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Infrastructure Gaps Vary across East Asia and the Pacific – and between Cities and Rural Areas

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Lack of clean water facilities, roads in need of repairs, recurring power outages – these are the realities of many developing countries, including in the East Asia and Pacific region. The Status of Infrastructure Services in East Asia and Pacific, a report by the World Bank Group’s Infrastructure, PPPs, and Guarantees unit, or IPG Group, based at the Hub for Infrastructure and Urban Development in Singapore,  shows in detail the infrastructure gaps that are critical for economic growth.

The findings reflect the composition of the region, a diverse mix of high-income and low-income economies with several large middle-income economies. Infrastructure access is also marked by fragmentation, with notable differences between low-income and high-income ASEAN countries, between ASEAN and the Pacific Islands countries, and between rural and urban areas.

These distinctions inform the three broad groupings with respect to access: highly advanced and well-equipped countries, such as Singapore and South-Korea; a semi-advanced group which includes middle-income countries, such as China, Malaysia, Thailand, and Fiji; and countries with less access, such as Myanmar and most of the Pacific Islands, excluding Fiji and Samoa.

Initiatives are underway to crowd in more private financing in infrastructure investment, as part of the World Bank Group’s efforts to maximize finance for development. Currently, public finance remains the largest source of funding for infrastructure development. In East Asia and the Pacific, private participation in infrastructure investments have recovered to pre-1997 Asian financial crisis levels, but they still account for a fraction of total infrastructure investments. In China in 2015, for example, private investment amounted to less than 1 percent of total investment in transport, energy and water.

Attracting more private investment will require regulatory reforms that impact the investment climate, and also business models that ensure returns. Currently, revenues from service tariffs in many East Asian and Pacific countries do not cover the costs of production. In several ASEAN countries – notably Indonesia, Vietnam, Malaysia and Philippines – average unitary revenues from electricity tariffs do not cover the marginal cost required to generate electricity, let alone to distribute and transmit electricity to users. Only China, Malaysia, and Thailand are operating at general cost recovery levels for electricity production.

The following are the report’s additional key findings:

  • With the exception of Fiji and China, on average water utilities cover their operating costs by tariff revenues. This does not imply, however, that current water revenues are sufficient to cover the capital costs required to expand service or rehabilitate existing infrastructure.
  • Among the countries with available information, only the Philippines, South Korea and Cambodia reported operating cost coverage ratios above two, which would allow water utilities to make capital investments to expand and maintain their infrastructure.
  • Singapore has the most developed infrastructure services, with 100 percent access to electricity, piped water, and sanitation.
  • Though strong economies, Malaysia, Thailand, and Fiji require more infrastructure development. Road infrastructure in rural Malaysia remain lacking, as are urban sewerage facilities in its cities. Water treatment and urban sanitation services in Thailand and Fiji can also improve.
  • The Pacific Island states – particularly Papua New Guinea, Timor-Leste, and the Solomon Islands – report low levels of access and quality of infrastructure services. In ASEAN, Cambodia and Myanmar are in most need of broader access to all services.
  • Access to electricity is relatively broad. Outside of the high income countries, EAP’s cities have 86 percent coverage for electricity, while rural access stands at 65 percent.  However, nearly 60 million people still lack access to electricity, particularly in the Philippines, Lao PDR, Cambodia, and Myanmar.
  • Among the Pacific Island countries except for Fiji and Samoa, access is defined by the urban-rural divide. Electricity access in Vanuatu’s cities is 100 percent, but only 11.5 percent in rural areas.
  • While access to improved water sources is relatively high in the region, access to piped water supply is low. Only Malaysia and high income countries such as Japan, South Korea and Singapore have extensive access to piped connections for residential areas. In low-income ASEAN countries and Pacific Island nations that comprise the third tier, overall household access levels for piped water are only 20 to 30 percent – and only 8 percent and 9 percent in Myanmar and Papua New Guinea, respectively.
  • Piped sewerage connections in cities are limited, with significant differences between economies. Access rates in the cities of some countries are ten times lower than rates in more developed economies, and only high-income economies enjoy full access to urban piped sanitation systems. Cambodia, Malaysia, and Timor Leste also have better access to urban sewerage, at 44 percent, 42 percent, and 18 percent, respectively.
  • Elsewhere in the region – even in the cities – coverage for piped sewerage are at single-digit levels.
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Urban Development

