KUALA LUMPUR: The Asean region will need a regional PPP (Public Private Partnership) Centre to help countries with knowledge and expertise with the launch of the Asian Infrastructure Investment Bank (AIIB) and other Chinese initiatives to fund infrastructure development.
A senior researcher of a local think-tank said although the region and Asia at large are flush with liquidity, countries need to be convinced about the interconnectivity of national projects with regional projects.
HK Yong of the Institute of Strategic and International Studies (ISIS) said the demand of infrastructure financing in the region far exceeds the AIIB and Asian Development Bank (ADB) capacities.
In Asia alone, US$8 trillion worth of funds are needed to meet the infrastructure needs by 2020.
“Governments in Asean and Asia also don’t have the fiscal space to fund the projects.
“We have to tap the private funds. Private funds such as the pension and insurance funds have only invested one per cent of the total US$80 trillion and mainly in developed countries,” he said during the second network of Asean-China think-tank seminar yesterday.
Apart from the US$100 billion- share capital held by AIIB which is poised to start operations in January 2016, other China-led initiatives are the Silk Road Fund (US$40 billion), the second phase of the China-Asean Investment Cooperation Fund (US$3 billion) and China Development Bank (US$10 billion).
“To make things move faster, we have to look beyond AIIB and other multilateral banks and regional centre will help countries.”
The China-Asean FTA, the third largest third trade agreement in the world, will be upgraded by the end of this year with trade projected to surge to US$1 trillion.
CAFTA 2.0, the new version of the FTA which was signed 13 years ago, has seen average tariff rate on China goods (sold in ASEAN) shrink to 0.6 per cent and Asean goods (sold in China) shrink to 0.1 per cent.
Meanwhile Dr Piti Srisangnam of Chulalongkorn University described Asean China connectivity at its `best timing’ to build efficient and seamless connections cross Asia as an integrated region.
The future growth path is vibrant but the large imbalance in infrastructure still exists among Asean countries that will require even more needs to address in the context of national government as well as its interconnections with China as in the case of Cambodia, Lao, Myanmar and Vietnam.
“Along the way, all stakeholders must assess and manage the negative socio economic and environmental impacts that these projects could cause for people, migration, diseases, smuggling, pollution, greenhouse gas and transport accidents.”