Asia's Infrastructure Gap: The Unmet Need of an Urbanizing Continent

The following was written by Guest Blogger Anant Mishra and does not reflect the views of The Washington Outsider or its staff.  

Anant Mishra is a former Youth Representative to the United Nations. He has served extensively in United Nations General Assembly, the Security Council along with the Economic and Social Council. He is also a visiting faculty for numerous universities and delivers lectures on political economics and foreign policies. 

​​Not long ago, the Asian Development Bank (ADB) estimated a total need for investment of over “$8 trillion to improve national infrastructure,” across Asia, along with another “$290 billion in regional infrastructure” by 2020.
 
Experts argue that “uneven economic growth, a population boom, and slow urbanization” have caused increasing infrastructure gap across Asia. As the infrastructure gap increases across continent, international development agencies are pursuing initiatives that will increase support of regional and local agencies.

 
 
In the past, region has witnessed a meagre growth rate of 6% with an urbanization rate of only 31%. In contrast, East Asia witnessed a growth of 9% with 50% urbanization.  This matters, because cities provide over 80% of a nation’s GDP.  After all, “a proximity and diversity of people can spark innovation and create employment as exchanging ideas breeds new ideas.” 
 
As nations urbanize and people migrate to cities, demand for new infrastructure, such as roads, sanitation facilities, and power plants, increases dramatically. 
 
It is important to recognize poor sanitation, for example, gives rise to water borne diseases, such as cholera and dysentery.   More than 690 million people continue to survive without sanitation utilities across South Asia.  Asia has the “...the highest incidence of open defecation in the world.”   As such, it is important for community to access sanitation facilities as it decreases healthcare costs and further increases economic growth of the nation.
 
In a recent report, the World Bank stated 90% of citizens “somehow” get access to water.   “A meagre 25% of the population have access to pipe water where as a handful of regions in South Asia have water supply 24/7.”
 
With that in mind, the World Bank estimates the population of South and Southeast Asia will increase from 1 billion people to an estimated 3.2 billion by 2050.  ADB estimates that the majority of the population will be living in urban cities. To fund urbanization, the developing and underdeveloped economies need financial aid.
 
In October 2013, President Xi Jinping introduced the concept of an Asian Infrastructure Investment Bank during a meeting with then-Indonesian President Susilo Bambang Yudhoyono.  The plan was to establish an organization that would work in collaboration with other Asian governments financial institutions to utilize China’s wealth of financial and technical resources as part of an effort to improve infrastructure in developing economies across Asia.
 
The Asian Infrastructure Investment Bank (AIIB) is newly established international organization.  It is tasked with bridging the growing infrastructure gap in Asia.
 
The committee met for the first time in 2015 to discuss the importance of sustainable infrastructure in the wake of Post 2015 Agenda. The committee then agreed to provide financial aid of over $100 billion, thus making it one of the most important international development organizations capable of bringing significant change throughout Asia.
 
Today, China is reinforcing its “One Belt, One Road” initiative to improve land and maritime transportation ways between China and Central Asia, the Middle East and Europe, which would affect a population of over 4.4 billion people.  In part, China’s initiative reflects the desire of many Asian leaders, who were previously advocating for the so-called “Silk Route Economic Belt.”
 
Since the establishment of “the One, Belt, One Road” initiative, however, Washington has done everything it can to dissuade its allies from joining.  Washington has also lashed out at AIIB, because its objective is to end “dollar dominance” while superseding financial institutions like the World Bank and the IMF, which favour American and Japanese financial institutions. 
 
The US Treasury Department has even gone so far as issue statement criticizing the AIIB, because it would allegedly fail to honour environmental standards, international standards for procurement, and other safeguards adopted by the World Bank and the ADB.
 
Washington views China’s regional economic development policies as part of an effort to bolster its dominance across Asia.  By alleviating the economic issues of under-developed nations, the US fears Chinese territorial aggression will go unchallenged with the rise strengthening of Chinese “soft power.”  Washington was also concerned that the AIIB would fail to adopt international standards of transparency, debt sustainability, environmental threats, and social protections.
 
The official endorsement of AIIB by numerous Asian leaders, however, clearly demonstrates their desire to gain access to regional and global financing that is not dependent on US, Japanese-based financial institutions.   
 
In late July of 2015, it became clear Japan, which is America’s closest and most powerful Asian ally, would not join.  
 
When two major strategic partners, South Korea and Australia, along with key European allies Germany, France and the United Kingdom, decided to join the AIIB, Washington adopted a new strategy.  Then-Trade Department’s Undersecretary of International Affairs Nathan Sheets addressed the importance of partnership between the AIIB nations.  In response, the World Bank and the ADB would seek to “strengthen international financial architecture” in an effort to maintain quality and standards.
 
In truth, initiatives from both Washington and Beijing are welcome.  Unfortunately, they are still inadequate even when combined.  
 
Furthermore, there is increasing talk about the role of private and how they might help fill the funding gap.  Private entities, for example, have been involved in the development of sanitation facilities.  The initiative of these kind help reduce healthcare costs, decrease pollution, and improve quality of life.