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April 13th, 2006, 12:28 AM
U.N. body urges Asia to boost infrastructure financing
JAKARTA, April 12 (Reuters) - The Asia Pacific region needs to boost efforts to raise $180 billion annually to improve its infrastructure, the U.N. body in charge of promoting development in the region said on Wednesday.
The U.N.'s Economic and Social Commission for Asia and the Pacific (UNESCAP) issued the statement at the end of its six-day meeting in Jakarta which also called for greater cooperation in transportation, communication as well as disaster management.
"Participants at the round table agreed that the region should work together to close the financing gap of an estimated $180 billion to upgrade the region's infrastructure each year," the commission said in a statement, referring to a ministerial meeting of the members of the commission.
The Commission is the largest of the U.N.'s five regional commissions in terms of population and area covered.
The commission said it was confident of financing solutions.
"I think we can say we are 70 percent on the way to finding solutions to close the financing gap, which is very encouraging," commission executive secretary Kim Hak-Su said in the statement.
He did not give details but part of the resolution stated the commission welcomed what it says is an increased emphasis on the part of the World Bank and the Asian Development Bank to help boost infrastructure development in the region.
Headquartered in Bangkok, Thailand, the commission aims to promote economic development and social progress in the developing countries of the Asian and Pacific region.
December 7th, 2006, 05:28 AM
ANALYSIS-Is Asia on cusp of new infrastructure boom?
By Dominic Whiting and Umesh Desai
BANGKOK/HONG KONG, Nov 10 (Reuters) - Investors are again scouting for infrastructure deals in Asia, which craves roads, ports and power plants to keep its economies in the fast lane, but failed projects from the late 1990s meltdown and political risk still haunt many countries.
Over the next five years East Asia will require $1 trillion in infrastructure funding while Southeast Asia will need up to $60 billion, law firm Clifford Chance Wong Pte Ltd estimates.
Indonesia is offering risk-sharing to try to make long-term private funding palatable and Singapore has floated public-private partnerships (PPPs). India eased rules on inward investment in construction last year as it dawned that it needed $320 billion to overhaul roads, ports and power systems.
But a tour of Bangkok is a stark reminder of the dangers.
Unfinished water treatment works are a monument to how Britain's Northwest Water, now a unit of United Utilities Plc. , was burnt when Thailand's economic bubble burst in 1997, the baht currency was devalued, and successive governments fell.
An elevated high-speed Bangkok rail line by Hong Kong's Hopewell Holdings is nicknamed the "hopeless project", and its abandoned concrete structures "stonehenge", as plans to raise funds selling station-side homes died in a property crash.
"There's a rhetoric and reality gap," said Paul Reddel, head of the World Bank's public-private infrastructure advisory unit.
"There are a lot of headlines about strong growth, but where are the projects? There's also a mismatch between returns and risk. Returns are being beaten down to single digits."
ABP, Europe's biggest pension fund, plans to pour 4 billion euros (US$5.14 billion) into global infrastructure over three years because it makes a good fit for its long-term liabilities.
The Dutch fund is setting up an office in Hong Kong, but a lack of financial tools in Asia worries Robbert Coomans, ABP's head of alternative investment at ABP.
"In Europe you can hedge, but here, can you really get a 30-year hedge on a currency?" Coomans said. "The problem is that it's so expensive that in the end there's no return left.?"
VERGE OF BOOM
The Asian Development Bank (ADB), which provides soft loans for infrastructure, has started offering currency hedging.
It will swap hard currency for local currency with developing Asian countries for tenors stretching to 15 or 20 years. The local currency will in turn be lent to infrastructure project developers, sponsors, and financial intermediaries.
"We are on the verge of an investment boom in infrastructure," said ADB Vice-President Lawrence Greenwood.
"It's triggered by having pro-reform governments come in and undertake both sound macro policy and structural reforms that have been politically difficult in the past."
He cited Indonesia's government, which has set aside about $440 million to provide financial guarantees and land for projects. But some analysts say that is too little to draw the $20 billion of investment the country wants.
Investors are also sniffing around China, where booming trade and manufacturing have put strains on ports, railways and power grids; tThe Philippines wants to spend $7.2 billion; and Thailand has hatched a plan for a $45 billion binge -- although political turbulence in both countries, including Thailand's military coup in September -- threaten to derail the plans.
Patience is most definitely a virtue.
Thailand just opened a new $4 billion airport after 40 years in the works and Manila airport's third terminal is set to open over four years late after the government settled a compensation case with a building group led by Germany's Fraport AG .
Union and public pressure put paid to ideas of privatising Thai power generation, although Malaysia's identical plan to let private producers plug into a power pool is being revived.
Sensing an opportunity, fund managers are creating infrastructure packages for investors, with Australia's Macquarie Bank at the forefront with private and listed South Korean funds and a fund of global assets listed in Singapore.
Fund manager IL&FS is planning an India infrastructure fund, with investors expected to stump up around 80 percent of the $750 million for buying roads, ports and power assets as well as some new projects. It promises internal rates of return of 20 percent.
But Asian politics are a big gamble for investors. Pet projects are often abandoned when governments fall, partly because new deals can become personal money spinning schemes.
The $2.9 billion Dabhol power plant in India built by Enron Corp., was mothballed for nearly five years after a billing dispute, complicated by a change of state government.
"Politicians are short term, so your project has to fit into their timeframes," said IL&FS Managing Director Shahzaad Dalal.
February 28th, 2007, 08:41 AM
ADB urges Bangladesh to improve infrastructure
DHAKA, Feb 25 (Reuters) - The Asian Development Bank (ADB) said on Sunday that Bangladesh should improve infrastructure, including power and transport, to sustain higher economic growth.
In its Bangladesh Quarterly Economic Update December 2006 released on Sunday, the bank said sustaining higher growth will need significantly improved infrastructure.
Bangladesh's economy grew 6.7 percent in the year ended June 2006 and the ADB forecast 6.5 percent growth in fiscal 2006/07.
"The country faces a gigantic task to meet growing energy demand; this will require substantial investment and faster progress with reforms," the Manila-based bank said.
The ADB report said "there is an urgent need to move forward on the transport sector; to approve and carry out various agreed road sector policies and plans; improve operations of Chittagong Port; and to proceed with agreed railway sector reforms."
Chittagong Port, which handles nearly 85 percent of imports and 80 percent of exports, suffers from low productivity, labour problems, and weak management.
During July-December, the first half of the 2006/07 fiscal year, the manufacturing sector continued to maintain steady growth as indicated by robust growth in manufacturing exports led by the garment sector, the import of industrial raw materials, and private sector credit, it said.
The services sector also continued to expand in line with rapid growth in industry.
"Despite the slightly larger trade deficit, the current account recorded a surplus of $302 million because of the surge in overseas workers' remittances," the ADB said.
But weak revenue collection poses considerable risk to fiscal management. During the first seven months of 2006/07, taxes increased by only 9.1 percent compared with the annual target of 19.2 percent.
"Reforms at the National Board of Revenue need to be stepped up to strengthen tax administration, and improve transparency and accountability to ensure the desired revenue increase," the ADB said.
Bangladesh has one of the lowest tax-to-GDP ratios in the world.
The growth in agriculture is expected to moderate from the post-flood high growth of the preceding year.
Monthly turnover of the Dhaka Stock Exchange increased to 16.19 billion taka ($270.2 million) in January 2007 -- a staggering 105 percent over December 2006 because of easing of the political situation.