The Asian Development Bank (ADB) said improving tax revenues and encouraging private-sector participation are vital to addressing Asia’s $8-trillion infrastructure gap in the decade to 2020.
In a statement, ADB President Takehiko Nakao said “strong” enforcement of tax collection efforts will increase tax revenues, which can be used to boost public infrastructure spending.
Nakao added these efforts can be complemented by undertaking public-private partnerships (PPPs) and seeking financial assistance from multilateral development banks (MDBs), such as the ADB.
“Borrowing from international financial institutions, such as the ADB, and bilateral partners would help. In addition, tapping private-sector resources locally and abroad is crucial. In particular, PPPs can be an effective tool to narrow the region’s infrastructure gap,” he said.
In a recent briefing in Germany, Bambang Susantono, vice president for Knowledge Management and Sustainable Development in the ADB, said the infrastructure gap estimate includes all kinds of infrastructure needs.
These include hard infrastructure facilities, such as roads and bridges, as well as social and health infrastructure needs.
But, Susantono said, this cannot be addressed by merely Official Development Assistance (ODA) alone. This is why the ADB signed a cofinancing agreement with China’s Asian Infrastructure Investment Bank (AIIB) and is encouraging the use of PPPs by countries.
“It is very logical that we have worked with others in leveraging and cofinancing,” Susantono said.
The use of PPPs, Nakao said, has been successful in the Philippines. He said this success is founded on the country’s long experience with PPPs through the build-operate-transfer (BOT) law introduced in 1991.
Nakao said some of the successful projects are the North Luzon Expressway and water-services project in Metro Manila, which provided round-the-clock water supplies to millions of households.
“Today PPPs are well-established in the Philippines. The PPP Center, supported by the ADB, is now the government’s lead agency for facilitating PPP projects. From just 11 projects in 2010, the Philippines now has 61 potential PPPs—nine of which have been awarded,” Nakao added.
Despite these, documents obtained by the BusinessMirror in April showed that the Philippines is nowhere near its infrastructure spending goal of 5 percent of GDP.
Actual spending as a percentage of GDP was at 2.74 percent, or P346.24 billion, in 2014 and 3.28 percent, or P435.3 billion, in 2015.