Big money sought to connect Asia-Pacific
Joint efforts are needed by Asia-Pacific countries to create innovative financing mechanisms to develop infrastructure, according to an official at a connectivity symposium in Yangzhou, Jiangsu province, on Tuesday.
Huang Mengfu, honorary chairman of the China National Committee for Pacific Economic Cooperation, said at the symposium — the International Symposium: Connecting the Connectivities in Asia Pacific — that in 15 to 20 years, global demand for infrastructure investment will reach $50 trillion.
According to the World Economic Forum, annual demand globally is currently $3.7 trillion, but as there is a $1 trillion shortage of investment, actual investment is about $2.7 trillion, Huang said.
“No single economy or any international organization can afford to cover such a huge margin. I believe we especially need to mobilize the participation of private capital in connectivity, and we should make full use of public-private partnerships,” Huang told representatives from more than 20 Asia-Pacific countries and regions at the event.
Zhou Qiangwu, head of the Ministry of Finance’s International Economics and Finance Institute, said connectivity in the Asia-Pacific region currently lacks capital, as well as mechanisms to maximize its use.
“It may take a long time for investors to make a profit by investing in infrastructure projects in the connectivity area, and sometimes there are even political and technical risks. As a result, private capital is reluctant to invest in it,” he said.
However, there is currently about $35 trillion in idle private capital in the Asia-Pacific region, Zhou said. Multilateral development organizations could bring in more private capital and help reduce risks through creative financing tools, Zhou said.
Huang, the chairman, added that the Asia Infrastructure Investment Bank could help channel financial support to infrastructure construction.