Bank fails to hit Asia-Pacific target

A chief of the Asian Development Bank yesterday admitted that the bank had failed to generate the level of private sector financing needed to meet the Asia-Pacific's huge infrastructure needs.

Paul Dickie, a director of the bank's infrastructure, energy and financial sectors, said there was a 'large gap' between what the private sector was contributing and what was needed.

Mr Dickie, who was speaking at the fourth Asia-Pacific Economic Co-operation (Apec) Finance Ministers' Meeting, said member economies were expected to agree to policies designed to encourage greater participation.

These range from agreeing to aim for a sound macro-economic environment to providing stable and transparent legal and regulatory systems.

Member economies are expected to back-down from supporting an Apec-sponsored credit rating agency or clearing and settlement system.

They are also unlikely to set targets for the level of alternative funding they will require.

Apec finance ministers are expected to agree to a set of voluntary principles and joint programmes to encourage more private sector participation.

A key recommendation is expected to be for governments to identify priority projects for their involvement.

The ministers are also expected to accept a recommendation encouraging co-operation among export credit agencies and developing a data base on private infrastructure.

In addition, economies are likely to develop a set of best practices for infrastructure financing, based on their experiences in promoting private provision of infrastructure projects.

According to the World Bank, the East Asian region will need about US$8 trillion of investments in the 10 years to 2004.

Mr Dickie said: 'Governments do not have enough finance to service that need. We have not had the success we would like to have had in finding private sector support.

'At present about 10 per cent of infrastructure financing comes from the private sector and we would like to increase that a great deal.' Mr Dickie said reasons for the lack of private sector involvement ranged from high transaction costs and high risks through to uneconomic pricing and uncertainty about returns over the long term.