ADB Report: Southeast Asia faces huge infrastructure financing gap

(ECNS) -- Southeast Asian countries will need to invest $7.1 trillion in infrastructure through 2040, but the region faces a huge financing gap, according to a report released by the Asian Development Bank (ADB) on Tuesday.

The report, which covers all 11 ASEAN member states, says the need for modern infrastructure is growing as the region's economies expand, urbanization accelerates and the digital economy develops.

Southeast Asia will need an estimated $476 billion in infrastructure investment annually from 2026 to 2040. At current investment levels, government spending is expected to cover only 45% of that need, leaving an annual financing gap of $264 billion.

Electricity and transport account for 85% of the region's infrastructure needs, the report says. Investment in the power sector will need to expand electricity generation, transmission and storage capacity to strengthen energy security, support wider use of clean energy and reduce the risk of global supply disruptions.

In the transport sector, roads represent the largest investment need, while railways and airports are seeing the fastest growth in demand.

The report also identifies funding needs for digital and health infrastructure across the region.

Government budget pressures and limited private-sector participation are among the main challenges facing infrastructure development in Southeast Asia, the report says. The ADB recommends that countries strengthen project preparation, establish predictable regulatory frameworks and ensure transparent procurement processes.

" Southeast Asia's growth depends on what it builds next," ADB President Masato Kanda said.

"Its factories need dependable electricity, and its businesses need faster, safer ways to reach markets. These investments must also be built to deliver long-term benefits," he said.

The ADB will help governments bring forward "projects that investors can trust and people can depend on," Kanda added.

(By Evelyn)