnerships are essential, and governments should look to strengthen existing legal and regulatory frameworks to attract more private investors and finance from funds and institutional investors, the bank said. "Infrastructure funds and local institutional investors, like pension and provident funds, can channel Asian savings to help finance public-private infrastructure projects," Kuroda said. Further development of domestic capital markets and more local currency lending will also help address currency mismatches that deter investors in the sector. ADB's infrastructure-related investments are expected to exceed $8 billion annually — or two-thirds of all its lending — over the next 10 years. — VS, GMANews.TV
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