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11/1/2017 1 Strengthening Development of Least Developed Countries in Asia and the Pacific to support implementation of the 2030 Agenda for Sustainable Development Investing in infrastructure for an inclusive and sustainable future (Session 3) Sudip Ranjan Basu Phnom Penh, 18 th October 2017 Outline Introduction Review Measuring progress Strategies The Way forward
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  • 11/1/2017

    1

    Strengthening Development of Least Developed

    Countries in Asia and the Pacific to support

    implementation of the 2030 Agenda for

    Sustainable Development

    Investing in infrastructure for an inclusive and

    sustainable future (Session 3)

    Sudip Ranjan Basu

    Phnom Penh, 18th October 2017

    Outline

    • Introduction

    • Review

    • Measuring progress

    • Strategies

    • The Way forward

  • 11/1/2017

    2

    Introduction

    • Countries with special needs (CSN)

    – Include LDCs, LLDCs and SIDS

    – Continue to face structural challenges and vulnerability to external shocks

    • Asia-Pacific Countries with Special Needs Development Report

    – 2015: Building productive capacities to overcome structural challenges

    – 2016: Adapting the 2030 Agenda for Sustainable Development at the National Level

    – 2017: Investing in infrastructure for an inclusive and sustainable future

    • Why infrastructure?

    – A critical element of inclusive and sustainable development

    – 2030 Agenda for Sustainable Development

    – Programmes of Action (IPoA, VPoA and SAMOA)

    1

    Introduction (continued)

    • “Infrastructure” encompasses physical infrastructure, social

    infrastructure and institutional infrastructure

    • The Report focuses on

    – Four types of physical infrastructure (transport, energy, ITC, and

    water supply and sanitation)

    – Four sources of finance (public sector, privates sector, bilateral

    donors and multilateral development banks)

    • The Report

    – Reviews the current state of infrastructure and identify gaps

    – Discusses the framework for integrating infrastructure for

    sustainable development

    – Reviews various financing sources and modalities for CSN

  • 11/1/2017

    3

    Conceptual Framework

    Current state of

    physical

    infrastructure in

    countries with

    special needs

    Review2

  • 11/1/2017

    4

    Transport infrastructure

    Road density (kilometres per 1,000 km2 of land

    area), 2013-2015

    Rail lines density (kilometres per 1,000 km2

    of land area), 2013-2015

    0 500 1 000 1 500 2 000 2 500

    Mongolia

    Kazakhstan

    Papua New Guinea

    Solomon Islands

    Myanmar

    Afghanistan

    Vanuatu

    Turkmenistan

    Nepal

    Fiji

    Lao PDR

    Tajikistan

    Uzbekistan

    Kyrgyzstan

    Cambodia

    Armenia

    Bhutan

    Maldives

    Micronesia

    Tonga

    Azerbaijan

    Samoa

    Bangladesh

    Non-CSN

    0 10 20 30 40 50

    Vanuatu

    Tonga

    Solomon Islands

    Samoa

    Papua New Guinea

    Micronesia

    Maldives

    Bhutan

    Lao PDR

    Afghanistan

    Nepal

    Mongolia

    Kyrgyzstan

    Cambodia

    Tajikistan

    Myanmar

    Kazakhstan

    Turkmenistan

    Uzbekistan

    Bangladesh

    Azerbaijan

    Fiji

    Armenia

    Non-CSN

    Energy infrastructure

    Access to electricity (% of population, 2013-2015) Electric power consumption (kWh per capita),