ADB Report Shares Best Practices in Chinese Cities to Combat Climate Change

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Cities in developing Asia and the Pacific are growing fast, but this surge in urbanization has led to increasing pollution and environmental concerns, threatening to impact the quality of people’s lives. Innovative climate solutions in the People’s Republic of China (PRC), however, are demonstrating that it is possible for cities to pursue growth in a low-carbon and climate-resilient manner, according to a new Asian Development Bank (ADB) report.

The report, 50 Climate Solutions from Cities in the People’s Republic of China: Best Practices from Cities Taking Action on Climate Change, highlights case studies where cities in the PRC have embraced means of ensuring more sustainable and climate-resilient growth. Some of these solutions include reducing energy consumption, improving waste management, promoting green spaces, as well as introducing clean-fuel vehicles and public transport.

“Climate change could severely impact developing Asia and the Pacific’s economic growth in the decades to come if no action is taken,” said ADB Deputy Director General for East Asia Ms. M. Teresa Kho at the launch of the report in Beijing. “Actions taken in many cities in the PRC show that it is certainly possible to start to turn the wheel around on climate change and its impacts. Other countries could well find useful lessons from the PRC’s experience.”

The city of Hohhot in Inner Mongolia Autonomous Region, for example, is taking advantage of the area’s abundant wind resources to use renewable energy sources for district heating. The project, supported by a $150 million ADB loan and a technical assistance grant, has helped the residents enjoy cleaner air, while reduce health hazards due to toxic air pollutants due to the city’s previous reliance on coal.

About 50 hectares of old landfills in the city of Wuhan in central PRC, meanwhile, have been transformed into gardens for residents to enjoy, lessening health risks and environmental hazards from the untreated sites.

Other climate action efforts mentioned in the report include a market-based emissions trading scheme in Shanghai, which has seen 100% compliance since its launch in 2013, and the rollout of electric taxis in the city of Taiyuan in Shanxi province, which will help reduce 222,000 tons of carbon emissions per year once the full fleet of traditional taxis is replaced.

The report, which includes details of projects supported by ADB and others, is part of ADB’s aim to support the PRC government’s efforts to address climate change and showcase its innovations in low-carbon city development. ADB is committing $80 billion from 2019 to 2030 to combat climate change in the Asia and Pacific region, while ensuring that at least 75% of its committed operations support climate change mitigation and adaptation.

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Turkey Sets Sights on Better Planned, Forward-Looking and Sustainable Cities

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Turkey takes a step forward today to make its cities more sustainable, inclusive and well-planned, with a focus on adopting integrated and long-term approaches to city planning and development.

High level officials from the World Bank, the European Union, the Ministry of Environment and Urbanization and Iller Bank with local representatives from metropolitan municipalities convened at the launch event of the Sustainable Cities Program in Turkey.

The Sustainable Cities Program at large aims to improve the economic, financial, environmental, and social sustainability of Turkish cities. The project will assist cities in laying the groundwork for sustainable infrastructure through comprehensive and integrated municipal plans, linking these to a robust Capital Investment Plan. It will also enable interested municipalities to access financing for their investments to deliver improved services to their citizens.

During the launch, Sameh Wahba, Director of Social, Rural, Urban and Resilience Global Practice at World Bank, highlighted that supporting Sustainable Cities was central to World Bank’s mission to end extreme poverty and boost shared prosperity and reemphasized the commitment to work with Turkey to assist in overcoming the challenges of building sustainable and resilient cities and promoting territorial development.

Johannes Zutt, World Bank Country Director for Turkey added: “The partnership and instrument that has been developed under the Sustainable Cities program provides a unique platform for integrated and multisectoral solutions to the various challenges faced by Turkey’s cities and to increasing the financial capacity of municipalities for improving lives of people of Turkey.”

