$1.8bn corridor shortfall

via CAAI

Wednesday, 15 September 2010 15:00 Jeremy Mullins

THE Asian Development Bank has identified a US$1.8 billion funding gap for its plans to develop the Southern Economic Corridor, linking Cambodia and its three neighbours.

Aiming to improve infrastructure ties, cross-border trade, and boost private business within Cambodia, Laos, Vietnam, and Thailand, a framework plan released yesterday identified the need for $3.3 billion in project funding over the next five years. About 46 percent has been secured so far.

ADB senior country economist Peter Brimble said the shortfall was not unusual, and that he believed it would be addressed. “There are always funding gaps in the beginning,” he said.

The Southern Economic Corridor plan was formally endorsed at the 16th Greater Mekong Subregion Ministerial meeting in Hanoi last month, which was attended by Cambodia’s Minister of Commerce, Cham Prasidh.

The cost of three large regional projects – two large power plants and a road – together account for about $1.5 billion of the $1.8 billion gap, but were suitable for private-public partnerships, according to the report.

Brimble said that raising donor money had become difficult in the post-recession world economy, but said worthy projects still received financing and income streams could diversify.

“A compelling project with an impact on reducing poverty will attract funding,” he said, and the ADB was looking beyond donors to finance future development. “The private sector will play a much greater role over the next 10 years.”

About two-thirds of the corridor’s price tag involved infrastructure , such as Cambodia’s $165-million Neak Loueng bridge and road improvements on the route from Phnom Penh to Vietnam, and $73 million for rehabilitation of the Kingdom’s railways.

Scott Lewis, chief investment officer at equity fund Leopard Capital, said yesterday that infrastructure improvements were crucial for the Kingdom’s economic development.

He welcomed increased private-sector involvement in infrastructure projects – provided firms were experienced and operated with integrity.

Poor-quality infrastructure had been laid in Cambodia in the past, he said, and pointed to the expertise provided by Australian firm Toll Holdings in revamping the Kingdom’s railway as providing “a lot more comfort”.