    2012-2015

    0 20 40 60 80 100

    Papua New Guinea

    Solomon Islands

    Vanautu

    Cambodia

    Timor-Leste

    Afghanistan

    Tuvalu

    Myanmar

    American Samoa

    Fiji

    French Polynesia

    Guam

    Kiribati

    Marshall Islands

    Micronesia

    New Caledonia

    Palau

    Bangladesh

    Lao PDR

    Bhutan

    Nepal

    Mongolia

    Tonga

    Armenia

    Azerbaijan

    Kazakhstan

    Kyrgyzstan

    Maldives

    Samoa

    Tajikistan

    Turkmenistan

    Uzbekistan

    Non-CSN

    0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 5 000

    Nepal

    Afghanistan

    Solomon Islands

    Myanmar

    Vanuatu

    Cambodia

    Bangladesh

    Tonga

    Papua New Guinea

    Lao PDR

    Samoa

    Fiji

    Maldives

    Uzbekistan

    Tajikistan

    Armenia

    Kyrgyzstan

    Micronesia

    Mongolia

    Azerbaijan

    Bhutan

    Turkmenistan

    Kazakhstan

    Non-CSN

  • 11/1/2017

    5

    ICT infrastructure

    Telephone communication subscriptions per 100

    population, 2013-2015

    Internet users per 100 in

    habitants, 2012-2015

    0 50 100 150 200

    Myanmar

    Micronesia

    Afghanistan

    Samoa

    Vanuatu

    Bangladesh

    Solomon Islands

    Bhutan

    Uzbekistan

    Tonga

    Lao PDR

    Tajikistan

    Nepal

    Fiji

    Mongolia

    Azerbaijan

    Armenia

    Kyrgyzstan

    Cambodia

    Papua New Guinea

    Turkmenistan

    Maldives

    Kazakhstan

    Non-CSN

    0 10 20 30 40 50 60 70 80

    Papua New Guinea

    Afghanistan

    Solomon Islands

    Bangladesh

    Myanmar

    Turkmenistan

    Cambodia

    Lao PDR

    Nepal

    Vanuatu

    Tajikistan

    Mongolia

    Samoa

    Kyrgyzstan

    Micronesia

    Bhutan

    Uzbekistan

    Tonga

    Fiji

    Maldives

    Armenia

    Kazakhstan

    Azerbaijan

    Non-CSN

    Water supply and sanitation infrastructure

    Access to improved water supply (left) and sanitation (right) and GDP per capita

  • 11/1/2017

    6

    National development plans and

    infrastructure policies

    • In CSN, high priority is given to rural development, particularly in terms of

    improved access to electricity and improved water supply.

    • Development and maintenance of transport infrastructure is the main

    priority in LDCs, followed by energy infrastructure.

    • LLDCs mainly focus on regional corridors and integration, for which

    transport infrastructure tops the list of priorities followed by the energy

    sector

    • In SIDS, ICT infrastructure development has been identified as one of the

    critical issues they face; as a result, many of them have formulated plans

    for expanding access to ICT services.

    ESCAP Access

    to Physical

    Infrastructure

    Index

    Measuring progress 3

  • 11/1/2017

    7

    ESCAP Access to Physical Infrastructure

    Index (APII)

    • APII : ESCAP APII captures 8 indicators, covering four

    dimensions (Transport, Energy, ICT, and water supply and

    sanitation)

    • Country coverage: 41 countries in Asia and the Pacific, 23 CSN,

    15 developing countries and 3 developed countries

    • Methodology: Simple average (equal weights), and each of the

    four sectoral indices are based on the standardized indicators

    that is a combination of two indicators for each of the sectors

    • Benchmarking: APII score of developed countries serves as a

    long-term benchmark of CSN to be achieved by 2030, while

    the average score for the 15 developing countries serves as

    the medium-term benchmark to be achieved between 2025

    and 2030.

    Infrastructure gap remains

  • 11/1/2017

    8

    APII score

    Country groupings APII score APII rank Country groupings APII score APII rank

    Countries with special needs 0.288 Developing countries 0.431

    Kazakhstan 0.520 6 Singapore 0.708 2

    Azerbaijan 0.476 9 Korea, Republic of 0.664 3

    Maldives 0.463 10 Malaysia 0.502 7

    Armenia 0.453 11 Russian Federation 0.495 8

    Fiji 0.394 17 Turkey 0.440 12

    Tonga 0.371 20 Georgia 0.436 13

    Kyrgyzstan 0.370 21 Viet Nam 0.419 14

    Uzbekistan 0.365 22 Thailand 0.418 15

    Samoa 0.350 23 Sri Lanka 0.407 16

    Tajikistan 0.309 26 Islamic Republic of Iran 0.394 17

    Bangladesh 0.277 28 China 0.391 19

    Bhutan 0.269 29 Philippines 0.336 24

    Turkmenistan 0.269 29 Pakistan 0.311 25

    Mongolia 0.235 32 Indonesia 0.278 27

    Micronesia 0.232 33 India 0.260 31

    Lao PDR 0.225 34

    Nepal 0.217 35

    Vanuatu 0.200 36 Developed countries 0.633

    Myanmar 0.198 37 Japan 0.712 1

    Cambodia 0.186 38 New Zealand 0.605 4

    Solomon Islands 0.113 39 Australia 0.582 5

    Afghanistan 0.072 40

    Papua New Guinea 0.070 41

    Large variations within LDCs

  • 11/1/2017

    9

    Economic impacts of infrastructure

    1% change in APII

    scores result in CSN:• 1.19% GDP increase

    • 0.32% HDI increase

    Estimating impacts

    National income could

    increase as high as $134

    billion by 2030

    – 6% of the national

    income of combined CSN.

