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Section : Economics
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Emerging Asia has an infrastructure issue
 
The ADB estimates there is infrastructure demand worth around $8 trillion over the 10 years through 2020 in Asia.

By Nikkei Asian Review




TOKYO -- Underdeveloped infrastructure systems, such as roads and power lines, can hinder further economic development in emerging nations.

     To sustain growth, emerging economies must improve their infrastructure situations.

     Trucks and passenger cars run at around 20kph on a narrow mountain road in Kawkareik in Myanmar's eastern Kayin State. The road is too narrow for vehicles to pass each other, so traffic alternates direction every day.

     In fact, this road is a part of the East-West Economic Corridor that goes from Vietnam's Pacific Ocean coast all the way to Myanmar's Indian Ocean side through Laos and Thailand. It is an important cross-border road in the Association of Southeast Asian Nations. The Asian Development Bank announced the plan for building this corridor in 1992; all sections were connected in 2006.

     Yet, economic disparities among the ASEAN countries make maintaining the road difficult. Mae Sot, a border town in Thailand, is home to about 400 companies. On the other side of the border, however, a Myanmar town remains less developed due to the government's shortage of funding and armed ethnic rebel groups in the region.

     Since ASEAN is slated to kick off its regional economic integration -- the ASEAN Economic Community -- at the end of this year, cross-border road networks are necessary to achieve further growth. Nevertheless, road construction -- the Southern Economic Corridor spanning from Vietnam through Myanmar and the North-South Economic corridor stretching from China to Thailand -- has been held up in the region's less developed countries. 

Crowded streets

Traffic congestion in urban areas has also emerged as a serious hindrance to economic development in Southeast Asia.

     Jakarta is considered the city with the worst traffic jams in the world, according to a survey by U.K. energy company BP. "It used to take 45 minutes to commute, but now it takes an hour and a half," said an official of Indonesia's Ministry of Religious Affairs. Since the end of last year, the Indonesian government has banned motorbikes from entering major streets in the capital city.

     In Indonesia, car sales have tripled over the past 10 years. But road construction has remained stagnant through that period. As a last-ditch effort, the government implemented the ban on two-wheelers, arguing that the measure has helped cut traffic congestion by 30%. Yet, the official complains of worsening traffic in side streets, suggesting that the measure has not improved the situation much.

Many roads are still unpaved and in bad condition in Myanmar, as seen in this photo of a country road near Dawei in the southeast of the country.

     The ADB estimates there is infrastructure demand worth around $8 trillion over the 10 years through 2020 in Asia. It will likely cost $2.4 trillion for creating transportation networks, such as roads and railroads, and $4 trillion for power systems, according to the bank's estimate. Some Asian countries have failed to make necessary infrastructure investment in line with the pace of their economic growth, which is taking a heavy toll on them.

     India, for instance, suffers from frequent blackouts. In fiscal 2013, the country supplied about 980 billion kilowatt-hours of electricity, which fell short of power demand for 1.05 trillion kilowatt-hours. The shortage was equivalent to the amount of power generated by roughly seven nuclear power stations, and the supply-demand gap came to 6.7%, nearly unchanged from a little over 7% a decade ago. India's electricity demand has continued to rise sharply amid population and economic growth, making it very difficult for the government to resolve chronic power shortages.

     Power distribution and transmission systems are lacking, and energy theft is rampant, said a former senior official of India's power ministry. The country ends up losing 25% to 30% of the power it generates. Politicians have often painted a rosy future for their constituents and then broken campaign pledges over and over again, the former senior official said.

     India seeks to improve the operation of its thermal power plants, but the inefficient state-run company, Coal India, has slowed its output, posing a yet another challenge to its power supply.

     A lack of political initiative is at the root of these problems.

(Nikkei)

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