Introduction

The Association of Southeast Asian Nations (ASEAN) is composed of Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Viet Nam. It was formed in 1967 with multiple goals— accelerating economic growth, social progress, and cultural development in the region. It also aims to promote regional peace and stability through abiding respect for justice and the rule of law, under the principles of the United Nations Charter.

In 1992, the ASEAN Free Trade Area (AFTA) was established to eliminate tariff barriers among Southeast Asian nations, with a view to integrating the ASEAN economies into a single production base, and creating a regional market of half a billion people (ASEAN 2002).The ASEAN Vision 2020 adopted in 1997, envisions ASEAN as a group of nations, “outward looking, living in peace, stability and prosperity, bonded together in partnership in dynamic development and in a community of caring societies.” Its goal is to change ASEAN into a stable, prosperous, and highly competitive region, with equitable economic development, and reduced poverty and socio-economic disparities (ASEAN 2008c). In 2003, the ASEAN Economic Community (AEC) was declared as one of the main pillars of the ASEAN Community. The AEC will be the realization of efforts by ASEAN member countries to strengthen economic integration, through existing and new initiatives with clear timelines.

At the 13th ASEAN Summit held on 20 November 2007, ASEAN leaders signed the ASEAN Economic Community Blueprint to fast-track AEC establishment by 2015. The Blueprint envisions ASEAN as a highly competitive region, fully integrated into the global economy, possessing a single market production base, and characterized by equitable economic development (Goh Ching Yin 2008). Moreover, the Roadmap on Integration for ASEAN in Finance (ASEAN 2009b) further identifies four goals for financial integration in the region, namely: (i) to develop deep financial markets and achieve cross-border collaboration among ASEAN capital markets; (ii) to have free flow of financial services; iii) to improve the flow of capital; and (iv) to have closer currency cooperation.

Infrastructure development is essential to the realization of ASEAN's goal of economic integration, and indispensable to ASEAN's future success—particularly if the region is to weather the fallout from the ongoing global economic crisis. Now more than ever, the development of infrastructure needs to be accelerated to enhance physical connectivity, as well as encourage resource-sharing. To promote cross-border trade and investment, improve countries competitiveness, and raise domestic output, it is important for ASEAN countries to be physically connected through various modes of transportation, such as roads, railways, airways, and ports and shipping. An improved and integrated transport and logistics systems in ASEAN is an integral part of the regional integration initiative.

This paper discusses the role of infrastructure development in ASEAN economic integration and its associated issues and challenges. Following this brief introduction, Section 2 presents the role of regional infrastructure cooperation in ASEAN's growth and integration. Section 3 provides an overview of ASEAN infrastructure in terms of its quality and quantity, and its importance for enhancing growth, trade, and investment; reducing the development gap; providing adequate basic needs; and achieving poverty reduction. Section 4 examines issues and challenges in infrastructure development. Section 5 addresses infrastructure financing requirements, while Section 6 discusses the role of multilateral development banks (MDB). Section 7 concludes.

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