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The financial troubles of Southeast Asian economies will not likely result in a drop in infrastructure investment as infrastructure is integral in the economic development policies of Southeast Asian countries. Infrastructure development is needed in sustaining growth and governments are likely to continue financing infrastructure development by tapping private capital markets.

The currency crisis in Asia could lead to a slowdown in infrastructure projects in the region. In the past few years, infrastructure investment in Asia has been financed largely by private sector investors, with banks lending a large part of the money. However, recent currency depreciations in the Philippines, Thailand and Malaysia will make it harder to obtain funding. Investors are already having more problems gaining finance because governments have stopped offering such generous terms for energy projects, while more banks are now focusing on projects in China and India.

Asia will spend a large amount on infrastructure and this has increased demand for capital. Some estimates exaggerate the amount needed since many projects do not go ahead. Delays may be caused by governments seeking to avoid an overheated economy, or complex regulations. Many projects are also too risky for most lenders to tackle alone. Corruption can also be a problem, but this is changing and bidding processes are becoming more competitive.

The Asian Development Bank is holding an annual meeting in Manila, Philippines, in May 1996, and will tackle the issue of infrastructure spending. There have been problems with seeking finance from the private sector for infastructure, and governments have surpluses which could be used to provide finance for these projects. Projects could be sold once they were completed and functioning. This could also help the development of a bond market in Asia.