Asia-Pacific must find ways to unlock its resources to fund sustainable development
Shamshad Akhtar says the region's development needs, though substantial, can be adequately financed by a host of measures now under way
The Third International Conference on Financing for Development this week will be a real test of the international community's commitment to sustainable development. In this context, it is worth noting that the Asia-Pacific region has been at the forefront of deliberations on financing for development and has endorsed initiatives that will unleash its resource potential.
The key to financial stability and people's well-being will be their improved access to financing for development, which involves broadening coverage to all segments of society. Escap estimates that the region could need between US$2.1 trillion and US$2.5 trillion per year to fund a comprehensive sustainable development agenda, which includes improving access to basic services, infrastructure development and addressing climate-change mitigation.
While the amount of money involved may seem daunting, the region is nonetheless known for its high saving rates, build-up of reserves and ability to attract large capital flows. Moreover, in 2013, the region's fiscal revenue was estimated to be US$4 trillion, and private-sector savings were estimated to amount to another US$6 trillion. In the same year, the stock of financial assets of the region's wealthiest individuals amounted to US$35 trillion.
If financial resources are, in principle, more than sufficient to fund the required investments in sustainable development, why, then, are they not being applied more effectively? The first reason is that such investments have high social returns but are perceived to have low private returns. A second reason is the skewed distribution of needs and resources.
Recognising these challenges, Asia and the Pacific, with Escap's support, has engaged in two high-level consultation processes in the past 12 months, leading to a consensus on a tangible agenda for dealing with these financing shortfalls. Proposals include: establishing an Asia-Pacific forum to raise tax-to-GDP ratios by broadening tax bases, removing exemptions and improving administrative efficiency; more efficient deployment of public expenditure; and promoting regional cooperation to curb tax evasion by multinationals and illicit financial flows.
The region will further benefit from the concrete action by China, Russia and India on new development banks, the establishment of the Asian Infrastructure Investment Bank and the Silk Road Fund.
The good news is that Asia and the Pacific has already moved towards providing the means to implement these sustainable development goals. It is vital that this momentum is maintained.
Dr Shamshad Akhtar is a UN under-secretary-general and executive secretary of the Economic and Social Commission for Asia and the Pacific (Escap)