RCI as Driver of Inclusive Growth

Transcription

1 RCI as Driver of Inclusive Growth 19 July 2013 Alfredo Perdiguero Principal Economist Thailand Resident Mission Southeast Asia Department Asian Development Bank Disclaimer: In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. 1

2 Presentation Outline 1. Regional Cooperation and Integration (RCI) 2. Greater Mekong Subregion (GMS) 3. Brunei-Indonesia-Malaysia Philippines- East ASEAN Growth Area (BIMP-EAGA) 4. Indonesia Malaysia Thailand Growth Triangle (IMT-GT) 5. Way Forward: Second generation RCI 6. ASEAN infrastructure Fund (AIF) 2

3 Regional Cooperation and Integration 3

4 RCI as Driver of Inclusive Growth OVERACHING MISSION/ OBJECTIVE POVERTY REDUCTION Regional Cooperation and Integration FOUR PILLARS OF ADB s RCI STRATEGY Cross-Border Infrastructure and Related Software Trade and Investment Individual Country Programs Monetary and Financial Regional Public Goods CORE AREAS OF INTERVENTION Pro-Poor Sustainable Economic Growth Inclusive Social Development Good Governance 4

5 Different RCI Programs IMT-GT IMT-GT BIMP-EAGA BIMSTEC CAREC GMS IMT-GT SASEC SECSCA Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation Central Asia Regional Economic Cooperation Greater Mekong Subregion Indonesia Malaysia Thailand Growth Triangle South Asia Subregional Economic Cooperation Subregional Economic Cooperation in South and Central Asia 5

6 Greater Mekong Subregion (GMS) 6

7 Contribution of GMS Program to Inclusive Growth Participating Countries: Cambodia, People s Republic of China, Lao PDR, Myanmar, Thailand, and Viet Nam Strategic Priorities: o o Vision a more integrated, prosperous, and harmonious subregion 3Cs Connectivity, Competitiveness, Community GMS projects totaled $15 billion as of December 2012

8 Roads Telecommunications Power Transmission Line Infrastructure Development in GMS (1992)

9 Roads Telecommunications Power Transmission Line Infrastructure Development in GMS (2010)

10 Roads Telecommunications Power Transmission Line Infrastructure Development in GMS (2020)

11 Sample GMS Project: Some Key Outcomes/1 Southern Transport Corridor: Phnom Penh-Ho Chi Minh City Highway Improvement Project Travel time and cost savings Cross-border trade up 40% People border crossings up more than 50% Increased tourism Special border economic zones set up creating jobs 11

12 Sample GMS Project: Some Key Outcomes/2 East-West Transport Corridor Project Significant travel time and cost savings e.g., from 12 to 3 hours; New establishments along the route FDI increase: US$18M to US$200M Former subsistence farmers now engaged in new incomegenerating opportunities Improved access to schools and safe water Poverty down by 35% in Savannakhet 12

13 Hydropower project Nam Theun 2 A BOT project, to be developed by a private company - Nam Theun 2 Power Company Limited (NTPC), owned by a consortium Development Partners support : Agence Française de Développement (AFD) Asian Development Bank (ADB) European Investment Bank (EIB) World Bank (WB) Inclusive Growth Contribution 13

14 Mekong Tourism Development Promote sustainable tourism through : Tourism related infrastructure improvement Cooperation on sustainable tourism Strengthening capacity to promote sustainable tourism development Inclusive growth through pro-poor community based tourism (CBT) 14

15 15

16 Brunei-Indonesia- Malaysia Philippines- East ASEAN Growth Area (BIMP-EAGA) 16

17 Contribution of Brunei-Indonesia-Malaysia Philippines- East ASEAN Growth Area (BIMP-EAGA) to Inclusive Growth

18 Indonesia Malaysia Thailand Growth Triangle (IMT-GT) 18

19 Contribution of Indonesia Malaysia Thailand Growth Triangle (IMT-GT) to Inclusive Growth 19

20 Way Forward : Second Generation RCI Continued important role of infrastructure development for inclusive growth, e.g. missing links in Myanmar, widening of economic corridors, enhancing access to energy Economic Corridor development: new sustainable urban projects Second generation project development: e.g. skills accreditation of labor migration Greater attention to cross sectoral issues 20

21 The ASEAN Infrastructure Fund and the Technical Assistance Funded by the Japan- ASEAN Integration Fund

22 The Region s Infrastructure Stock: Roads (km) Rail (km) Phones (no.) (Per 1,000 people) Electrification Clean Water (Percentage) ASEAN Asia OECD Latin America Africa n.a Source: Asian Development Bank (ADB), United Nations Development Programme (UNDP), and the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) Paths to 2015: MDG Priorities in Asia and the Pacific. New York and Bangkok.

