Infrastructure Regulation: Models for Developing Asia

Abstract

The objective of this paper is to review the experience of infrastructure regulation in low and middle income countries, to assess the applicability of this experience to developing Asia, and to identify areas for future research on infrastructure regulation in the low and middle income economies of the Asia region.An essential requirement for economic growth and sustainable development is the provision of efficient, reliable and affordable infrastructure services, such as water and sanitation, power, transport and telecommunications. Traditionally, infrastructure was the exclusive province of the public sector, with large, state-owned enterprises (SOEs) being responsible for investment and service delivery. Typically, the SOE sector was a costly and inefficient provider of infrastructure in most developing countries.1 However, encouraged by international organisations such as the World Bank, privatisation has been a major component of the economic reform programmes pursued by many developing countries over the past two decades (Parker and Kirkpatrick, 2004a). Privatisation was predicted to promote more efficient operations, increase investment and service coverage, and reduce the financial burden on government budgets (World Bank, 1995). Much of the early privatisation activity was concentrated in the manufacturing sector, but recent years have seen donor agencies advocating the privatisation of utility industries in developing countries and the introduction of semi-autonomous, dedicated regulatory bodies for these industries within government (World Bank, 1995,1997). A large number of developing countries have introduced some private participation into their infrastructure industries, especially telecommunications, and to a lesser degree in electricity and water.