asean infrastructure gap

I think that is going to be a big opportunity. 2025年のASEANの展望と課題 ASEAN 2025: Vision and Challenges – Prof. Akifumi Kuchiki 日本大学生物資源科学部教授 朽木 昭文 3. All rights reserved. They can structure, underwrite, and syndicate significant sources of private funds. 8 min. By putting in place measures to monitor and minimise the E&S impacts, financiers and project developers could enhance projects’ bankability and profitability. Bridging ASEAN’s US$2.8 trillion infrastructure gap by 2030 is a pressing issue for regional governments. MANILA, Philippines – The Association of Southeast Asian Nations (ASEAN) needs a whopping $60 billion a year to address the region’s infrastructure gap. In most countries, the criteria for project selection are realistic and transparent. On the investment front, Chinese funds flowing into BRI countries are also expected to hit US$300 billion by 2030, more than twice the level as of 2017. ASEAN infrastructure gap turns negatives into positives – says HSBC If a spending deficit of US$1.2 trillion in six key Asian economies and a rising tide of protectionist rhetoric in Europe don’t seem the most promising combination of business prospects, think again. The EU-ASEAN Business Council has recommended that ASEAN member states engage more with private firms to finance its infrastructure projects. Available: https://www.mas.gov.sg/news/speeches/2019/keynote-speech-by-mr-heng-swee-keat-at-the-omfif-global-public-investor-launch, [5]Speech by Senior Minister and Coordinating Minister for National Security, Teo Chee Hean, at the 5th Singapore Regional Business Forum on 15 August 2019. Leveraging its deep market knowledge, as well as industry and product expertise, Standard Chartered works with investors, corporations, and governments globally, advising and connecting them to the right local and international partners. Jiten: We are the only international bank present in all 10 ASEAN markets. Globally, the infrastructure investment gap is estimated to be USD15 trillion from now till 2040. In fact, they are currently only able to cover about 50 per cent of the total investment, said the report. The “Financing Sustainable Infrastructure in ASEAN” report is authored by the SIIA and the full report will be launched in November 2019. Take for example, the public-private partnership frameworks for the transportation sectors. Last year, we were involved in close to 100 BRI projects. However, ineffective project structuring continues to keep private money at bay. The rapid acquisition of foreign direct investment, while welcomed, has resulted in general concerns over the quality and sustainability of infrastructure projects. 3 April 2019. Financial institutions have either adopted international sustainability standards, frameworks or principles, or developed their in-house policies and guidelines to better identify and mitigate E&S risks. Take Standard Chartered for example. However, China’s Belt and Road Initiative, for example, has drawn criticism for funding emissions-heavy infrastructure in Southeast Asia. Jiten: What is interesting as we go through the next phase of growth in ASEAN is how you raise capital and funding for these projects. Permission required for reproduction. Infrastructure Gap in South Asia : Inequality of Access to Infrastructure Services Biller, Dan; Andres, Luis; Herrera Dappe, Matias (2014-09) The South Asia region is home to the largest pool of individuals living under the poverty line, coupled with a fast-growing population. How has Standard Chartered mobilised capital from private-sector investors for infrastructure projects? Infrastructure investment in ASEAN from 2016 through 2030 is estimated to be about US$2.8 trillion, according to the Asian Development Bank (ADB). That works very well because you have banks who are present in the Middle East structuring the transaction, and the transaction is structured in a way that the project is optimised and local realities are taken into account. © Standard Chartered 2020. Financial institutions tuned into the global conversation on sustainability have set sights on ASEAN’s infrastructure sector, which holds one of the largest green finance opportunities in the region – an estimated US$1,800 billion from 2016 to 2030. Foreign initiatives such as China’s Belt and Road Initiative and Japan’s Partnership for Quality Infrastructure promise investment into infrastructure-starved ASEAN countries. That way, countries can identify the right financing approach for each project accordingly. Digital Infrastructure financing gap in Asia is growing significantly, estimated to reach $512 billion by 2040. What trends do you see for infrastructure financing? “You have 400 million lacking electricity, 300 million don’t have safe drinking water, and over a … However, the region may be at a turning point. Our capabilities span FX solutions, M&A financing, loan syndication, debt capital markets products, risk structuring, trade and cash management solutions and financial market products. The infrastructure investment gap—the difference between investment needs and current investment levels—equals 2.4% of projected GDP (climate-adjusted) for the 5-year period from 2016 to 2020. The ongoing drive towards an ASEAN Economic Community (AEC) reflects an understanding that deep integration needs more than traditional trade policy. What would be a model public-private partnership in the BRI? Our international network and local market expertise allow us to effectively connect our clients seeking partnerships with local governments, and even multinational companies. But this financing deficit presents significant opportunities for mid-corporates to grow beyond their home turf while addressing the market needs. Particularly for