EXECUTIVE SUMMARY
Most local governments are not authorized to collect income, payroll or general sales taxes. Only a few local governments are empowered to collect property taxes. Income from local enterprises such as public markets, barely meet operation and maintenance costs. In China and Vietnam, local governments have financed infrastructure by “monetizing” land values, but other Asia Pacific countries have difficulty doing this because most land is privately owned. Some local governments seek to make basic services sustainable by collecting user tariffs. Most get good returns from the electricity, water, and transport sectors where consumption is easier to measure. How ever, user tariffs are often difficult to collect for sanitation and solid waste services, especially from people living in slum areas. PPP financing has been used in Asia-Pacific for water and sanitation, electricity, transport, and solid waste management. In most PPP projects, investments are made by the private sector, while governments make contributions in the form of public land or provide capital subsidies, tax breaks or guaranteed annual revenues. The notable success of some PPP schemes in Asia-Pacific does not mean they have been trouble free. Problems include the following: some PPP projects are over-designed and over-built because private partners tend to use the latest technological approaches, which can be expensive; some projects are built in one stage instead of in several stages, which often increases costs; local governments often find it hard to manage projects after the private partners move on because staff development programs are not included in the schemes; the benefits from PPP projects tend to be inequitably distributed among a city’s pop ulation since the poor often cannot afford tariff charges); and PPP projects using for eign currency loans become expensive
when foreign exchange rates fluctuate and local currencies are devalued. Access to basic services Based on a survey of a sample of ASCAP cities, there appears to be a positive correlation between the degree of decentralization and the level of basic services. How ever, the main factor influencing access to most services in Asia Pacific is the level of economic development, as measured by per capita GDP. In high income countries like Australia, Japan and Korea, for instance, 100% of the population has water piped to their premises and access to adequate sanitation facil ities. By contrast, in Bangladesh only 6% have piped water; and in Cambodia only 28% have access to adequate sanitation. While the water and sanitation information provided by the 2012 WHO-UNICEF Joint Monitoring Program (JMP) points to increasing coverage in the region, with a number of countries “on track” to meet full coverage for adequate provision, this information also appears overly optimistic in many cases, reporting rates exceeding those reported by Demographic and Health Surveys. The standards used to define adequacy can also be misleading in many urban settlements, where density often affects the suitability of theoretically adequate solutions. Provision in many urban slums remains dire. In India, for instance, almost 20% of urban residents still rely on open defecation, and less than half have access to toilets connected to drains; in Karachi, Pakistan, water is supplied for an average of four hours a day. Electricity consumption in Asia Pacific is similarly related to levels of economic development, with high income countries hav ing 100% electrification rates but less developed countries having only intermittent power supplies. In a number of countries,