Southeast Asia has weathered its share of economic crises, usually emerging stronger. The 1997 Asian financial crisis spurred an overhaul of its financial systems and increased its resilience during the 2008 global financial crisis. But a new threat to its growth is now emerging: a shortage of infrastructure investment.

Private investment in the infrastructure of the 10 member countries of the Association of Southeast Asian Nations plunged after 1997 and has yet to recover. The five largest Asean countries, for example, attracted $38 billion of private infrastructure funding in 1997, but only about $25 billion in 2010.

Public financing, too, is sorely lacking. Asean countries on average spend only about 4% of GDP on infrastructure, significantly lower than the average annual spending of 6% during 1980-2009. Rapid growth of Asean economies means their physical infrastructure is now under tremendous strain.

Asean has barely 10 kilometers of roads and 0.25 kilometers of rail per 1,000 people, compared to more than 200 kilometers of roads and five kilometers of rail in OECD countries. The electrification rate in Asean is 72%, compared to 99.8% in OECD countries, and only 86% of Asean's population has access to clean water, compared to 99.6% in the case of OECD. It will need more than $60 billion a year up to 2020 to address huge infrastructure gaps -- a target that looks unattainable at present.

This worrisome trend is unfolding at a key moment for Asean. Its prospects of sustaining medium-term growth of around 5% are good, but it needs world-class roads, ports, energy, telecommunications and other forms of connectivity to make the most of a planned common market from 2015. Failure to deliver could consign this region's 600 million people to a middle-income trap, unable to shift from low-cost to high-value economies.

Lack of money isn't the problem, as Asean has a savings surplus. But these savings are not being invested in Asia. Instead they are invested in low-yield Treasury bonds or other securities in Europe and the United States. Bringing those funds back to Asia for investment in productive assets will require concerted reform efforts by the region's authorities across four priority areas.

First, capital market development is essential to promote efficient recycling of surplus savings. Asean has taken important steps on this front including the Asean+3 Bond Markets Initiative, the Asian Bond Fund, the Credit Guarantee and Investment Facility and the Asean Infrastructure Fund. The latter, supported by the Asian Development Bank, is aimed specifically at promoting sustainable, high-quality physical infrastructure in the region, while the other initiatives are aimed at developing and deepening long-term debt markets.

Second, potential investors need to know there is a level playing field for private investment and that their money is safe. Governments should cut risks for private investors by addressing the policy, institutional and regulatory impediments to investment; fixing governance problems; setting up transparent procurement systems; and establishing clearly designed viability funding gap mechanisms which enable public funding for investments that the private sector cannot undertake.

Here too, there is progress. The Philippines is working to liberalize the domestic coastal shipping industry to lower costs, and has amended the build-operate-transfer law, expanding it into a Public-Private Partnership Act. Other countries in the region are making similar efforts, but much remains to be done.

Third, and perhaps most crucially, the region needs to develop a pipeline of bankable projects through public-private partnerships, or PPPs. Such partnerships can fill infrastructure gaps, but they are not a panacea. Governments need a better grasp of how PPPs work and what drives private-sector investment. Not all projects are viable. For example, private investors find it hard to make money building airport runways. But if packaged appropriately, they can entice private investors.

Finally, governments must boost their own spending on infrastructure. This might mean improving tax collection and enforcement to increase revenues. This won't be easy, but the private sector can't be expected to fund all infrastructure projects. In fact, we believe that governments should be prepared to bear 60% of their national infrastructure requirements, based on the pre-Asian Financial Crisis trends.

Asean also needs better connectivity across borders as it counts down to an integrated market. It has a Master Plan for Connectivity, while Indonesia has a flagship connectivity program and the Greater Mekong Subregion has pioneered several regional projects.

But cross-border projects are even harder to structure as bankable deals. So it is crucial that the public sector prioritize scarce fiscal resources to strategically invest in them, while finding innovative ways of bringing in private partners. Good starting points might include deals to transform transport corridors into economic corridors, and logistics investments to enhance Asean's role as a key link in regional production networks.

This is another crisis that Southeast Asia can beat. But governments need to act quickly, before inadequate infrastructure cripples the region's economic potential.

Mr. Groff is the Asian Development Bank's vice president for East Asia, Southeast Asia and the Pacific.

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