The Asian Development Bank (ADB) and the Japan-based Asian Development Bank Institute (ADBI) introduced on Monday an idea of forming a "Seamless Asia" through better infrastructure development to maintain the region's competitiveness.
ADB president Haruhiko Kuroda launched the joint report called "Infrastructure for *a* Seamless Asia" on the sidelines of the annual meeting of the ADB board of governors, and said Asia's trade competitiveness largely depended on efficient, fast, reliable and seamless infrastructure connections.
"But many parts of Asia - including inland and remote areas, landlocked countries and distant islands - are isolated economically as well as geographically; so much of the region's potential remains untapped. Meanwhile, some of the existing infrastructure is world class, but much of it is below average," he added.
The report examines five issues, such as ways to support regional trade and investment in logistics; the economic benefits of regional infrastructure networks and new empirical evidence to support the case; examination of policies and institutions needed to develop effective regional infrastructure work; resources to realize a seamless Asia; as well as a framework for pan-Asian infrastructure cooperation.
Seamless Asia, according to the report, is an integrated regional economy based on world-class regional infrastructure networks.
To achieve a Seamless Asia, the book provides a framework for pan-Asian infrastructure cooperation, involving the private sector, governments, bilateral funds and multilateral development banks as sources of financing.
The ADB suggested the establishment of the Asian Infrastructure Fund especially to finance cross-border infrastructure projects.
It further suggests Asian countries should deploy their "twin surpluses" - domestic savings and foreign exchange reserves - to overcome the region's infrastructure bottlenecks. In the medium term, the report said Asia needs to develop deeper and more robust domestic financial markets to help fund bankable infrastructure projects.
Commercially viable projects can readily be financed in a variety of ways. They can tap domestic equity markets. They can borrow from domestic counterparties, either through bond markets or long-term bank loans. They can seek external finance, where possible.
Islamic financial instruments such as Islamic bonds also offer an attractive source of financing for regional infrastructure projects.
Commenting on the report, Indonesian Finance Minister Sri Mulyani Indrawati said she agreed with the authors in emphasizing the importance of infrastructure development despite the global economic crisis.
"Indonesia learned a lot during the 1997-1999 monetary crises when cutting costs in infrastructure was something unavoidable. Nevertheless, infrastructure is critical and something that we must address now.
"To that extent, I'm really impressed with some of this book's provocative ideas, and hopefully I can implement these *recipes' in this country."
