Southeast Asia needs an estimated USD7.1 trillion in infrastructure investment through 2040, but a shortage of commercially viable projects is preventing governments from mobilizing enough private capital to meet the region’s growing needs, Asian Development Bank (ADB) President Masato Kanda said Saturday.
The region must invest about USD476 billion annually, equivalent to 8.7 percent of its gross domestic product and more than twice ADB’s previous estimate, Kanda said at the ASEAN Business and Investment Summit in Manila.
At current spending levels, governments will cover less than half of the requirement, leaving an annual financing gap of about USD261 billion. The shortfall is larger than the region’s entire government infrastructure investment at present.
But Kanda said the problem is not simply a lack of money, pointing instead to the limited supply of projects capable of attracting commercial financing.
“Capital is not the binding constraint. Investable projects are,” he said.
He urged ASEAN governments to provide predictable regulatory frameworks, transparent procurement processes and stronger project preparation to make infrastructure investments more attractive to private investors.
Public funds, he added, should be used strategically to reduce project risks and draw in private capital rather than shoulder the entire financing burden.
Electricity infrastructure accounts for about half of the region’s investment requirement, while transport represents another third. Broadband networks and data centers will require nearly USD600 billion, while an estimated USD227 billion is needed to address gaps in clinics, hospitals and laboratories.
The scale of the requirement highlights the challenge facing ASEAN economies as they seek to accommodate rising power demand, improve regional connectivity and expand their digital economies without placing excessive pressure on public finances.
Kanda also announced two major ADB-backed initiatives, completing the bank’s May commitment to provide up to USD30 billion by 2030 for ASEAN priorities.
The ASEAN Resilient Rivers Initiative aims to mobilize up to USD8 billion by 2030 for water and food security, including infrastructure to protect farms and urban communities against floods and droughts.
Another commitment of up to USD5 billion will support the ASEAN Digital Economy Framework Agreement through investments in digital infrastructure, cross-border data flows and payments, cybersecurity, artificial intelligence readiness and digital inclusion.
The initiatives are intended to help address infrastructure gaps while creating opportunities for private-sector participation.
“So bring us your projects. We will help prepare them. And we will invest alongside you,” Kanda said.