    0

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  • 11/1/2017

    10

    Change in GDP during 2015-2030

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    Financing

    infrastructure

    Strategies 4

  • 11/1/2017

    11

    Current infrastructure financing

    • Sources of finance:

    – Public sector (3-5% of GDP)

    – Private sector (approx. 1% of GDP)

    – ODA (0.7% of GDP)

    – MDB (0.7% of GDP)

    • Financing instruments:

    – Concessional financing and bank

    loans dominate

    – Other instruments are limited

    Composition of infrastructure

    financing sources in CSN

    Public and private sectors

    • Domestic public finance

    – Traditional sources of finance

    – Expected to remain a significant

    source

    – Should be used to crowd in private

    investment

    • Private sector participation

    – Concentrated in a few mega energy

    projects and privatization of ICT

    infrastructure

    – Has potential to play a bigger role

    but requires a stable “investor-

    friendly” climate

    PPP, 2006-2015, % of GDP

    0.00.10.10.10.20.30.50.50.60.60.70.70.90.91.31.41.82.43.13.8

    18.6

    0.60.30.61.6

    0 5 10 15 20

    SamoaMongolia

    TurkmenistanTonga

    Papua New GuineaMaldives

    AzerbaijanKazakhstanKyrgyzstan

    FijiMyanmarVanuatu

    UzbekistanBangladeshAfghanistan

    NepalBhutanArmenia

    CambodiaTajikistanLao PDR

    Non-CSNSIDSLLDCLDC

    Energy

    ICT

    Tranport

    WSS

  • 11/1/2017

    12

    Development cooperation

    • Bilateral development assistance

    – Have played a limited role in CSN as

    they tend to focus more on social

    infrastructure

    – Assistance from non-DAC countries may

    be increased

    • MDBs and new regional initiatives

    – Great presence in LDCs, particularly

    ADB’s support to the transport sector

    and WB’s support to the energy sector

    – Help CSN attract capital from the

    private sector

    – New regional initiative have the

    potential to help develop investible

    infrastructure projects in CSN

    Declining ODA to CSN

    Infrastructure financing needs

    • Large infrastructure financing needs:

    10.5% of GDP annually

    • 8.3% of GDP will be required

    – to fill the current gap (LDC);

    – to meet the future demand; and

    – to cover the cost of maintenance

    (LLDC, SIDS)

    • A major portion is in the transport

    sector, but needs are growing for ICT

    and energy

    • Climate change adaptation and

    mitigation will require additional

    2.2% of GDP

    Annual infrastructure financing

    needs, 2016-2030

  • 11/1/2017

    13

    Infrastructure financing gaps

    Tax revenue

    Tax-to-GDP ratios in selected Asia-Pacific countries, 2014

  • 11/1/2017

    14

    Public expenditure management

    Public investment and infrastructure quality

    Private sector engagement

    • Private sector engagement has been severely

    hampered

    – Risk-return profile needs to be adjusted by Government support

    measures

    • Governments can also

    – Partner with multilateral development banks to increase financial

    viability

    – Enhance coordination across Government agencies to establish a

    infrastructure project pipeline

    – Facilitate innovate PPP

    • No one-size-fits-all approach to development financing

  • 11/1/2017

    15

    Policy

    messages

    The way forward5

    Short-term policy issues

    In the short term:

    • Prioritize which sectors are to be developed

    • Integrate policy approaches across sectors

    • Identify priorities, partners, instruments and support

    measures

    Short-term Medium-term

    0%

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    20%

    30%

    40%

    50%

    60%

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    Long-term

  • 11/1/2017

    16

    Medium to long-term policy issues

    In the medium to long term:

    • Mobilize domestic public finance

    • Develop capital markets (if domestic markets are

    sufficiently large)

    • Enhance institutional and technical capacity for

    planning, maintaining and managing infrastructure

    Most relevant challenges for infrastructure development and maintenance

    0

    10

    20

    30

    40

    50

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    70

    80

    Acquiring and

    transfer of

    Technology

    Financial

    accessibility

    Technical know-

    how

    Development

    cooperation

    Institutional

    capacity

    Effective

    governance

    LDCs group specific policy messages

    • Limited domestic finance and development

    assistance

    • Need institutional capacity to develop a

    pipeline of projects across sectors and

    Government agencies and also in line with

    the objectives of development partners

    • Need to enhanced domestic resource

    mobilization over the medium to long term

  • 11/1/2017

    17

    Key policy messages

    • CSN have made uneven progress over the past decades in

    terms of their level of physical infrastructure development

    and improving the overall quality

    • Traditional sources of financing will be inadequate to fulfil

    the investment needs of CSN

    • Policy messages need to go beyond national borders, and

    include aspects of regional architecture for infrastructure

    development in a holistic manner

    Thank you អរគុណ

    Please visit

    www.unescap.org/publications/asia-pacific-

    countries-special-needs-2017

    Email: basu@un.orgtwitter.com/unescap

    facebook.com/unescap

    youtube.com/unescap

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