Public-Private partnership, the solution to Asia’s growing Infrastructure needs: ADB

According to a report by Asian Development Bank, the region is expected to need more than 1.5 trillion USD in the next 15 years to continue to growth momentum, reduce poverty, and respond to climate change. Public Private Partnerships are goal oriented service providing entities with a single aim to transform delivery of public infrastructure and services.

In order to meet the requirements forecasted in the region, Asia would look to avenues beyond the traditional sources. Asia faces extreme challenges in public sector delivery and services; Over 400 million Asians live without electricity, 300 million without safe drinking water, and a staggering 1.5 billion without basic sanitation. Asian countries face a momentous task to finance these services, governments are already living under an enormous debt (incl: their repayments), with 92% funding for these provided by states, some economies struggle to make ends meet. Even after inculcating the private sector funds, the gap continues to remain well above $500 billion per year.

With governments piled under debt, the only option that remains if of Public Private Partnership (PPP). PPP’s transform the way countries provide services to public sector, PPP’s effectively marshal private sector’s strengths – incentivized finance, operational efficiency and innovation – to meet the public sector objectives. Moreover, PPP can be a conduit for infrastructure finance by institutional investors such as insurance funds and pensions.

PPP’s have time and again proved their ability to increase access to infrastructure. The report argues that, “Doubling PPP investment from 0.5% of GDP in 2015 to 1.0% could bring safe drinking water to 12 million people among the 300 million who currently lack it and provide electricity to 14 million of the 400 million without. Improving access to infrastructure, when coupled with public sector reform, enhances productivity and competitiveness across the economy. The same doubling of the ratio of PPP investment to GDP is projected to add 0.1 percentage points to GDP growth per capita across Asia and the Pacific.”