ADB warns Southeast Asia of unnoticed crisis

Asian Development Bank in Mandaluyong City, Philippines. Eugene Alvin Villar / Wikipedia

MANILA — Private funding for infrastructure in five biggest Southeast Asian members has declined steeply; this is a largely unnoticed crisis in Southeast Asia according to an Asian Development Bank Official on Thursday.

“It’s coming up but it’s nothing like it was in 1997,” Stephen Groff, ADB Vice President for operations told The Associated Press.

Groff warned about the private investment in infrastructure’s failure to recover for nearly two decades from $38 billion in 1997 to around $25 billion in 2010.

“Essentially, the ASEAN financial crisis led to a crisis of confidence with governments, a crisis of confidence in the private sector, and there hasn’t been enough investment or discussion or development of tools that allow risk-sharing to be used appropriately,” he added.

Groff refers to the five biggest members Southeast Asia which includes Malaysia, Philippines, Thailand and Vietnam.

While efforts have been made by some countries to help facilitate private investments in infrastructure by addressing legal and regulatory issues, Groff noted that the process is not easy and it takes time.

He also emphasized the need to formulate mechanisms to mitigate risks and develop bankable projects that would attract private investments and return the region’s extra savings which have been invested in U.S. and Europe’s low-yielding treasury bonds.

In the a similar report published by the Associated Press, Finance Secretary Cesar Purisima said in order to make a sustainable growth possible, more infrastructure investments has to be made by the “capital surplus region.”