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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
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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)
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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
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Conceptual Framework
Current state of
physical
infrastructure in
countries with
special needs
Review2
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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
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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
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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
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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
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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
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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.
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Change in GDP during 2015-2030
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Financing
infrastructure
Strategies 4
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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
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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
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Infrastructure financing gaps
Tax revenue
Tax-to-GDP ratios in selected Asia-Pacific countries, 2014
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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
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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%
10%
20%
30%
40%
50%
60%
70%
0%
10%
20%
30%
40%
50%
60%
0%
10%
20%
30%
40%
50%
60%
Long-term
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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
60
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
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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
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