Infrastructure gap in Asia threatens to hamper growth (China Daily)

Looking out at bumper-to-bumper Monday morning traffic crawling along the Philippine capital’s main avenue, taxi driver Ranilo Banez shook his head in frustration.

Congestion has become so bad as the economy grows, he said, that a 10-kilometer trip that once took 30 minutes can stretch to two hours.

“We lose so much,” said Banez, 64. “We waste a lot of gasoline and time.”

The Philippines is far from alone. The outpouring of support for a newly planned Asian bank to finance infrastructure highlights a gap in Asia’s success story. From power-starved India to Thailand’s overburdened railways, developing economies face a shortage of basic facilities so severe that it threatens to hold back growth and living standards.

Manila and other cities are choked with construction sites for office and apartment towers. But spending on roads, railways and other unglamorous but essential infrastructure collapsed after the 1997 financial crisis and has yet to recover.

“The catch-up they need to do is still considerable,” said Ramesh Subramaniam, deputy director general of the Asian Development Bank’s Southeast Asia department.

If spending fails to pick up, “then this could possibly have an impact on future growth”, he said. “Certainly it is going to reduce the competitiveness of the countries in the region.”

India is set to pass China this year as the world’s fastest-growing big economy. To keep that up, its government says, the nation of 1.2 billion people needs to spend $1 trillion on infrastructure in the next five years.

India’s most ambitious initiative is the $100 billion Delhi-Mumbai Industrial Corridor Project. It calls for the creation of seven industrial cities, high-speed railways, six airports and three sea ports.

Thailand has a $92 billion building plan for 2015-22 that includes high-speed train routes that eventually will stretch from China in the north through Malaysia in the south to Singapore. It calls for expanding seaports and Bangkok’s commuter trains.

Coping with congestion

In the Philippines, President Benigno Aquino in May approved $1.4 billion in spending for commuter rail lines in Manila and other projects. That brought the total for infrastructure investment to $31.8 billion since Aquino took office in 2010.

Bjorn Pardo, founder and CEO of Xend, a delivery company in the Philippines with 250 employees, said it copes with congestion by using custom-outfitted motorcycles instead of trucks.

“The traffic situation will not get significantly better anytime soon,” Pardo said.

The Philippines ranks 95th out of 144 countries in a World Economic Forum survey of infrastructure quality.

“Our priority will be energy,” said Benjamin Diokno, an economist at the University of the Philippines and former Cabinet secretary. “The urban rail system is also pressing. The railway system from north to south is pressing. Everything is pressing.”

(China Daily 08/19/2015 page11)