ADB urges South Asia PPP overhaul

The Asian Development Bank (ADB) has suggested that South Asia needs to mobilise more private finance if it is to catch up with the rest of the world on high-quality infrastructure.

The Infrastructure Financing in South Asia report argues that the region would benefit from an overhaul of its budget spending decisions and PPP framework, despite recent improvements in leveraging private capital.

“Volumes of listed and unlisted instruments of project finance and PPPs in Asia remain small in relation to its investment needs and well below the global average,” the report says.

Accounting for nearly 40% of PPP investments among sub-regions of developing Asia in the last 25 years, South Asia has seen a sustained stream of PPPs in the energy sector, with thermal and renewable power generation dominating the industry.

While transport and water have also been major areas for PPP investments, the study noted that the social sector has been struggling to gain traction.

“Despite the improvements in PPP readiness, South Asia is not private sector-friendly compared with other regions,” the report said.

The study singled out India as the “most successful” country in the region in the implementation of PPPs in the health sector, although “much is needed for further PPP development, including enhanced development of financial facilities”.