The ADB: Asia must improve infrastructure ...
... in order to sustain growth. I am not sure infrastructure represents any kind of impending threat to the growth rates of Asia but the point is valid I think especially if we are talking about attracting FDI in specific sectors such as retail for example but also in a general perspective.
(From the FT - bold parts are my emphasis)
'Asia is raising transport costs and damaging the international competitiveness of China and other countries by not spending enough on infrastructure investment, the Asian Development Bank will report on Friday.
In a draft discussion paper to be presented on Friday by Haruhiko Kuroda, ADB president, to a closed-door emerging markets forum in Jakarta, the ADB warns that Asia needs $3,000bn – or $300bn a year – in infrastructure investment over the next decade.
Mr Kuroda told the Financial Times that heavy investment in infrastructure was crucial if Asia was to facilitate further growth. The report says that “despite huge opportunities and large needs”, Asian governments are failing to provide enough “bankable” projects to private investors to ensure that infrastructure projects succeed.
Because of that, the authors say, east Asia is facing an investment shortfall of about $100bn a year, while south Asia is falling short by a further $60bn a year. Key areas affected by the shortfall include roads, power plants and communications networks, the ADB says.'
The ADB warns that “inadequate” and “uncompetitive” transport, communication and logistics sectors, coupled with high fuel prices, mean that businesses in Asia face high costs relative to other parts of the world when they try to move goods into, out of and around the region.
Logistics costs in China are equivalent to about 18 per cent of GDP, according to the ADB, compared with about 10 per cent in North America.
“Moreover, while logistics costs as a percentage of GDP have declined in North America and Europe, they have actually increased in Asian countries,” the paper’s authors say.
A major reason for the rising costs is the fact that some large cities in Asia have begun to reach their population capacity. Rapid urbanisation is expected to lead to greater infrastructure problems as 500m people move into Asian cities over the next 20 years, according to the ADB.'