Asian Cities at Crossroads: -Role of Urban Infrastructure & Bilateral Development Banks-

Asian Cities at Crossroads:-Role of Urban Infrastructure &

Bilateral Development Banks-

Hiroto ARAKAWA

Executive DirectorJapan Bank for International Cooperation

(JBIC)

May 29, 2006

- Table of Contents -1.Why Cities / Urban Infrastructure Matters? 　　 (1) Growing Urban Population in Asia　　 (2) Role of Urban Infrastructure 2. Urban Infrastructure as an Efficient Tool to Realize Linkage between Poverty Reduction and Growth　　 (1) City as Growth Pole & Poverty Pocket 　　 (2) Urban Infrastructure as Growth Management Tool

3. Innovative Approach: Municipal Financing　　 (1) Catalyzing Private Funds　　4. Spatial Management　　 (1) Striking a Better Balance　　 (2) Country-led Framework as Basis for Coordinated Donor Support

5. Role of Bilateral Development Banks　

1.Why Cities / Urban Infrastructure Matters?

(1) Growing Urban Population in Asia(1) Growing Urban Population in Asia

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1.Why Cities / Urban Infrastructure Matters?

• Asian Cities are at “critical point” of sustainable urban development.

Sources: UTCE and ALMEC

(2) Role of Urban Infrastructure(2) Role of Urban Infrastructure

①

②

③

< 3 fold contribution to poverty reduction >

① Growth ： transaction cost↓ ・ productivity↑

② Distribution ： poor people’s participation in growth process ↑

③ Direct effect ： access to education and health services ↑

≪≪4 Guiding Principles4 Guiding Principles≫≫

① Country led framework　 Partner governments should develop robust approaches for planning and managing pro-poor growth and infrastructure development in coherent poverty reduction strategies formulated in consultation with stakeholders.

② Enhance impact on the poor need not only to increase the supply of infrastructure facilities and services, but also to ensure that infrastructure improvements benefit the poor.

③ Improve sector management for sustained outcomes Sustainability is a primary concern for infrastructure development. Well- maintained infrastructure has strong positive effects on growth and poverty reduction, and provides clear long-term fiscal and economic benefits.

④ More and better use of all financial resources Increased infrastructure investment is essential (through (1) improving public resource management, (2) increasing private participation and (3) strengthening local financial systems).

2. Urban Infrastructure as an Efficient Tool to Realize 2. Urban Infrastructure as an Efficient Tool to Realize Linkage between Poverty Reduction & GrowthLinkage between Poverty Reduction & Growth

(1) City as Growth Pole & Poverty Pocket(1) City as Growth Pole & Poverty Pocket

• Positive correlation between urbanization and economic growth.

• 1% increase in urbanization rate raises GDP per capita by 2.71%.

• Positive correlation between urbanization and national poverty reduction.

• Urban infrastructure contributes to national poverty reduction.

≪≪Case StudyCase Study≫≫ Transport Infrastructure Project in the Northern Transport Infrastructure Project in the Northern

Vietnam Vietnam

(2) Urban Infrastructure as Growth Management Tool(2) Urban Infrastructure as Growth Management Tool

East-Asia : promote economic growth and poverty reduction through foreign direct investment and trade 　

≪≪Case StudyCase Study≫≫ Sri Lanka: Sri Lanka: Greater Colombo Water Supply Projects Greater Colombo Water Supply Projects

• The projects provided access to water for the growing urban population of Colombo.

• The results of the impact study were feedbacked to the local decision-makers through workshops to address the urgent needs for water supply and wastewater treatment and management for the rapidly increasing urban population.

3. Innovative Approach: Municipal Financing3. Innovative Approach: Municipal Financing

(1) Catalyzing Private Funds(1) Catalyzing Private Funds

• Donors have role to support infrastructure development, such as bottleneck facility.

• Funds from Government Financial Institutions / ODA is not enough to meet the demands of water service providers: Private funds is needed

3. Innovative Approach: Municipal Financing3. Innovative Approach: Municipal Financing

(1) Catalyzing Private Funds(1) Catalyzing Private Funds

≪≪Case StudyCase Study Philippines: Municipal Water Loan Financing Initiative ≫ Philippines: Municipal Water Loan Financing Initiative ≫

intermediary financial institutions

JBIC

Private Financial Institutions

Water Revolving Fund

Local Government Unit / Water District

USAID

ODA Loan

GuaranteeLoan

Water Revolving Fund scheme

Loan

Loan

4. Spatial Management4. Spatial Management

(1) Striking a Better Balance(1) Striking a Better Balance

(2) Country-led Framework as Basis for Coordinated (2) Country-led Framework as Basis for Coordinated Donor SupportDonor Support

≪≪Case StudyCase Study Korea≫ Korea≫• Korean Government realized rapid economic growth by

efficiently coordinating JBIC’ ODA loan and aligning it to its own development strategy.

≪≪Case StudyCase Study Philippines: Metro Cebu Development≫ Philippines: Metro Cebu Development≫• JBIC has been supporting Metro Cebu Development, which is t

he Government of the Philippines’ effort to avoid overconcentration to Metro Manila.

• Metro Cebu Development projects contributed to the balanced regional development.

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5. Role of Bilateral Development Banks5. Role of Bilateral Development Banks

i. Providing policy advice, based on its own country’s experience of development.

ii. Providing long-term / large scale / concessional financing.

Bilateral Development Banks has a role / comparative advantage in;