Ten years ago Asia was struggling out of a financial crisis and was expected, at best, to keep its

head just above

water for the next decade or so. Many countries were hit hard by the collapse of the Thai baht and their economies
almost went into meltdown. Five years later, however, the resilient economies were back on their feet- almost
doubling their combined GDP in 2005. China is to thank for much of the buzz in the region, since reopening its
economy in the late 1980s it has climbed its way to the top.

Asia as a continent has always recognised the importance of infrastructure for creating wealth-The Silk Road is an
early example. Infrastructure is key in both countries in order for them to realise their potential. Bureaucracy, tough
financing and hesitant overseas investment have slowed development in the sector for India, calling into question its
future as a powerhouse.

The stakes are high for India: Asia's third-largest economy has said it needs to double infrastructure spending to $1
trillion in the five-year period starting 2012, but its record is riddled with a history of missed deadlines, red tape and
massive cost overruns.  The fast growth of Indian economy in recent years has placed increasing pressure on
physical infrastructure, all of which already suffer from a substantial deficit. Against this backdrop, Budget 2010-11
underlines infrastructure development but is relatively low on impact in comparison to China. It has proposed $37
billion for infrastructure up gradation in both rural and urban areas. This amounts to over 46 percent of the total plan
allocation for infrastructure development in the country. But more is needed to boost India's long-term potential rate of
growth.

Since 1990 China has posted an average rate of growth of ten percent, one of the highest in modern history. China is
also remarkably open- exports and imports together account for almost three fourths of China's economy. Although
India has made significant progress in recent years, its share of global trade has been relatively small compared to
that of China, partly due to its average tariff, which remain relatively high.

Population projections

China and India's vast land area and large population require an extensive network of infrastructure to link the more
developed regions to less developed provinces. Burgeoning domestic consumption and an export-intensive economy
require ongoing investments in infrastructure in order to avoid economic disruption and maintain steady growth.

It is estimated that the proportion of China's working-age population to total population will start declining from 2014
due to population ageing and low birth rates. Meanwhile, it is predicted that India's workforce will continue to rise due
to population growth. This may constrain China's long-term economic growth prospects and India must improve
education and create jobs in order to benefit from its future demographic dividend. In India, with an economy growing
at 8.5 percent and a fast-urbanising population of 1.2 billion, the need to speed up project approvals, implement new
financing models and lure foreign investors is increasingly acute.

Jason Liao, vice chairman of Asian Business Aviation Association (AsBAA), explains the lack of workers for the
aviation side of infrastructure worldwide: "The infrastructure challenge I think for aviation right now as a whole is the
lack of pilots. This will more than likely get worse when North America and Europe start to grow." For China, the need
is even greater and, as Liao explains, 'the lack of pilots and mechanics is even worse'. This is despite the inflating
population being ready and willing to work. "You still have ample amount of labour from the countryside who are
willing to come to the city and work hard" Liao says. It is the education of this workforce that both India and China
must ensure for ample infrastructure growth.

During the early 1980s, China was among the poorest nations in the world. By 2003, however, the giant had reduced
poverty (those living on less than $1 a day) to less than 13.4 percent. This was achieved due to very high growth
rates helped by trade openness. India's achievements on growth and poverty during the same period have also been
impressive, but remained relatively modest compared to its counterpart. The overall population was living on less
than $1 a day also, and this declined from 54.4 percent in 1980 to 30.7 percent in 2003. The total number of poor
remains high- at over 325 million. This overall performance may be down to India's initial development model that
focused on import substitution and self-reliance- one of the factors that affected its lack of trade openness for most of
the time since independence.

Investment opportunity

While the opportunity is clear in a country with dusty roads and frequent blackouts, investors are wary of India, given
their untrustworthy history. India's stock markets, however, are well regulated and considerably better run and
possibly more transparent than those in China.

One company that has invested in the growing Indian economy is Cable and Wireless. The firm have made a $30
million investment on its multi-service platform, into India. This will allow Cable and Wireless India customers to get
more high-quality access from India to the rest of the world.  Shali Thalikan, Managing Director of Cable and Wireless
India, explains the need to invest in a highly resilient domestic infrastructure: "I think the infrastructure is the biggest
impediment to the growth in India right now and, although it is being viewed as an opportunity, a lot of effort is going
on to put the infrastructure in the right place.

