The Asia Pacific Economic Cooperation (APEC) will enhance connectivity among its member-economies with a new infrastructure development plan that will remove impediments to cross-border investment and meet rising infrastructure demand to ensure the flow of goods and people.
The idea for an APEC Multi-Year Plan on Infrastructure Development and Investment was hatched during the APEC Senior Officials meeting in Ningbo on February 28. The officials established a Friends of the Chair Committee to oversee its crafting and implementation.
“We are drafting a blueprint for establishing greater regional connectivity that is far-reaching and ambitious,” said Li Baodong, chair of the APEC 2014 Senior Officials’ Meeting and Vice Foreign Minister of China. “Our goal is to facilitate the seamless movement of goods and people across the region to raise productivity and central to that is ensuring that there is sufficient infrastructure in place to support it.”
“Robust trade flows hinge on reliable supply chains,” explained Alan Bollard, the APEC Secretariat’s executive director. “As trade volumes in the Asia-Pacific rise, there is a real need for economies to build the capacity of the region’s infrastructure and an important aspect of this is fostering an environment that encourages greater private sector investment in new projects.”
Asia will require about US$8 trillion in investment between 2010 and 2020 to meet the region’s infrastructure needs, according to the Asian Development Bank. The return on investment is potentially significant for the region’s economies—a 10 percent increase in infrastructure provision raises long-term growth by 1 percent, the World Bank estimates.
“Red tape and uncertainty deter investors critical to the development of roads, ports, container technology and other core infrastructure,” explained Li. “Reducing behind-the-border barriers and overall investment risk is an APEC priority which ultimately contributes to better supply chain efficiency and lowers trade transaction costs.”
The infrastructure development plan will outline steps for boosting private sector involvement in the sector by 2016. It will emphasize regulatory reform, planning improvements, identifying bankable projects, and creating a more investor-friendly financing and funding environment.
The blueprint also calls for setting up an APEC public-private partnership center in Indonesia that will assess which infrastructure projects need financing and promote information-sharing.
“Public-private partnerships can help with infrastructure financing but a common understanding of the needs within the investment and regulatory environment is required for things to move forward,” said Li.