A shortfall in the massive funding needed to build roads, ports, power plants and other infrastructure in Asia could dim the lights on the region's brightening economic growth, experts said yesterday.
While there are signs funds were returning to the region, the experts urged authorities to develop alternative sources of financing such as the bond market and increasing the participation of local banks for long-term lending.
They also said more needed to be done to carry out reforms to meet global standards in terms of enforcing contractual obligations and transparency to entice lenders to re-enter the market.
"Without the roads, without the lights turned on, you won't have the GDP growth that people are expecting," said analyst John Bailey of international credit rating agency Standard & Poor's.
Foreign funding for infrastructure development dried up between 1997 and 1999 as a result of the financial crisis, which burnt international lenders after borrowers defaulted on their loans.
Asian Development Bank (ADB) president Tadao Chino said recent estimates put Asia's infrastructure investment requirements at more than US$250 billion a year in the medium term.
"The need for external financing is tremendous," Chino said in a speech at the opening of the ADB's two-and-a-half-day meeting gathering the elite of the region's financial and banking sectors.
"The financing shortfall is a serious constraint to the region's continued economic growth and development, and to achieving the medium-term development goals."
He said infrastructure is "critical" for sustained economic growth and its impact extends to other sectors as roads and power generators for example can bring development and basic services to the rural areas.
Standard & Poor's said infrastructure finance volumes to Asia have grown steadily in the past few years, following a "dramatic decline" during the financial crisis.
"We are now beginning to see developers and banks return to Asia as the current economic recovery starts to fuel demands for large infrastructure projects," Bailey told reporters on the sidelines of the ADB meeting.
"It is important to say that this is not yet a full recovery. But it goes a long way from the Asian crisis," he said at a news briefing on the sidelines of the ADB meeting.
Surinder Kathpalia, head of Standard & Poor's in Singapore, said one of the critical issues in the next phase of Asia's development is investment in infrastructure.
"Unless these investments are financed, this could possibly choke growth going forward," Kathpalia said.
Bailey cited the case of China where power blackouts still happen because of under-investment in the energy sector.
"We've seen that the market still remains cautious about infrastructure projects in some parts of Asia ... Some of the painful lessons [from the financial crisis] are still in the lenders' and bankers' minds," Bailey said.
Lenders are now "increasingly bringing in more institutions such as the ADB and other multilaterals to diversify risks and are getting more aggressive about getting political risk insurance," Bailey added.
He said most developing markets in Asia still have weak legal environments which often prevent the enforcement of contractual obligations.
Legislations remain ambiguous and are rapidly changing, while disclosure levels are below international standards.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts