Asian countries need to invest over 5% of GDP for infrastructure: ADB

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Developing Asian countries need to invest more than 5 percent of their gross domestic product (GDP) over the next decade to meet the infrastructure needs of their fast-growing economies, said a new book co-published by the Asian Development Bank (ADB) on Tuesday.

According to the book, titled Infrastructure Financing in Asia, many of the developing countries in the Asia and Pacific region are currently investing less than the proposed 5 percent of GDP for infrastructure development.

At this rate, the book says financing infrastructure to maintain and sustain economic growth and development will be a tough challenge.

An ADB report has estimated that infrastructure needs in developing Asia and the Pacific will exceed 22.6 trillion U.S. dollars through 2030, or 1.5 trillion U.S. dollars per year. The estimates rise to over 26 trillion U.S. dollars, or 1.7 trillion U.S. dollars per year, when climate change mitigation and adaptation costs are incorporated.

To address this challenge, the book offers a variety of policy approaches, such as wide-ranging public finance and institutional reforms to create a stronger enabling environment for public-private partnerships.

The book provides out-of-the-box solutions in the form of tax financing, mass transit investments, and smart energy grids investments to help meet the infrastructure financing gap.

The book also explores alternative financing methods to unlock long-term funding from institutional investors and offers mechanisms to deepen the region's bond markets.

"Developing Asia must strive to find new, innovative, outside-the-box financing solutions to meet its huge infrastructure investment needs," said Bambang Susantono, ADB Vice President for Knowledge Management and Sustainable Development.

Susantono further expressed confidence that the book prepared by experts from inside and outside ADB "will set forth some concrete and specific directions for infrastructure financing, as well as provide food for thought."

Established in 1966, the Manila-based bank is owned by 68 members -- 49 from the Asia and Pacific region.

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