"I think one is getting the whole infrastructure absolutely to the global standard in the urban cities. Mumbai and Delhi
for example, and they are connected on superhighways. But the tier two cities, like Chennai and Hyderabad, are
seeing a lot of growth in both BPO sector and IT and software application centres. Chennai in particular, is becoming
the automobile back office. Hyundai plants, the Ford plants, and GM are all investing in Chennai, and these are big
names and they need to have very good growth transport back to the ports in Mumbai and in Chennai and in other
port locations," he explains.

The government have provided much of the income but private investors that may be wary are especially needed to
drive infrastructure growth. "There is a tremendous amount of foreign investments," Thalikan says, "mainly from the
automobile and energy segment. This encourages a large amount of infrastructure development that is happening
today.  I think that if you want to invest in India stock, you need to invest in the infrastructure company stocks
because the demand for raw infrastructure materials, such as steel, is phenomenal."
Across Asia China is the undisputed pace setter for infrastructure development. Whilst the rest of Asia was
concentrating on gaining wide-ranging investor interest in 2005, China's infrastructure spending was 7.3 percent of its
GDP. Asia's two other big economies, India and Indonesia, paled in comparison, with India spending 3.6 percent.
What is perhaps concerning is that, although China's overall GDP is high, its per-capita GDP lags far behind the
west. At around US$3,800, the per-capita GDP is less than one tenth of Japan or the U.S. Since 2003, China' s
economic growth has relied on two major themes: exports and real estate.

Planning ahead

Both countries have adopted planning as an important policy making tool, but the development models of each are
contrasting.  A case in point is road infrastructure.

Though China has committed a great deal of investment to expand its network of expressways, this growth still lags
behind the growth of automobile ownership. Add to this the ongoing trend of concentrated urbanisation in China and
the market for road usage looks quite promising.

In the past few years China has been rapidly developing its highway system, with the investment for highway
construction increasing enormously from 2000, owing to increased government attention. The rate at which China is
outpacing India in this sense reflects their difference. China has 3.5 million kilometres of roads, and India has 3.3
million but China has been adding tens of thousands of kilometres of roads each year (69000 in 2006 and 53900 in
2007). In comparison India is targeting constructing 7000 per year.

Both railways and roads in India are places where the need for infrastructure development is visible for all to see. 
You just have to drive around Mumbai to experience the crumbling roads, and railways are so over crowded that
passengers are often forced to the roofs of carriages, ignoring the risks of overhead cables.

Less visible, but equally as pressing are India's ports that are reaching capacity and power and water shortages of
which are a common occurrences. Port trade in both India and China has increased dramatically, but in India there
remain problems of capacity and operation- India's exports only account for one percent of world trade compared with
seven percent for China- and there are real logistical challenges to and from the ports.

Even within infrastructure priorities, political interests have driven the overall resource allocation for India. In the
1970s and 1980s, for example, government emphasised development of minor irrigation and rural roads as part of
anti-poverty programs. Generation of employment through construction of ground water, minor irrigation and rural
roads to support food security received much higher priority compared to the need to enhance logistics to support
industrial growth and improving overall economic stability and efficiency.

The Indian government is currently struggling with a fiscal deficit, rising raw materials costs and bidding wars for
projects are hurting profits, and risk-averse foreign investors are shying away from committing long-term funds.  The
democratic federal republic and parliamentary system of India is an advantage for the country as investors are more
likely to approach an open market. Recent changes in China have enhanced its approachability, but the government
is still highly centralised and control orientated.

Thalikan emphasises this advantage for India. "It's just the space of implementation that's required is a bit slower
than China," he explains, "The government needs to focus on that.  But if you get the infrastructure bit right and if you
can make infrastructure available seamlessly, I think we have a very good chance to realize that essential."

