Asia and the Pacific should find ways to accelerate infrastructure investment to help maintain growth at a time of significant downside risk to the global economy, Asian Development Bank (ADB) president Haruhiko Kuroda told a meeting of finance ministers today.
Kuroda was speaking at the Asia-Pacific Economic Cooperation (APEC) group’s 18th annual meeting of finance ministers in Honolulu, Hawaii. The meeting was chaired by US Treasury Secretary Timothy Geithner, with participants including ministers from the APEC economies, the President of the Inter-American Development Bank and senior officials from the World Bank (WB), International Monetary Fund (IMF), and APEC Business Advisory Council.Asia’s booming economies have been supported by the rapid rollout of new infrastructure but their needs are immense with required investments estimated at around $8 trillion between now and 2020. That will require substantial support from the private sector and Kuroda said governments must continue regulatory and policy reforms to encourage international and domestic investors, as well as public-private-partnerships. They must also build up the capacity of public sector agencies to identify and carry out infrastructure projects.
Innovative financing arrangements that support infrastructure and trade are also critical, Kuroda said. To that end, ADB together with the Association of Southeast Asian Nations (ASEAN), established an ASEAN Infrastructure Fund which is seeking to mobilize up to $30 billion in global savings by 2020 for infrastructure development.
ADB’s Trade Finance Programme has provided $7 billion of total assistance to 14 Asian economies since 2004. The programme, which provides credit guarantees and loans through banks to support trade transactions, has had no defaults in more than 3,300 transactions.
Kuroda also stressed the need for Asia to step up its efforts to rebalance its economies, putting more focus on domestic and regionally driven demand. He noted that this will require both demand and supply-side policy measures, including support for the development of small-and-medium-sized enterprises.