Building Asia’s Infrastructure with Government-to-Government Partnerships
It is estimated that the poor quality of infrastructure costs Asian economies between 2% to 5% of GDP annually from increased transportation costs and lost time.
Infrastructure development across Asia has become a priority. The population growth, rapid urbanization, and economic development has created the need to upgrade infrastructure.
Despite recent growth, the region suffers from uneven economic growth and a sizeable infrastructure gap which could potentially hinder future growth.
The Asia-Pacific region accounts for over half of the global infrastructure investment requirement. However, there lies a gap in the investment for critical infrastructure development. The Asian Development Bank estimates that developing Asia will require $1.7 trillion annually until 2030 to keep pace with its growth momentum.
Currently, the investment gap is estimated at $5 trillion over the next 20 years. If the region aims to meet development goals, maintain growth momentum, and economic prosperity, it is imperative that the investment gap is bridged. To close this gap, the region will need an investment between $1.7 trillion to $2.5 trillion annually.
Developed and developing economies vary vastly in terms of infrastructure availability and their ability to develop and finance infrastructure projects. A constraint common to both types of economies is capital investments. Governments are rarely able to develop and finance infrastructure projects entirely on their own.
Infrastructure development has historically seen a dearth of funding due to low private participation. Governments have financed around 90% of the infrastructure investment. That being said, numerous regional governments lack the capacity and investments to address their infrastructure requirements. This calls for Government-to-Government partnerships.
Government-to-Government (G2G) partnerships 1utilizes government expertise to address regional infrastructural challenges. This includes the development of ports, railway networks, and upgraded logistics networks. These partnerships provide enhanced technical expertise, attract investments from multilateral institutions, and support long-term capacity building.
Combining Foreign Technical Expertise with Local Capabilities
G2G partnerships bring together foreign technical expertise with local contractors. This does not come without hurdles.
Cultural obstacles aside, institutional differences particularly the variations in operational methods between foreign and local contractors remain a challenge. Technical standards, design, and construction standards vary across countries. Lack of knowledge of foreign standards can delay project delivery involving collaborations between foreign and local contractors.
Local contractors may not share the same expertise as their foreign counterparts in terms of engineering and technical requirements for procedures and processes. Standards for equipment, building materials, measurement scales, design standards, and construction standards are derived based on regional perspectives. These are shaped by availability of materials, knowledge of personnel and conform to local technical, legal, and environmental factors.
For instance, the road design standards in the US vary from that of China in terms of road classification, human factors, traffic volumes and design vehicle dimensions. American standard differs from Chinese standards in concrete construction in terms of batching methods, transportation limits, and concrete placement. The lack of standardization of processes, products, and procedures are obstacles in collaborations involving foreign and local expertise.
Foreign contractors, because of differences in their knowledge, training, investments may be familiar with the use of sophisticated equipment and have access to updated tools and software. Local contractors may be used to executing the same tasks using different equipment. Hence, the gaps in expertise could potentially slow down the pace of projects.
Even after the identification of differences in methodology, local contractors need additional resources to bridge the gap. Yet, they face challenges such as the occurrence of errors which require reworks, delays in learning new methods and adapting to unfamiliar work processes.
Hence infrastructure projects which require collaboration between foreign and local contractors can be challenging due to local contractors requiring time to adapt to international standards. These hurdles could reduce operational efficiency and impact project performance.
Ensuring Effective Knowledge Transfer
Transfer of foreign expertise to local contractors is essential for Asia’s infrastructure projects to keep pace with the growing demand for facilities. This can only be achieved by enhancing training and bridging existing gaps.
Training sessions to 2familiarize with the tools, software, machinery, standards, and systems to be adopted will ensure that the team of experts are at the same level. Documenting processes, insights, procedures, and essential information is key to capturing, retention, and transfer of technical expertise.
The usage of visual aids and videos could help in simplifying complicated subjects. Ensuring that all team members have clarity on processes, methods, and standards to be used is essential in plugging gaps. Adequate training and development, demo sessions, pre-project drills, and brainstorming can encourage effective flow of expertise from foreign experts to local contractors.
Governments of the region will not only require additional investments to bridge the infrastructure investment gap but also need a better equipped workforce to enhance efficiency of infrastructure projects.
Faced with a high demand for infrastructure development and resource constraints, it is essential for governments to reduce gaps in technical capabilities and deliver improved infrastructure to support the regions’ expanding economies.
Photo Caption: An ongoing bridge construction in Jakarta.