Infrastructure for a Seamless Asia
Opening Remarks by
Haruhiko Kuroda
President, Asian Development Bank
At the Book Launch Seminar
4 May 2009
Bali, Indonesia
I. Introduction
Honorable Finance Minister Sri Mulyani Indrawati, distinguished guests, ladies, and gentlemen.
This evening I have the pleasure of launching a book – a joint work of ADB Institute and ADB – that examines the vision of a "seamless Asia" through building pan-Asia connectivity. This is the first time that such a study on regional infrastructure has been undertaken. The study presents major issues and challenges in developing regional infrastructure in Asia through fostering regional cooperation, as well as a practical framework for pan-Asian infrastructure cooperation.
The current global financial and economic crisis provides three reasons for increasing infrastructure investment. First, infrastructure is critical for increasing competitiveness and productivity of an economy. Second, infrastructure development will continue to help reduce poverty in Asia. Third, bringing forward and stepping up infrastructure investment can form an important part of a fiscal package, especially if the crisis is prolonged.
II. Need for Regional Infrastructure
Asia is home to more than half of the world’s people, and occupies more than a quarter of the world’s land area. Over the last decade, most Asian economies have grown rapidly and have become increasingly connected to each other, and to the rest of the world, through greater integration.
Asia’s trade competitiveness—particularly in its increasingly sophisticated production networks—depends to a large extent on efficient, fast, reliable, and seamless infrastructure connections. But many parts of Asia—including inland and remote areas, landlocked countries and distant islands—are isolated economically as well as geographically; so much of the region’s potential remains untapped. While some of the existing infrastructure is world class, much of it is below average.
Rapid economic growth in recent years has put enormous pressure on Asia’s transport, energy, and communications infrastructure. Unless these can be improved, they will continue to be a bottleneck to growth, a threat to competitiveness, and an obstacle to poverty reduction. Better connectivity with inland areas, for instance, would boost trade and economic growth in both coastal areas and inland.
Following the 1997–1998 Asian financial crisis, countries with significant investments in infrastructure recovered faster than others. If the current crisis is prolonged, demand from advanced economies for Asian exports will remain depressed, thus further impeding and prolonging Asia’s economic recovery. To mitigate the medium-term consequences of the crisis, Asia will need to put greater emphasis on increasing regional demand. Consequently, regional infrastructure will need to be geared more towards supporting Asian production networks and regional supply chains to accelerate the return to the higher growth trajectory and further bolster the growth momentum.
III. Vision of a seamless Asia
Asia has enormous untapped economic potential. Connecting its diverse economies and peoples through seamless infrastructure will help in achieving an integrated, poverty-free, prosperous, inclusive, and peaceful Asia and the world.
Moving towards this vision would also foster a higher degree of regional cooperation while deepening regional integration. Existing subregional infrastructure cooperation programs such as those in the Greater Mekong subregion, Central Asia and South Asia, can act as the building block for pan-Asian physical connectivity. Thus far, infrastructure development in Asia has followed a largely bottom-up and market-driven approach. We now need to complement this with a more top-down, market expanding, and market inducing approach. This will require leadership, vision, commitment, and partnership at the highest level as well as effective communication, coordination, and the creation of new mechanisms and institutions. It is obviously a significant challenge, but the benefits will be felt for generations to come. And quite surely, these benefits will far outweigh the costs involved.
IV. About the book
The book that we are launching this evening, examines five important issues. First, it addresses how to support regional trade and investment, with a particular focus on logistics. Second, it discusses the economic benefits of regional infrastructure networks and presents new empirical evidence from Asia to support the case. Third, it examines the policies and institutions needed to develop effective regional infrastructure projects. Fourth, it explores how much resources will be needed to realize a seamless Asia, and how to finance regional infrastructure projects. And last, it provides a framework for pan-Asian infrastructure cooperation with innovative ideas for setting up a pan-Asia Infrastructure Coordination Forum and an Asia Infrastructure Fund.
The study also highlights the relevance of three of ADB's major areas of emphasis, namely infrastructure development, financial sector development, and regional cooperation.
ADB has historically played an important role in supporting infrastructure development in the region through financial and technical assistance. I assure you that this support will be continued, and indeed increased. We have recently adopted Strategy 2020 that puts greater emphasis on infrastructure. Our emphasis will increasingly shift towards infrastructure-related activities that support Asia-wide connectivity.
In these uncertain times, Asia must not pause or turn back, but rather forge ahead with the challenging—and the immensely rewarding—task of integrating this vast and diverse region of great promise for the benefit of all its citizens and world at large. This will help to boost further growth and prosperity in the region and spread its benefits more widely. It will enhance the region’s competitiveness and extend its global reach. It will help reduce poverty and promote greater environmental sustainability. Exemplary and visionary leadership as well as firm and unflinching commitment will be needed, and I am confident Asia is capable of providing it.
V. Conclusion
Ladies and Gentlemen,
I would like to thank all those individuals, from both outside and within ADB and ADB Institute, who have worked hard to finalize this study in time for our Annual Meeting here in Bali.
It is our hope that it will be useful resource for policymakers, business leaders, researchers, and other stakeholders in the region and beyond who are involved in national, subregional, and regional infrastructure development, in infrastructure services operation and in financing infrastructure projects.
And I am very pleased that this evening we have the privilege of hearing the views of one of the most respected Asian policymakers, the Honorable Sri Mulyani Indrawati, Finance Minister of the Republic of Indonesia.
Thank you.
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