UN Says Asian Economic Growth Hinges on Investment in Infrastructure

Participants of Economic and Social Commission for Asia and the Pacific (ESCAP) forum in Jakarta (File photo - 10 Apr 2006)

The U.N. Economic and Social Commission for Asia and the Pacific says a shortage of roads, rail networks, ports and energy projects in rapidly-growing Asia threatens to hold back the region's economies.

At a two-day meeting in New Delhi, the U.N. agency called on Asia to invest more heavily in cross-border infrastructure projects to spur trade and investment in the region.

Representatives of 20 countries attended the meeting, where a new study by Research and Information Systems, a New Delhi-based research institute, highlighted the infrastructure deficit in Asia.

For example, lack of sufficient cross-border surface transportation among Central, South and East Asia forces Asian countries to rely heavily on shipping by sea, pushing up the cost of moving goods.

The study says Asian countries should cooperate to develop a dense network of roads and rails, in the same way European countries have.

Similarly, countries should share energy resources, because several resource-rich countries have low demand, while their neighbors have high demand.

Nagesh Kumar heads Research and Information Systems. He uses South Asia as an example to show how cross-border initiatives could bring vast benefits to the region.

"We could build a connecting road, say, from Afghanistan to Pakistan to India to Bangladesh to Myanmar [Burma], which would link up all these countries. It would become a Silk Road, for instance, providing the connectivity to the people, promoting businesses and livelihoods. In energy, for instance, you could be developing hydro power in Nepal and bringing it to India, which is perennially short of energy," said Kumar.

International agencies have estimated that the region could use approximately $200 billion for infrastructure investment every year over the next five years in addition to what countries are already spending.

ESCAP head Kim Hak Su suggests that the region could use a part of its huge foreign exchange reserves to fund infrastructure projects.

"The crucial thing is Asia has net saving. Net saving as of 2005 is three $350 billion. This will grow more as the economies grow," he said. "So how to tap this net Asian saving?"

ESCAP has suggested the establishment of an Asian infrastructure investment bank to help finance major trans-Asian road and rail links and other projects in the region.