Following the opening remarks, Murat Kurum, Minister of Environment and Urbanization and the World Bank team held a bilateral meeting, focusing on the fruitful cooperation between two institutions in the areas of municipal services, disaster risk management, and urban regeneration.

The Sustainable Cities Program involves a series of projects, the first one was approved in 2016 and the second in 2018 for a total value of around US $225 million. The aim is to support further projects in future allowing interested municipalities to access long-term financing for their investments.

The Sustainable City Planning and Management Systems component of the project, which is financed through European Union-Instrument for Pre-Accession Assistance Grant amounting to 25 million Euro, supports reforms including policies and legislation that improve sustainable urban development planning and enhance urban sustainability. The component supports municipalities in planning and management and for the preparation of feasibility studies, detailed engineering designs, and environmental assessments for municipal subprojects.

Ten metropolitan municipalities and their water and sewerage utilities including Antalya, Balikesir, Denizli, Kahramanmaras, Kayseri, Malatya, Mardin, Mugla, Ordu, Van will benefit from this technical assistance component financed by the European Union.

The Municipal Investments part of the project will finance municipal infrastructure investments in public transport, water and sanitation, solid waste management, and energy. The cities that will benefit from this component so far include Denizli, Muğla, and Antalya where the investments to be financed include the design and construction of water, sewerage and storm water networks, collectors and Waste Water Treatment Plans.

The project supports the Turkey Country Partnership Framework of the World Bank Group for the 2018-2021 period, which includes the strategic objective of improving the sustainability and resilience of cities through investments and technical assistance interventions which coalesce around a public-private investment coordination platform in coordination with the International Finance Corporation (IFC) which is the Private Sector Arm of the World Bank Group.

The Project thus supports the World Bank’s objective under the maximizing finance for development (MFD) approach through this public-private investment coordination platform.

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Promoting inclusive and sustainable industrial production at the Zenata Eco-City

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The Zenata Development Company (SAZ) and the United Nations Industrial Development Organization (UNIDO) are joining forces to ensure the sustainability of the Zenata industrial park in Morocco.

The industrial park is located within the Zenata Eco-City, which aims to optimize the consumption of energy and water, and to reduce liquid and solid waste – both at the residential and industrial levels. The Zenata industrial park will accommodate the 200 companies which are already active on the Zenata territory, as well as a number of new industrial units. The development of the industrial park’s largest portion is completed and companies have already begun to establish their operations in the park.

UNIDO works to support the development of eco-industrial parks as part of a programme funded by Switzerland. “The eco-industrial park concept promoted by UNIDO will contribute to achieving the goals of the Zenata Eco-City,” said Smail Alhilali, Chief of UNIDO’s Emerging Compliance Regimes Division.

“The goal is to strengthen collaboration among industrial park companies to improve their social, economic and environmental performance. Ultimately, this will allow inclusive and sustainable industrial production, “added Alhilali.

The partnership combines UNIDO’s international experience in the industrial sector with SAZ’s know-how in the development of an eco-city. “The partnership with UNIDO will enable us to share SAZ’s best practices with other international projects of the Organization,” said a representative of SAZ. “For SAZ, having a body like UNIDO as a strategic partner not only adds value but also helps to promote the project nationally and internationally.”

The Zenata eco-industrial park aims to encourage businesses to adopt sustainable development practices to ensure a harmonious economic development of the city while reducing the impact of industrial activities on the environment. It will enable enterprises to realize significant economic and financial gains by reducing the use of water and energy, for example. The park will also create an attractive and competitive business environment by helping develop synergies between companies.

The Zenata industrial park project offers an important opportunity for environmental and regulatory upgrading, in line with the approach of Morocco’s Secretary of State for Sustainable Development regarding industrial pollution and its effective control.

The project fits within the framework of Morocco’s Programme for Country Partnership (PCP) – implemented in partnership between the Moroccan government and UNIDO – which aims to advance industrialization by supporting the implementation of the country’s Industrial Acceleration Plan 2014-2020.

The Zenata Eco-City aims to welcome 300,000 inhabitants and create 100,000 jobs through 4 high value-added activities, namely a health centre, an education centre, a sales centre and a logistics centre.

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