ADB Confident Indonesia can Overcome Tsunami Damage, Meet Infrastructure Needs

JAKARTA, INDONESIA (18 January 2005) - Gearing itself for challenges posed by the devastation wrought by the recent earthquake and tsunami, Indonesia's concurrent adoption of a 5-year infrastructure plan and strategy, announced yesterday, is impressive and timely, says Shamshad Akhtar, ADB Director General for Southeast Asia.

"Indonesia's enormous infrastructure needs, now further increased by the earthquake and tsunami disaster, require careful strategic planning, backed by a predictable and well-governed legal and regulatory framework," she said in a speech yesterday at the Indonesia Infrastructure Summit 2005.

"The earthquake and tsunami tragedy has drawn new attention to the specific challenges faced by poor and remote regions, such as those that bore the brunt of the impact," Ms. Akhtar noted.

"ADB, with its focus on poverty reduction, is determined to help these communities to recover as quickly as possible, and to help rebuild the livelihoods of farmers, fishing families and others who have been affected. Prompt rehabilitation and reconstruction of roads and bridges, schools and hospitals and other infrastructure is crucial to restoring normalcy."

Ms. Akhtar complimented the leadership and economic managers of Indonesia for a comprehensive and well-conceptualized vision and short- and long-term strategy for infrastructure sectors, which reflects the team's in-depth understanding of the issues at hand.

Drawing regional perspectives, Ms. Akhtar said that in addition to the recent tsunami damage, the Asia and Pacific region's general infrastructure needs in the years ahead are vast. Developing countries in the region will need a minimum of US$250 billion per year over the next decade to meet their requirements. Worldwide, 2.4 billion people lack access to sanitation, 2.5 billion people are without access to modern energy supplies, 1.2 billion people lack access to safe drinking water and 1 billion people lack roads to reach markets, jobs, and health facilities.

Ms. Akhtar noted that the infrastructure challenges in the region relate to improving access of the rural poor to infrastructure services, promoting regional cooperation, diversifying financing arrangements to achieve a well-balanced public-private mix, and balancing environmental considerations against infrastructure development.

Drawing attention to the infrastructure challenges in Indonesia, Ms. Akhtar highlighted the need for revisiting the issue of Government control of important branches of production, creating independent infrastructure providers, formulating an enabling regulatory framework, tapping domestic currency sources of financing in a prudent manner, and adopting a balanced approach towards risk-sharing through Government guarantees.

As the region's development bank, ADB is well positioned to support Indonesia in its efforts, Ms. Akhtar said. "Since its establishment in 1966, ADB has lent $7.8 billion for infrastructure projects in Indonesia, or 40% of ADB's total lending to the country." She noted that in addition to human resources, public sector operations and technical assistance, ADB can provide loans, guarantee products and currency swap facilities to facilitate private sector investments in infrastructure sectors.

Read the speech.

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