Infrastructure challenges and need for new global partnerships
Thursday, 14 November 2013 00:55
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By Shabiya Ali Ahlam
Challenges in infrastructure are by far what is mostly faced by developing countries. In an attempt to highlight the importance of partnerships for infrastructure in the Commonwealth region, a session chaired by CPCS Transcom Canada CEO Peter Kieran comprehensively addressed the issues prevailing in that regard.
It is noted that by 2030, the world economy will have to spend approximately $ 57 trillion in infrastructure to keep up with economic growth. ARUP, UK, Global Head Infrastructure Practice Peter Chamley stated that this investment in infrastructure is not to enable growth, but to keep up with it.
Pointing out the issues in getting about that level of development, he said: “If we are to deliver that level of infrastructure, there is no way we can do that without partnership.”
In terms of project selection and prioritisation, to put together the national infrastructure plan, which in turn puts together the number of years needed for projects to be implemented, and the identification of projects that will help realise growth, countries will have to be realistic in terms of costs and benefits, he said.
Chamley added that in a global context, it is observed that countries have a poor history of underestimating the costs of projects and overestimating the benefits. Taking an example of infrastructure projects in the transport arena, he noted that there are many projects have failed and never delivered what they have promised.
Infrastructure and investor environments
Concentrating on the region, Asian Development Bank (ADB) Country Director Rita O’ Sullivan said as the ADB is a significant partner for Asia; this means the region is largely developing.
Taking into account the population of Asia, which is approximately 4.3 billion, the infrastructure needed in the region shows the need for partnerships at various levels.
“The challenges when you look at infrastructure are many. The planning of the load of work is a critical factor since at the end of the day there is not enough money to spend. The integration of projects to optimise the benefits is a big part of it and that is where the global partnership is important from a technical expertise on the planning stage through to implementing,” she said.
The ADB having estimated that for Asia, in national and regional infrastructure for telecommunication, energy, transport, water and sanitation, a budget of $ 8.3 trillion is needed, and she questioned as to where the money would come from.
O’Sullivan acknowledged that for this, government borrowing obviously leads the way to ensure that an enabling environment is created for private sector investors to come in.
“In the global partnership aspect, we see that there is a lot of leverage from peer pressure. Countries realise that if their neighbour is more effective with its business processes and its operation, businesses will go there. This means that the governments are forced to adopt reforms in the regulatory framework that is needed,” she added.
Wealth creation and insurance costs
Infrastructure should lead to wealth creation and looking back, Roughton International, UK, COO Richard Wotton noted that it really has. Focusing on tackling the challenges of infrastructure deficit, Wotton said the main challenge is to work on changing the attitude of relevant institutions to fully leverage the full potential of the public and private sector.
“We must work together to have better access to solutions. Governments can’t do it alone. The private sector is the key to reduce infrastructure deficit and creating wealth,” he emphasised.
Meanwhile, Minister of Water Supply and Drainage Dinesh Gunawardena highlighted the issue of insurance of infrastructure, which is noted to have impacted the physical development of many countries.
“If insurance costs are reduced in all the emerging countries, there are tremendous opportunities to have an increased number of projects to flow. It is an important area which should be considered. Perhaps insurance need not be more costly, instead it should be more negotiable,” asserted Gunawardena.
