Table of Contents

  • By connecting suppliers and markets, improving efficiencies and fostering indirect economic benefits, roads and railways, along with other kinds of transportation infrastructure, play fundamental roles in driving growth and development. While Emerging Asia (the ten ASEAN Member States, China and India) is expected to see continued strong performance in the future – with real GDP growing by an average 6.3% per year over 2018-22, according to the Economic Outlook for Southeast Asia, China and India 2018 – the demand for infrastructure remains high and additional investment is needed to support sustained economic expansion. At the same time, new approaches to infrastructure investment are also needed that prioritise the quality of these projects, addressing issues including effective governance, economic efficiency and resilience, empowerment of local communities, consideration of social and environmental impacts, alignment with economic and development strategies, and resource mobilisation.

  • The Road and Rail Infrastructure in Asia: Investing in Quality report addresses the need for greater attention to be paid to investing in quality infrastructure in Asian countries. It includes an introduction to the main issues, illustrated through case studies on recent road and rail infrastructure (Chapter 1) and discussions of three key policy areas to be addressed in developing and implementing quality infrastructure: the roles and responsibilities of local governments (Chapter 2), financing options for infrastructure projects (Chapter 3), and the alignment of transport infrastructure planning with development strategies (Chapter 4).

  • While there is significant demand for infrastructure in Asian countries, and with economic growth and climate change making the case for considerable investments in this regard, too little is currently being invested in much of the region. In addition to expanding transport, energy and communications networks, and developing other kinds of infrastructure, countries in the region also need to ensure the ongoing maintenance of their existing networks, and to make improvements to the overall quality of their infrastructure.

  • There is a considerable need for additional infrastructure investment in many Asian economies, and future increases in population, economic growth and climate change will result in additional demand for infrastructure. As well as increasing investment in infrastructure, policy makers will need to work to ensure the quality of these investments. Quality infrastructure is designed and implemented taking into account a life-cycle perspective, employment creation, social and environmental impacts, alignment with broader development strategies, and resource mobilisation. Quality infrastructure generates positive externalities benefiting economic development and well-being. Examples of the incorporation of these principles in recent road and rail projects in seven Asian countries are discussed in this chapter through 16 case studies.

  • The experiences of Indonesia, the Philippines and Viet Nam are used in this chapter to illustrate the local economic consequences of infrastructure projects, the roles and responsibilities of local governments, the means of financing investment, and the benefits and challenges of local governments’ involvement in the sector. While local governments can be important actors on infrastructure projects, they can face challenges related to financing constraints, limited capacities and co-ordination difficulties with higher levels of government and other partners. Improving the efficiency and effectiveness of local governments in developing and implementing infrastructure will require improvements to planning and co-ordination, the development of institutional capacities, the use of broader sources of financing, and the incorporation of ongoing maintenance and monitoring costs in project budgeting.

  • Required investments in road and infrastructure in Asian countries will require governments to consider a broader range of sources of financing than have been used in the past. The public sector still bears much of the burden in financing infrastructure and is expected to continue to play a major role in future. Public revenues can be increased through improvements to tax yields generally and the implementation of taxes specifically for financing infrastructure, such as vehicle taxes and road-use charges, energy taxes and taxing project beneficiaries. Public-private partnerships and private investment in infrastructure projects are expected to continue to become more important as sources of financing. Fostering greater private involvement in infrastructure finance will require, in many countries, the development of effective governance mechanisms and of financial markets.

  • The quality of infrastructure cannot be judged entirely in isolation, and also requires that projects complement broader development strategies where they are implemented. However, weak public investment management systems can lead to investments that are less fiscally sustainable and unlikely to make effective contributions to growth and development. Similarly, appraisal systems are critical in identifying quality infrastructure projects, as are institutions for infrastructure governance. Viet Nam, which has adopted many principles of quality infrastructure through its planning system, offers an interesting case study, though further work could be done to strengthen the connections between socio-economic development plans and transport planning. Detailed budgeting, time-specific targets, and clearer criteria, could be helpful in addressing these challenges.