The paper lays out basic design options for infrastructure policy. It first sketches mechanisms to assess demand. Then it sets out a hierarchy of issues starting with choice of market structure followed by conduct regulation. Ownership options are largely a function of market structure choices. The implications for finance—the topic of much day-to-day discussion in infrastructure policy-making—follow from these various prior choices. The discussion naturally circumscribes the role for the so-called public-private partnerships, their uses and pitfalls.

Intra-regional trade serves as a key growth engine for East Asian economies. Accompanying the rapid growth of bilateral and intra-regional trade ties, the East Asian economies are becoming increasingly connected and interdependent. Infrastructure connectivity plays a crucial role in bridging different areas of the East Asian region and enabling them to reap the full socioeconomic benefits of economic cooperation and integration. Nevertheless, further improvement of infrastructure in the region faces major challenges due to the lack of effective mechanisms for coordination and dialogue on regional integration through funding infrastructure projects, as well as the serious trust deficit among member states that has arisen from the on-going territorial and historical disputes.

This paper considers the problems surrounding the implementation of road infrastructure plans in a policy perspective. As the main pillar of regional connectivity, road networks provide the link across national markets, foster strong and sustainable economic growth, help meeting people’s basic needs, and promote trade and competiveness. It is argued that planning, implementing, and managing good transportation infrastructures poses a series of challenges that require competence, good governance, and the availability of funds. Such problems become more complex when road projects encompass different states and become transnational. The regional dimension of connectivity involves both opportunities and risks; a cooperative attitude by all parties is viewed as the best ingredient to achieve a positive balance. Since most countries cannot still rely on domestic resources, the paper stresses the role of virtuous policies in directing capital flows from abroad towards the infrastructural projects of Southeast Asia.

The world economy needs a growth-lifting strategy, and infrastructure financing seems to hold the key. Based on the New Structural Economics (Lin, 2010; 2012) we discuss the heterogeneity of capital focusing on the long-term versus short-term orientation (STO). Traditional neoliberalism assumes that capital is homogenous, complete capital account liberalization is “beneficial”. However, previous studies have found evidence of long-term orientation (LTO) in the culture of many Asian economies (Hofstede, 1991). In this exploratory paper, we suggest that the LTO can be considered a special endowment which, under certain circumstances, can be developed into a comparative advantage (CA) in patient capital. If these countries can turn their latent CA into a revealed CA in patient capital, and develop the ability to “package” profitable and non-profitable projects in meaningful ways, they would have a “revealed” competitive advantage in infrastructure financing. The ability to “package” public infrastructure and private services is one of the key institutional factors for success in overseas cooperation.