This is a Bad Thing--not only is it critical for progress to continue on the
technological timeline, but infrastructure development serves as a greater
stabilization factor than any 'hearts and minds' campaign. With the Asian
markets poised to drop off into the tank, this serves as a further point of
destabilization. Meanwhile, US investment capital continues into equity issues
already past sane multipliers; this comes from poor understanding of risk
models. For some odd reason, software and other tech firms, with no or limited
'real' assets (what would Yahoo be worth if subjected to a long DOS attack
series, and forced to liquidate?) keep getting investment capital, while real
infrastructure cannot (you can't tow off a road or water system, but it bloody
well works for you). If you have the time, draw yourself up a model, nothing
terribly sophisticated--map infrastructure investment to middle-class
population (as a rough percentage) to stability. It's the single most critical
factor, and the lack of such funding will haunt the First World all over again.
-MW
Asian financial crisis halts $250 billion worth of infrastructure
Copyright 1998 Nando.net
Copyright 1998 Reuters News Service
SANTIAGO (May 26, 1998 11:56 p.m. EDT http://www.nando.net) - Financing
shortfalls brought on by the Asian crisis has put on hold $250 billion
worth of infrastructure required for the region's growth and
globalization, an official said Tuesday.
"The money has run out but we need $250 billion in the next 10 years to
build the necessary infrastructure," said Alan Ortiz, president of
Edison Mission Energy based in Makati City, Philippines.
A lackadaisical approach to investments and "crony capitalism" has sunk
Asia into the "most disturbing, deep-seated, and far-reaching wake-up
call in the economic history of the region," Ortiz said.
"The currency meltdown wiped out the infrastructure capital base in Asia
for the next two to three years," Ortiz told an audience at the Pacific
Basin Economic Council annual conference.
Shelved projects include new and upgraded roads, telecommunications
systems, shipping and handling facilities, power generation units,
airport complexes and satellite networks, he said.
About $70 billion in oil and gas pipelines had already been committed to
in Asia according to Jake Epp, vice president of Calgary-based
TransCanada Pipelines.
Infrastructure needs in the region have ironically hit a peak at the
same time capital resources, both from Asian and non-Asian sources, have
dried up, said Ortiz.
"It's the chicken and the egg - you need growth to build infrastructure
and infrastructure to stimulate growth," Ortiz told Reuters.
The "quick and dirty" solution is for governments in countries such as
Indonesia, South Korea and Thailand to privatize their infrastructure
programs as quickly as possible, he said.
"Governments in dire need of cash are opening up their long-held
monopoly positions in key utilities and industries," Ortiz said.
Privatization alone is not the answer, he cautioned, since it is a
complex process involving political will, the establishment of an
investor-friendly legal framework and the founding of operating
institutions.
Part of the solution to the infrastructure financing quandry is the $42
billion stimulus package put together by Japan to assist Asia, he said.
Otherwise a trilateral consortium between governments, international
financial institutions and the private sector has to be cobbled together
to create an "Infrastructure Fund" to finance, build and operate
projects all over the region, he said.
"Private groups are the key, but there are not very many and they will
be selective (about the projects),"Ortiz told Reuters. "They can afford
to be that way - it's a buyers' market."
By ROBERT S. ELLIOTT, Reuters News Service
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