23 Disparity within the Region Infrastructure Index: Asian countries' percent of US' infrastructure development by Country Coverage (2008) Source: Institutions for Regionalism (2011) 23

24 ASEAN s Initiative-AIF 24 Based on the needs, as well as availability of funds for private investments (PPP), etc. it is clear that additional (nontraditional) resources are required to meet the region s infrastructure demand. One key recommendation came from Professor Lawrence Summers (also a member of ADB s Eminent Persons Group). If the wealth tied up in reserves were invested either domestically in infrastructure or in a fully diversified long-term way in global capital markets this is comparable to the gains thought to be achievable from the next round of trade liberalization, to global foreign aid, or to spending on key social sectors in a number of countries. Reflections on Global Account Imbalances and Emerging Markets Reserve Accumulation, L.K. Jha Memorial Lecture (Reserve Bank of India): March 2006

25 ASEAN s Initiative-AIF Specifically, in 2006, ASEAN Finance Ministers called for a fund which uses foreign exchange reserves for development financing ADB was asked to provide support in 2009, and responded with technical and financial support The Shareholders Agreement for the ASEAN Infrastructure Fund (AIF) was signed in September 2011 ADB has three important roles: (i) Administrator; (ii) Cofinancier; and (iii) Shareholder. All ADB policies will apply to AIF operations and administration 25

26 Equity for AIF ASEAN 55% AIF 30% Hybrid Capital 25% AIF+ADB Lending ADB 20% Debt (FX reserves) 60% Equity & Debt for AIF Tranche 1 Tranche 2 Tranche 3 Subtotal Equity 40% Equity Structure for the AIF ASEAN Brunei Cambodia Unit 0.1 Indonesia Lao PDR Unit 0.1 Malaysia Philippines Singapore Thailand Viet Nam ADB Subtotal Hybrid Capital Total ADB 70% Note: In million US Dollars 26

27 27 AIF - Current Progress 2012: April: Incorporation in Labuan May: First Board Meeting June: Election of Chairmanship Aug.: Country Programming Mission Nov.: Final Equity Contribution Dec.: Grant of Malaysia s exemptions 2013: March:2 nd Board Meeting May: 3 rd Board Meeting - Detailed Pipeline for Pipeline - TBC 3rd Q: Begin lending operations 2013 Projects $ M Java-Bali 500 kv Power-Transmission Crossing Neighborhood Upgrading and Shelter Sector Project Phase II Flood Management in Selected River Basins Metropolitan Sanitation Management and Health II Project Nabong 500 kv Substation and Transmission Facility Project Standby Projects: Lao PDR - Viet Nam Power Interconnection (Hatxan - Pleiku) (standby) Angat Water Transmission Improvement (formerly Urban Water Supply and Sanitation Project ) Transmission Grid Development of Ha Noi and Ho Chi Minh City

28 AIF - Current Progress To further enhance AIF operations and impact, there s a need to catalyze private investments using AIF as an operational platform: 1. Establishing a Project Development Facility (PDF) for PPP to support private sector financing in infrastructure. The Facility is to support the structuring of PPP transactions, upon which AIF financing can be used. Singapore has been proactive and some other partners have shown interest. 2. Exploring potential forms of guarantees for AIF lending to non-sovereign entities. In addition to sovereign guarantees, other forms of guarantees sufficient to strengthen AIF s credit profiles can be examined. 28 Both initiatives are still in the early stage of development, and ADB will report on the progress to the AIF Board at its November 2013 meeting.

29 Technical Assistance The operations of the AIF and other related initiatives to promote regional connectivity, considerable technical support is required. Project Pipeline Financial Model Consensus Building This is the main motivation for the ADB-TA: Supporting the Master Plan on ASEAN Connectivity. Potential Projects: Pre- Feasibility Studies Financial Model and Analysis Consultation and Dissemination The activities will be undertaken throughout 2013 and The TA is expected to be closed by end of Pipeline of regional projects for AIF and others Financial Policies for the AIF Stakeholders in ASEAN, Japan, and others 29 29

30 Technical Assistance 30 30

31 Conclusions & Next Steps Continued operations of the AIF and the TA remain to be a key priority. Financing alone is not a sufficient condition. Others include: Providing policy and capacity development support for developing countries Ensuring a synergy between hardware and software of infrastructure Compliance with best practice in social and environmental safeguards Keeping productive relationships with civil society and local communities 31 Coordination with other relevant stakeholders and donor agencies 31