Remarks at the High-level side event at the 2017 ECOSOC Financing for Development Forum: Investing in infrastructure for an inclusive and sustainable future of the Asia-Pacific LDCs, LLDCs and SIDS

Delivered at the High-level side event at the 2017 ECOSOC Financing for Development Forum: Investing in infrastructure for an inclusive and sustainable future of the Asia-Pacific LDCs, LLDCs and SIDS in New York City, United States of America.

Excellencies, distinguished delegates, ladies and gentlemen,

Welcome to the high-level side event on “Investing in infrastructure for an inclusive and sustainable future of the Asia-Pacific least developed countries (LDCs), landlocked developing countries (LLDCs) and small-island developing States (SIDS).” It is a great pleasure to share with you some of the main findings of our publication, the Asia-Pacific Countries with Special Needs Development Report 2017, which focuses on this topic.

Goal 9 of the 2030 Agenda for Sustainable Development focuses on promoting investment in sustainable infrastructure, of which the benefits for development are well documented. Upgrading old and building new infrastructure increases productivity growth, competitiveness and, done intelligently, supports social development. In the short term, building new infrastructure boosts demand and employment through construction work. In the longer term, it helps keeps growth sustainable. The academic consensus in this field is overwhelming. Infrastructure, growth and poverty reduction go hand in hand.
Improved access to infrastructure empowers rural areas, connects people to markets and can support climate change adaptation and mitigation. Each country has its own set of risks and vulnerabilities, but through our analysis we have identified common challenges which a multilateral approach could help overcome.

Among the countries with special needs, the Least Developed Countries need to expand their productive capacities and increase their levels of social and economic development, while equitably sharing the benefits of economic growth.
Landlocked Developing Countries need to overcome the disadvantages of being landlocked which inhibit their ability to engage with the global economy. By expanding trade, intensifying production networks and accelerating investment in transport, ICT and energy infrastructure, these countries can become land-linked.

Small island states face significant challenges due to their small size and lack of economic diversification which limits economies of scale. Geographical fragmentation and isolation, and the existential threat due to the impact of climate change are big challenges requiring the collective effort of the international community.

To capture the multidimensional character of infrastructure, ESCAP has created the Access to Physical Infrastructure Index, which focuses on four sectors of physical infrastructure: transport; energy; information communication technology; and water and sanitation. The Access to Physical Infrastructure Index has been calculated for 41 countries in the Asia-Pacific region, including 23 countries with special needs. It confirms the significant infrastructure deficits of these countries. The report calculates that if infrastructure access in countries with special needs or CSNs, were increased to the level of other developing countries in our region, by 2030 their combined GDP would increase by as much as $134 billion, or 6 per cent.

Closing these infrastructure gaps will require significant financial resources. We estimate that taking population growth, increasing urbanization and the impact of climate change into account, CSNs will require average annual investments equivalent to 10.5 per cent of GDP. This far exceeds current infrastructure funding of between 5 to 7 per cent of GDP. These needs are particularly acute in the small island least developed countries (such as Timor-Leste and Kiribati) and in the landlocked least developed countries (such as Afghanistan and Nepal).

It is clear that a more effective use of existing funds for infrastructure development is needed. Yet, many CSNs face significant challenges in terms of delivering public services and raising additional financial resources. Public sectors suffer from low efficiency in delivering public services and generating economic growth through infrastructure. On the revenue side, tax collection is too low. Previously, an 18 per cent tax-to-GDP ratio was estimated to be needed in developing countries to meet the MDGs. But 13 out of the 27 CSNs for which data are available currently have tax-GDP ratios below that level.

Governments can strengthen infrastructure investment in the region by proper planning and coordination across relevant ministries. Complementary policy measures should be undertaken, supported by stronger institutional governance for project execution, respect for property rights and the rule of law to ensure the benefits of infrastructure are shared by all. Infrastructure development frameworks for policy design and implementation are important for this purpose - bringing various sectors together. Overall, ESCAP is mandated to provide a regional platform to bolster infrastructure development and maintenance capacity in CSNs, with the active participation of emerging regional, subregional and national initiatives.

Excellencies, distinguished delegates, ladies and gentlemen,

With this background on infrastructure development challenges and associated financing requirements, the purpose of this side event is to:

  1. identify in further detail the opportunities associated with infrastructure development, such as prioritization, cross-sectoral coordination, and institutional capacity for implementing projects and ensuring sustainable and effective use of infrastructure;
  2. understand challenges and opportunities at the national level for financing infrastructure, including through mobilizing domestic public finance; as well as enhancing private sector participation and PPPs; and
  3. discuss the future role of ESCAP in collaboration with development partners and institutions in developing regional infrastructure such as large transport corridors, information superhighways, and energy connectivity.

The outcome of this side event will contribute to national and regional strategies for infrastructure development and the implementation of the SDGs in Asia and the Pacific. I look forward to hearing the panelists’ views.