17 September 2020

Improving infrastructure development drivers: 3 Asian nations stand out

17 September 2020

In the Global Infrastructure Hub’s InfraCompass analysis, Singapore takes top honours. In fact, Asia boasts three of the top four overall performers of the eighty-one monitored countries. 

The InfraCompass tool assesses the quality of eight drivers - governance, regulatory frameworks, permits, planning, procurement, activity, funding capacity, and financial markets - determining infrastructure development success. It also identifies which countries have improved the most for each of the drivers. The 2020 analysis shows Asia is home to the most improved of all assessed countries for activity, regulatory frameworks, and governance.

Pakistan 

Pakistan rocketed 45 places to number thirteen in the global ranking in activity. The impressive performance is driven by an increase in private infrastructure investment as a percentage of GDP over the last five years and investments under China’s Belt and Road Initiative

The country recently announced its costliest project to date as part of the multibillion-dollar China-Pakistan Economic Corridor (CPEC) agreement, giving the go-ahead for the US$6.8 billion ML-1 project to upgrade the Karachi-Peshawar Railway line, one of four main railway lines managed by Pakistan Railway. 

This is a large-scale undertaking covering the length of the 1,687 kilometre railway. And the ML-1 project alone is almost equal to Pakistan’s entire development budget for fiscal 2020-21, which currently stands at US$7.9 billion.

Azerbaijan

Azerbaijan moved up 27 places in the regulatory frameworks driver, showing the most improved of any of the 81 monitored countries. This improvement can be attributed to the 2018 decision to make resolving insolvency easier by making insolvency proceedings more accessible for creditors and granting them greater participation in the proceedings, improving provisions on the treatment of contracts during insolvency and introducing the possibility to obtain post-commencement financing.

In its 2017 edition, the World Bank Doing Business report ranked Azerbaijan 86th in resolving insolvency, and also ranked it 65th in the Ease of Doing Business Index out of 190 countries. As a result of much progress made since 2018, the 2020 edition of the same report ranked it a much improved 47th in resolving insolvency. The 39 place jump in ranking drove the overall improvement in Azerbaijan’s Ease of Doing Business Index from 65th to 34 in 2020.

India

According to the latest performance indicators, India jumped 18 places in the ranking for governance, due largely to efforts to reform India’s insolvency proceedings and recovery rates. Citing the same World Bank Doing Business data but for 2015, India ranked 136th (out of 190 countries) for resolving insolvency, with a recovery rate of 25.7 cents per dollar.

In October 2016, the Indian government created the Insolvency and Bankruptcy Board of India (IBBI) under the Insolvency and Bankruptcy Code. The IBBI is responsible for the implementation and regulation of the Code, which streamlines regulations related to reorganisation and insolvency resolution of corporations. In 2019, the Insolvency and Bankruptcy Code Act was amended to provide creditors of the loan defaulting companies with authority over the distribution of proceeds in the resolution process.

IBBI is making a profound difference. Since its creation the time taken to resolve insolvencies has dropped from four to 1.5 years, and the recovery rate rose to 72 cents.

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