US$ 40 billion per year needed for Asian cities

08 May 2008

Turkey: Asia needs an estimated US$ 40 billion per year for urban infrastructure building, according to the Asian Development Bank (ADB).

An ADB seminar held in Turkey last month heard that the explosive urbanisation of Asia over the last 40 years is putting a huge strain on infrastructure.

Bindu Lohani, director general of ADB's Regional and Sustainable Development Department said, “In the mid-1960s, only one person in five lived in towns and cities. Today it is one in three, and by 2020, it will be one in two.”

Citing data from the United Nations (UN), Mr Lohani said the world would have 23 ‘megacities’(cities with 10 million or more inhabitants) by 2010, 12 of which would be in developing Asia. These are expected to be Beijing, Delhi, Dhaka, Hyderabad, Jakarta, Karachi, Kolkata, Manila, Mumbai, Seoul, Shanghai and Tianjin.

According to Mr Lohani, city growth has been largely unplanned and uncontrolled. This has created problems such as traffic congestion, inadequate water supply and sub-standard housing.

Despite this, he said, cities are the engines of national economic growth. Mr Lohani cited Bangkok as an example, which generates about one-third of Thailand's GDP.

In view of this, the ADB is expected to lend increasing amounts of money to urban projects. According to Mr Lohani, the Bank's current investment in urban infrastructure accounts for about 60% of its lending portfolio. This translated to about US$ 800 million per year between 2002 and 2004.

Besides this, Asian Governments are being encouraged to tap into the Private sector, to help increase urban infrastructure investment. The Public-Private Partnership (PPP) model of infrastructure concessions is seen as the main vehicle for such investment.

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