The AIIB has joined the alphabet soup of entities assisting the infrastructure building in the ASEAN region. Despite the AIIB-ADB agreement to co-finance projects, ASEAN needs to craft effective mechanisms to manage overlaps and spillovers.

The prevalence of global production networks (GPNs) has heightened the importance of infrastructure development for ASEAN countries. Better connectivity not only bolsters international trade and financial linkages but also boosts their economic development. Realising this significance, collective effort has been harnessed to advance infrastructure, as seen in the Master Plan on ASEAN Connectivity (MPAC) launched in 2010. Among the MPAC’s 15 priority projects are the ASEAN Highway Network, Singapore-Kunming Rail Link, and ASEAN Power Grids. Implementation of the MPAC, however, is hampered by the lack of funds to meet its connectivity demands.

According to the report by the Asian Development Bank (ADB), Southeast Asia would require about US$60 billion each year until 2022 to fill its gaps. However, the ASEAN Infrastructure Fund – a financing arm of MPAC – can provide only US$ 4 billion through 2020.

… Kaewkamol Pitakdumrongkit is an Assistant Professor at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore.