[IWAR] ECON Asia infrastructure spending

From: 7Pillars Partners (partnersat_private)
Date: Wed May 27 1998 - 10:01:36 PDT

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    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.
    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
       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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