MASATO Kanda is the 11th President of the Asian Development Bank, a leading multilateral development bank supporting sustainable, inclusive, and resilient growth across Asia and the Pacific. Before joining ADB, Mr. Kanda held key leadership roles at Japan’s Ministry of Finance, including as vice-minister for International Affairs.
Photograph courtesy of Asian Development Bank
Southeast Asia risks losing ground in the global investment race unless governments move faster to attract private capital, as the region faces a staggering $261-billion annual infrastructure funding gap through 2040, the Asian Development Bank (ADB) warned Saturday.
Infrastructure requirements have more than doubled
ADB president Masato Kanda said ASEAN’s infrastructure requirements have more than doubled to $7.1 trillion, putting pressure on governments to accelerate reforms and develop commercially viable projects as public funds fall short.
Speaking at the ASEAN Business and Investment Summit in Manila, Kanda said the region would need around $476 billion annually, equivalent to 8.7 percent of its gross domestic product, to finance critical power, transport, digital and healthcare infrastructure.
“At current levels, governments will finance less than half of what is needed. That leaves a gap of around $261 billion a year. That gap is larger than the total government infrastructure investment in the region today. Public budgets alone cannot close it,” Kanda said.
Failure to generate projects attractive to investors
But while financing remains a major challenge, Kanda stressed that ASEAN’s bigger problem is its failure to generate enough projects capable of attracting investors.
“Capital is not the binding constraint. Investable projects are,” he said.
He urged governments to establish predictable regulations, ensure transparent procurement and invest more in preparing bankable projects, while using public funds to reduce risks and encourage private sector participation.
Electricity infrastructure accounts for half of ASEAN’s projected investment requirements, while transport represents another third.
Digital infrastructure, including broadband networks and data centers, will require nearly $600 billion, reflecting growing demand for connectivity and artificial intelligence technologies.
Another $227 billion will be needed to close gaps in healthcare facilities, including hospitals, clinics and laboratories.
Region’s vulnerability to external shocks
Kanda warned that disruptions to global energy supplies and shipping routes have exposed the region’s vulnerability to external shocks, making infrastructure investment increasingly urgent.
“The world is fragmenting. Trading relationships are being redrawn. Supply chains are shifting,” he said.
Despite these pressures, ADB expects ASEAN to grow by 4.7 percent in both 2026 and 2027, supported by continued regional integration.
“The next era of integration will not be negotiated through trade agreements alone. It will be built in power grids, transport corridors, and digital networks,” Kanda said.
To help bridge the investment gap, ADB announced two new financing initiatives under its commitment to provide up to $30 billion for ASEAN priorities by 2030.
These include up to $8 billion for water and food security projects under the ASEAN Resilient Rivers Initiative and up to $5 billion for digital infrastructure, cybersecurity, artificial intelligence readiness and cross-border payments.