With economic growth still running apace Asian economies are hard-pressed to maintain and develop infrastructure. Project finance deals, in an increasingly private-sector context, are hotly contested by banks, but countries in the region vary widely in their ability to undertake them. Gill Baker reports.
The heat is on in Thailand for contractor Hopewell dubbed Hopeless by some Bangkok cynics as it struggles to complete an ambitious 60km road and rail system amid continued concern about the Hong Kong-based company's financial health. The job has to be finished by 1998 when Thailand hosts the Asian Games. Five years after the concession was granted, however, the $3.2 billion project is just 20% complete. Running the company is Gordon Wu, who is struggling to juggle government and commercial pressures and to raise money to fund the project.
The Hopewell saga is perhaps an extreme example of Asia's infrastructure problems but it is by no means an isolated case. The region as a whole is fighting to keep its infrastructure up to speed with economic growth. Although some countries notably Hong Kong and the Philippines seem to have got the hang of project financing, there are plenty of latecomers scrambling up a steep learning curve. The question is whether financing problems and political wrangling will drive their utopian visions off the rails.
The World Bank estimates that between $1.2 trillion and $1.5 trillion will need to be invested in infrastructure during the next decade in the developing east Asian countries alone.