Private Sector Participation and Investment in Physical Infrastructure for CAREC

Over 30 senior officials and members of the Central Asia Regional Economic Cooperation (CAREC) trade and infrastructure sector coordinating committees participated in an ADBI Seminar on “Private Sector Participation and Investment in Physical Infrastructure for CAREC” held from 5-7 March 2008 in Tokyo. The seminar was organized by ADBI in close coordination with ADB Headquarters, and in collaboration with a number of ADBI’s important development partners - the European Bank for Reconstruction and Development, the Islamic Development Bank, the World Bank, and a number of private sector organizations representing investor interests.

The seminar was programmed to enhance the understanding of participating infrastructure policy makers of the benefits and main challenges to achieving greater public-private partnerships for infrastructure development across the CAREC region. In his welcoming remarks, Masahiro Kawai, Dean of ADBI, highlighted the dynamic transformation and remarkable economic growth experienced by the CAREC region over the last two decades. He indicated, that in the medium- to longer-term, strong macro-economic performance in the region continues to be anticipated at rates that are expected to be among the highest in Asia and globally. Mr. Kawai emphasized that to realize this strong performance the need to further intensify policy reform efforts now underway by many countries in the CAREC region will be critical. He underlined efforts to improve governance and strengthen institutions, as well as encourage the investment climate, private sector development, and regional cooperation and integration, will all be important drivers for achieving sustained economic performance.

In his opening remarks, Sean O’Sullivan, Deputy Director General of ADB’s Central West Asia Department, profiled the importance of connectivity for the CAREC region. He stressed that connectivity within the countries, between the countries, and beyond the countries, will all be important for expanding trade and access to markets and supporting broader economic growth. Mr. O’Sullivan pointed out the valuable role the private sector can take on in developing energy and transportation infrastructure required to support the level of connectivity desired. While recognizing the potential private sector financing offers to expand investment levels now primarily sourced by CAREC country governments, Mr. O’Sullivan placed significant emphasis on the extensive infrastructure management expertise and access to new technology the private sector also offers to the CAREC region.

As outlined by the seminar’s keynote speaker, Takehiro Hashimoto, Division Director, Macquarie Japan, the interest of private sector investors in global infrastructure investments has and continues to experience huge growth as demonstrated by the enormous increase in the number of infrastructure investment funds managed worldwide. He profiled Macquarie’s extensive infrastructure experience with infrastructure assets that now span 25 countries with extensive holdings in the Asia-Pacific region. He described how Macquarie’s strategy for investments in infrastructure public-private partnerships is focused on ensuring mutual benefits are achievable through projects that are financially viable and sustainable, and highlighted a number of Macquarie's successful experiences in Asia. In closing, Mr. Hashimoto provided a ‘private sector investor’s’ perspective of the main challenges to further accelerating the PPP process and the development of a ‘bankable’ pipeline of projects for the CAREC region.

Over the three day seminar, CAREC trade and infrastructure policy makers explored further the benefits and main challenges to greater private sector participation and investment in infrastructure projects for the CAREC region. On Day 1 of the program, they reviewed the linkages between infrastructure development and economic growth and poverty reduction, and the infrastructure financing challenges faced by the CAREC region. On Day 2 of the program, they focused on the opportunities and advantages PPPs offer, the modalities that have evolved, and the key issues that need to be addressed by country governments in the region for projects to be ‘bankable’. On Day 3, the last day of the program, participants walked through a number of energy and transport case studies to determine those points of project design and negotiation that brought infrastructure projects to a successful conclusion or resulted in a breakdown of the deal process. Through facilitated group sessions, each of the eight CAREC country delegations identified a number of priority policy issues to be profiled and addressed in their respective countries in order to strengthen the PPP enabling environment and better enable a pipeline of bankable infrastructure projects to be developed for the CAREC region.