Tommy E.

Nantung PhD PE

Developed vs. Developing Economy

In many developed economies
spending on infrastructure is predominantly directed at
asset maintenance and repair, with few opportunities for
brand-new installations.
As the worlds population increasingly chooses to live

in large urban centers

There is an increasing need for improved

Connectivity,
Efficient use of natural resources, and
Creation of sophisticated transport hubs.
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Major Challenges
The long-term issue of funding (who pays?), and
The shorter-term options for financing of

infrastructure (how do we pay?)

Becoming hugely important questions for policy
makers and the government officials responsible for
creating and maintaining the assets that enable 21stcentury cities to function
In this turbulent period of low growth and government
deficits, economies need fiscal stimulus and creation
of employment.
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Economic Reality
Spending on infrastructure offers both of these

benefits and, if wisely directed, this investment

delivers improved quality of life to the affected
community.
Superior and well maintained infrastructure attracts
The best talent as well as

Dynamic businesses seeking reliable connectivity and a

high quality of life for workers.

Just-in-time delivery system

Economic Reality
Across the globe,

infrastructure is the
lifeblood of prosperity
and economic
confidence in the 21st
century.

Just-In-Time (JIT) Logistic

Honda, Indiana

Nissan, Tennessee
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Economic Reality
Infrastructure
The structure or underlying foundation on which the
continued growth of a community depends
Is critical for countries in all stages of development.

Projected Urbanization

The Year Ahead and the Way

Forward
Urban mobility, Global population growth, coupled

with urbanization trends,

Will continue to spur infrastructure planners

To integrate transport systems in ways that improve mobility

while reducing reliance on cars and trucks and decreasing
pollution.
This often involves investing in mass transit.
Managed lanes more operational efficiency will be eked out of
roads.

The Year Ahead and the Way

Forward

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A Case for the US

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A Case for India

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Indonesia

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Economic Reality and Infrastructure

Poor infrastructure conditions are the main factor

preventing Indonesias economy from growing at its

potential rate of 8%.
Inadequate infrastructure also results in high inflation
compared to most of Indonesias peers in South East
Asia.
Infrastructure development has been slow in the past
decade and has relied heavily on government
spending.

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Predicted Growth with

Infrastructure
Under the best of our most plausible scenarios
Indonesias economy will grow in a range of 7.1-7.6%
during the 2011-14 period

If the private-sector participation rate reaches 50% of what is

required and
If the government increases spending on transport
infrastructure by 20% a year

Otherwise, we expect the economy to grow by only 6.5-

7% during the period

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Road Coverage

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Road Classifications

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Roads vs. Economic Activities

Only about 58% of Indonesias roads are on Java and Sumatra

islands

Contribute around 81% of GDP.

Sumatra
Area: 25%
Roads: 34%
Population: 22%
GDP: 23%
Java
Area 7%
Roads: 24%
Population: 59%
GDP: 59%

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Roads vs. Economic Activities

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Jakarta
Contributes about 13% of GDP
Accounts for around 50% of deposits and 49% of loans
in the countrys banking system.
From 2005-09
The number of motorcycles rose by 24% annually,
The number of cars rose by 22%,
The distance of usable roads actually declined from
7,226km in 2005 to 6,506km in 2009.

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Jakarta
Clogged roads and bottlenecks plague Jakartas

roadways
Jakarta relies on less-capital-intensive bus rapid transit
solutions
Which cost about $4 million per kilometer to build, to

help relieve congestion

Alternatives to expensive light rail or subways (which
cost about $50 million per kilometer)

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Jakarta

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Lesson Learned from Uncle

Eisenhower
The best $500 billion the United States has ever spent
Young Lieutenant Colonel Eisenhower
Ike took part in a transcontinental military convoy from
Washington, D.C., to San Francisco.
It took the convoy two months to cross the country, averaging
less than 60 miles per day.
Nine of the convoy's trucks were destroyed by poor road
conditions
The Federal-Aid Road Highway Act
The Interstate Highway's immediate predecessor -- had just
been completed,
But its $500,000 expenditure (equal to less than $7 million
today) had only paved another 13 miles of the nation's roadways.
Not much of a project, really

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New Era of Interstate System

By 1960
>10,000 miles of the interstate highway system had been
completed.
2.3 million miles of unpaved roads across the United
States, but only 1.2 million miles of paved roads.
The first decline in the percentage of people living in
city centers (from 32.8% to 32.3%), but its percentage of
suburban dwellers grew from 23.3% to 30.9% of the
population.
74 million registered vehicles on the roads in 1960, an
increase of 20 million over the previous decade.

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50 Years Later
>47,000 miles constructed

The interstate highway system's total cost was

estimated at $425 billion (nearly $500 billion today)

2.7 million miles of paved road, compared with 1.32
million miles of unpaved roads
240 million registered vehicles

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Economic Benefits
American Highway Users Alliance estimates that this

project has produced more than $6 in economic

benefit for every $1 of construction expense.
In 1960, seven of the 10 largest American companies
(by revenue) were either automakers or oil producers.
In 2007, 3 oil producers and 1 automaker still placed
among the top 10 companies. Wal-Mart (consumer
goods) sits at the top, earning more than $100 billion
more in annual revenue than the largest oil company.

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The Best Investment Ever

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