Resource Needs for East Asia and Pacific Infrastructure 2005-

2010

Bali WorkshopJune 28,2004

Jonathan Walters(econometric analysis: Tito

Yepes)The World Bank

1. Projection of physical infrastructure stocks, based on econometric models.

2. Changes in stock levels (investment) is then valued at “best practice costs” – investment is assumed to be efficient

3. Annual maintenance expenditures are estimated as a fixed percentage of stock of infrastructure valued at same prices.

Methodology of Estimation

Sector Coverage

Included: electricity grids, major roads (paved only), railroads, water and sanitation, telecommunications systems

Excluded (for lack of data): off-grid power, gas grids, mass transit, ports, unpaved/minor/urban roads, airports

Projections were made for the 8 countries with sufficient historical data. (China, Malaysia, Philippines, Thailand, Indonesia, Laos, PNG, Mongolia).Those countries account for 98% of EAP GDPTotals for EAP countries outside the sample were obtained by assuming those countries were like sample countries in same class

Expanding from Sample to EAP Region

Projection of Physical Stock Levels

2000 2005 2010 2000 2005 2010Electricity Generation Capacity (GW) 293.7 409.8 545.8 66.5 88.6 115.6Telephone Mainlines (Lines per 1000 hab) 113 211 353 49 78 123Telephone Mobile (Lines per 1000 hab) 18 275 561 48 214 400Paved Roads (Kms per 1000 hab) 229 320 347 724 818 905Rail Route Length (Kms per 1000 hab) 43 47 51 35 37 39Access to Improved Water (% Households) 75.0 78.5 82.2 67.9 70.9 74.3Access to Improved Sanitation (% Households) 40.0 43.4 46.8 66.7 70.6 73.8

Rest of East AsiaChina

Best Practice Costs2000 2005 2010

Electricity

per kilowatt of generating capacity, including associated network cost. 1,900 1,900 1,900 2%

Roads

per kilometer of two lane paved road

417,995 417,995 417,995 2%

Railway

per kilometer of rail, including associated rolling stock

900,000 900,000 900,000 2%

Sanitationper connected household 700 700 700 3%

Waterper connected household 400 400 400 3%

Mainlinesper line

650 550 550 8%

Mobileper subscriber

700 580 580 8%

Maintenance, % of stock valueUS$Sector Unit

Annual Investments and Maintenance in East Asia

2005-2010

All Countries Investment Maintenance Total Investment Maintenance Total

Electricity 63,399 25,725 89,124 2.2% 0.9% 3.2%Telecom 101,694 69,144 170,838 3.6% 2.4% 6.0%Roads 23,162 10,922 34,084 0.8% 0.4% 1.2%Rails 1,169 1,597 2,766 0.0% 0.1% 0.1%Water 2,569 5,226 7,795 0.1% 0.2% 0.3%Sanitation 2,886 4,129 7,014 0.1% 0.1% 0.2%Total 194,879 116,742 311,622 6.9% 4.1% 11.0%

US$ MN % of GDP

Annual Investments and Maintenance in China

2005-2010

China Investment Maintenanc Total Investmen Maintenanc Total

Electricity 51,668 20,739 72,407 2.8% 1.1% 3.9%Telecom 82,238 57,077 139,315 4.5% 3.1% 7.6%Roads 19,345 7,424 26,769 1.1% 0.4% 1.5%Rails 963 1,258 2,221 0.1% 0.1% 0.1%Water 2,097 4,090 6,187 0.1% 0.2% 0.3%Sanitation 1,830 2,644 4,474 0.1% 0.1% 0.2%Total 158,141 93,232 251,373 8.6% 5.1% 13.6%

% of GDP US$ MN

Annual Investments and Maintenance in the Rest

of East Asia2005-2010

Investment Maintenance Total Investment Maintenance Total

Electricity 11,731 4,986 16,717 1.2% 0.5% 1.7%Telecom 19,456 12,067 31,523 2.0% 1.2% 3.2%Roads 3,817 3,498 7,315 0.4% 0.4% 0.7%Rails 206 340 545 0.0% 0.0% 0.1%Water 472 1,135 1,608 0.0% 0.1% 0.2%Sanitation 1,056 1,484 2,541 0.1% 0.1% 0.3%Total 36,739 23,510 60,249 3.7% 2.4% 6.0%

All without China

US$ MN % of GDP

Annual Investments and Maintenance in East Asia Middle Income Countries

2005-2010

Investment Maintenance Total Investment Maintenance Total

Electricity 6,398 2,893 9,292 1.1% 0.5% 1.6%Telecom 10,840 7,667 18,507 1.8% 1.3% 3.1%Roads 827 1,451 2,279 0.1% 0.2% 0.4%Rails 138 155 293 0.0% 0.0% 0.0%Water 160 412 572 0.0% 0.1% 0.1%Sanitation 416 730 1,146 0.1% 0.1% 0.2%Total 18,779 13,309 32,089 3.2% 2.2% 5.4%

Middle Income without China

US$ MN % of GDP

Annual Investments and Maintenance in East Asia

Low Income Countries2005-2010

Low Income Investment Maintenance Total Investment Maintenance Total

Electricity 5,333 2,092 7,425 1.3% 0.5% 1.9%Telecom 8,616 4,400 13,016 2.1% 1.1% 3.2%Roads 2,990 2,046 5,036 0.7% 0.5% 1.3%Rails 68 185 252 0.0% 0.0% 0.1%Water 313 723 1,036 0.1% 0.2% 0.3%Sanitation 640 754 1,394 0.2% 0.2% 0.3%Total 17,959 10,201 28,160 4.5% 2.5% 7.0%

US$ MN % of GDP

Headline Numbers

EAP bill is US$ 300 billion+ per yearWhich equals 11% of EAP GDPChina alone needs US$ 250 billion or 13.6% of its GDPMiddle income countries (w/o China) need 5.4% of GDPLow income countries need 7% of GDPTelecommunications is 55% of the EAP totalAll numbers are approximations!

How to fund US$ 300 billion+

Three questions:How to keep the bill down to US$ 300 billion? how to make investment efficient (public sector reform or private participation)?

How to get the funding up to US$ 300 billion?Cost recovery (tariffs, user charges)Tax-financed subsidies (how much fiscal space?)Loans to postpone the tax or tariff burden (role of domestic and

international financial sector?)Donors (US$ 8-10 billion?)Private capital (US$ 15-40 billion?)

How much extra to achieve MDGs?