For Liao, working closely with urban planning officials remains an important factor when managing aviation space.
"Asian Business Aviation Association has been working hand-in-hand with the Chinese aviation industry, especially
the business aviation sector to improve all areas of aviation infrastructure" says Liao. Urban planning is an
increasingly important subject in infrastructure development but many challenges are posed to the aviation industry
due to military control. "China is facing really limited ratios of air space because the majority of air space are
controlled by the military" agrees Liao, "So the civilian, commercial operation only have a small portion of the air
space, but China aviation as a whole has been growing on average about 17-18 percent for the last 30 years. China I
know are working hard on that. They need to look at how to expand civilian air space allocation."

Though most Indian planning documents have continued to emphasise the importance of infrastructure, until recently,
they did not embrace the Chinese single minded goal of infrastructure development, anticipating future demand and
building ahead of time. India's development model began with a balance between growth and distribution in the early
fifties. It has since been change and adapted to provide greater emphasis of redistribution.

Thalikan emphasises the political will in the present government, describing in as 'extremely high'. "I think they have
signed off on all of the major infrastructure projects. I feel today the pace in which it is growing; a political party cannot
anymore slow down the pace of growth," he continues. "I think it's just gathered too much momentum for a political
party to impact it. But they can of course slow it down a bit. The present government is very well engaged with the
industry to make this happen.  But yes, it is a tricky situation."

The State Planning Committee (SPC), and its subsequent variants, have been at the centre of China's political and
economic affairs. In China, strong accountability for delivery of plans has been embedded through powerful party
structure and this has so far led to better economic outcomes in terms of growth and infrastructure development. In
India, there was a disconnection between targets and performance, plan and implementation, and demand for
resources and actual availability. This resulted, in the past, as infrastructure projects being built on a piece-by-piece
approach.
 Growing pains

Liao is confident in China's ever expanding economy. "China has been really in the forefront of growing infrastructure;
railway, highways and China is building about 5 to 10 brand new airports every year.  Where else in the world you
can find that?" Liao asks.  For AsBAA, the global financial crisis- far from being a crippling blow to the industry-
provided opportunities for the aviation sector. "For my business there was actually opportunity because before the
financial crisis it was hard to find a suitable aircraft, there was a long lead time. Due to the financial crisis, you can get
an aircraft quicker, which actually helped the market as it is growing and the demand for aircrafts is increasing."

Cable and Wireless India plan to continue expansion after establishing relationships with India multinationals.

Thalikan explains the need to upsell these relationships. "So we're talking about introducing more managed products
such as video conferencing, managed IP telephoning, and taking the success story from our UK headquarters in
terms of infrastructure as a service or from a telephony perspective in India. That is what we're focusing on," Thalikan
says.

There are ambitious plans to boost India's GDP to ten percent by 2012, with private sector investment contributing a
much higher share. To effectively administer infrastructure spending programmes in dynamic and democratic
contexts, studies suggest that the establishment of an independent governing body, comprising of representatives
from different technical ministries and affiliated agencies who report directly to and are held to account by the head of
state can help minimize operational challenges.

By 2025, Asia will account for 40 percent of the world's economy and more that two thirds of the expansion of its
middle class will come from Asia. The rising affluent societies of Asia will populate cities and own multiple motorized
vehicles and travel regularly, all putting significant strain on infrastructure. This is the issue for both countries; their
infrastructure must keep up with the rapidly growing economy and increasingly affluent population.

Future plans for AsBAA include full service business aviation entry. "We will be involved in pretty much all aspects of
business aviation in China, there is tremendous opportunity in this area," Liao says. The recently announced plan to
open up lower altitude is another boost for Chinese aviation. "Not just aviation," Liao explains, "commercial aviation,
business aviation for aircrafts to use existing products.  I think this will bring the whole Chinese aviation industry into
play. I think from research, design, manufacture, sales, support, operation- the whole industry." 

"I think when we look at China, in comparison I would say I think execution is key for India; that's what has been
missing," says Thalikan, summing up the overall state of Indian infrastructure. The economy, development strategies
and individual workers are in place to withstand the economic boom in China and India, it is the way they're
continually developed and progressed that will stand the test of time.

The challenge for both countries is developing their infrastructure quickly enough to keep up with the rapidly
expanding economies but, as Liao says: "The rest of the world would be happy to have the problem of growing too
fast."