Effective decision making key to regional infrastructure investment

Comments on  Mahendra Siregar, BKPM, Andrew Elek, ANU, and Maria Monica Wihardja “Seizing the global infrastructure opportunity in Indonesia”, 25/02/2014, http://www.eastasiaforum.org/2014/02/24/seizing-the-global-infrastructure-opportunity-in-indonesia/

If I were an Indonesian charged with managing the economy, I would probably put more emphasis and focus on the most likely and feasible options that are likely to be outside the G20 and possibly APEC exist multilateral frameworks. Some commentators have commented that the G20 has become a talkfest. And it seems indeed very difficult for the G20 to come to a common position with strong commitment to the issues discussed in the article, given the very different situations of the members' domestic economies and politics.

On the other hand, the AIIB initiative may be helpful to regional infrastructure investment, given that China is the sponsor or initiator and it has the money to invest overseas, as well as its links to the regional economies and its desire to show leadership with its financial resources outside of the IMF and world bank frameworks where it does not have adequate weight of influence due to under-weighted voting power.

Certainly it would be much easier to make decisions among the parties involved, given the needs for investing in regional infrastructure and the financial resources available that is fairly concentrated in terms of decision making, as compared to the IMF or the world bank where understandably there are more disparities among the major stakeholders.

The authors’ discussion on that may bear more fruit to advance infrastructure investment in Indonesia and indeed the East Asia region. And that is likely to contribute to enhanced growth of the region.

In short, the desire for using existing multilateral organisations to invest in infrastructure is one thing, the reality of difficulties in getting agreement is likely to be another, not too dissimilar to the world trade organisation negotiations and other bilateral or regional free trade agreements negations.