THE INCREASINGLY IMPORTANT ROLE OF MULTILATERAL DEVELOPMENT BANKS (MDBs)

Multilateral development banks (MDBs) are increasingly financing large infrastructure projects in the region. Both the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) are expected to each finance $2.5 billion of infrastructure projects in 2017.8 In 2016, AIIB approved $800 million of funding for nine infrastructure projects, of which five were within Asia-Pacific. Similarly in 2016, the NDB approved $1 billion of funding across four Asia-Pacific infrastructure projects.

EXHIBIT 4: ASIA-PACIFIC VERSUS GLOBAL INFRASTRUCTURE EXPENDITURE

$ TRILLIONS, 2010-2020

Source: APRC analysis of data from Construction Intelligence Center

Infrastructure spend in the Asia-Pacific is expected to more than double relative to a decade earlier, to reach $2.5 trillion in 2020, accounting for almost 60 percent of projected global infrastructure spend (see Exhibit 4). The cumulative annual growth of about 8-10 percent is expected to be driven by the twin engines of economic development and changing demographics. Led by China and India, Asia-Pacific is projected to contribute close to half of global infrastructure spending by 2020, up from less than 30 percent in 2010.

In 2016, AIIB approved nine infrastructure projects, of which five are within the Asia-Pacific, with a combined financing amount of about $800 million from AIIB itself. Similarly, NDB has, in 2016, approved four Asia-Pacific infrastructure projects out of their seven approved projects, with a total financing amount of about $979 million (63 percent of the total approved amount).