East Asian countries attracted US$13 billion in private infrastructure investment last year - a record, but far short of what the region required, a World Bank official said yesterday. Senior operations adviser for East Asia Harinder Kohli said governments needed to double the amount of capital flowing into infrastructure projects to about 30 per cent of total outlays, from current levels of 12-18 per cent. To meet the bank's ambitious target, private investment would need to reach $360 billion over the next decade. While the money was there, the constraint was in the way governments structured projects, Mr Kohli said. Profitability needed to rise, risks needed to be reduced and transaction costs must also come down, he said. 'It is the lack of bankable, low-risk projects, not the lack of finance, that is at the heart of the present predicament,' Mr Kohli said. The economic crisis facing Southeast Asia made the need for private funding even more imperative, he said. 'Some governments must cut back on public sector spending as economic growth slows,' Mr Kohli said. 'Public sector resources will be even less. The need for private financing will be higher.' The crumbling currencies of Southeast Asia highlighted the increasing need to rely on domestic capital market funds, rather than funds raised abroad, to match domestic currency revenue streams, he said. To raise more money onshore, domestic bond markets needed to be developed further - a key plank of the World Bank's recommendations for years. 'Asia has some of the highest savings rates in the world,' Mr Kohli said. 'The problem is how to convert those savings into bonds so institutions can make long-term investments in bridges and power plants.' On the policy side, Asian governments could increase the profitability of power plants, waterworks and other basic needs by removing subsidies that distorted prices, he said. But private contractors, banks and investment funds needed a clear regulatory and legal framework before they could commit money to a project. 'If the rules of the game are clear, profitability will be more predictable,' Mr Kohli said. Bidding and contracting procedures needed to be transparent and approval times shortened, he said. Mr Kohli held up the example of China's new build-operate-transfer framework, recently tested with the Laibin B Power project. By inviting bids based on the power tariff, and not on the rate of return, there was an incentive for the contractor to keep costs down. 'Experience outside Asia shows that a much higher share of private infrastructure investment are possible,' he said. In Argentina and Hungary, at least 70 per cent of new investment in power, telecoms, water and transportation came from the private sector. In a report entitled 'Choices for an Efficient Provision of Infrastructure in East Asia', the bank contrasts the Chilean experience with the East Asian strategy. Rather than experiment with ways to attract investment to specific projects in power and telecommunications, as Asian countries have done, Chile has focused on creating market structures and regulatory institutions conducive to private entry. As a result, more than 72 per cent of the Latin American country's project financing needs will be met by the private sector, helping to support an annual growth rate of 7 per cent. The bank estimates Asia's infrastructure investment needs at $2 trillion over the next decade. If India is removed, the figure falls to $1.2 trillion - the lower end of the bank's earlier forecast. Mr Kohli cited the lower figure because some work in Southeast Asia would be delayed, both as a means to limit government expenditure and as a recognition that demand would not be as strong as the economy slowed. 'In Thailand and Malaysia, perhaps some of the projects in power production need to be scaled back,' he said. Malaysia and Indonesia had put several major public projects on hold already. However, most of the region's infrastructure needs were in China, India and South Korea - three countries unaffected by the crisis - he said.