BRI, there is a myth that the initiative is all about Chinese corporates going into markets. The infrastructure gap – the difference in required infrastructure spending and actual investment spending – arises due to rapid urbanisation and population growth. In fact, commercial banks are the fabric that binds all these parties together by ensuring that projects are structured appropriately and efficiently from day one. What can the public sector do to encourage private financing and partnerships? At the same time, heightened global attention on climate change and international awareness of human rights have also shaped how people view and finance long-term infrastructure projects. However, countries in ASEAN do not have sufficient public sector capital to finance all the required projects, going by the Standard Chartered report. In the case of BRI, about 70 per cent of our global footprint overlaps with the BRI countries. That trend will be a win for governments too. Bridging the Development Gap among Members of ASEAN. Infrastructure Investment Gap The East Asia Summit (EAS) Energy Outlook 2019 projects that US$430-US$440 billion will be necessary in the power generation sector, including US$149-US$226 billion for refineries and US$16-US$28 billion for liquefied natural gas (LNG) terminals. However, BRI is a great opportunity for local corporates in ASEAN to collaborate with some of their larger partners who have the necessary funding. Banks can add value by looking at the viability of each project and advise how to make it feasible by considering numerous aspects including partnerships, financing and risk management. The second part of this series will include insights from the bank’s clients. ASEAN has a massive infrastructure gap but it is increasingly evident over recent years that the region may not be able to fund it. ASEAN stands to be a key beneficiary with a number of major projects planned in the region. In 2015, Chinese President Xi Jinping said he hopes annual trade with those countries would outstrip US$2.5 trillion in a decade. 151 The last reference can be made to institutional gap. China’s Belt and Road Initiative (BRI) is an ambitious undertaking that seeks to revive trade along two ancient land and sea routes, benefitting over 60 countries in the process. As demand for infrastructure development soars, how should ASEAN approach its infrastructure needs then? And with demand for infrastructure development ramping up, ASEAN may need to re-think its approach to plugging the gap. Addressing Southeast Asia’s Infrastructure Gap Past August 28, 2019 2:00 p.m. - 3:30 p.m. Therefore, Southeast Asia is currently facing an infrastructure gap of US$102 billion. They are a great way of raising long-term money, especially because they are aimed at projects that are innovative and that are in the renewable energy sector. The long-term nature of many infrastructure projects means that we have no time to lose. It uses a mix of solar power technologies, including storage solutions, to generate solar power even at night, in a cost-effective manner. Source: The Business Times © Singapore Press Holdings Limited. Also, if you look at projects which are innovative, like converting plastic waste into renewable energy, you have a huge amount of green bonds that are starting to emerge. The report identifies a lack of a common language around what sustainable infrastructure looks like in ASEAN. ASEAN needs to re-think approach to US$2.8 trillion infrastructure gap. 2 The lack of infrastructure connectivity continues to … The SIIA would like to specially thank HSBC for its generous support (including sponsorship) and our Knowledge Partner, KPMG in making this study possible. Available: https://www.pmo.gov.sg/Newsroom/SM-Teo-Chee-Hean-at-5th-Regional-Business-Forum. [5] As a regional infrastructure financing hub, Singapore can steer the direction of infrastructure development in this region towards a more sustainable path. to bridge the infrastructure gap in ASEAN and the linkages of various players across the infrastructure value chain, this Annual Report continues to provide useful updates on the latest developments in the ASEAN investment landscape. ASEAN faces a long-standing challenge with the lack of good quality, adequate infrastructure. What factors influence project selection? Surya: Generally, socio-economic considerations drive the selection of projects. [4] The city state is already a significant source of funds and expertise for infrastructure projects in the region – an estimated 60 per cent of ASEAN projects have received loans or advisory services from Singapore-based banks. Government financing accounts for 90 per cent of infrastructure expenditure in Asia, compared to a worldwide average of 40 per cent. More consistency in identifying E&S risks will improve the way these risks are mitigated not only at the planning stage but also throughout the project lifecycle. For BRI, we have been heavily involved in structuring financing and providing services for the major projects. With the opportunities in mind, Standard Chartered offers companies the presence and experience it has built across the region for over 150 years. Available: https://www.dbs.com/iwov-resources/images/sustainability/img/Green_Finance_Opportunities_in_ASEAN.pdf, [3]ADB (2017) “Meeting Asia’s Infrastructure Needs”. ASEAN needs to re-think approach to US$2.8 trillion infrastructure gap. © Singapore Institute of International Affairs. Among them, 38 deals (nearly 40 per cent) were related to projects in the ASEAN and South Asia region. Infrastructure access is also marked by fragmentation, with notable differences between low-income and high-income ASEAN countries, between ASEAN and the Pacific Islands countries, and between rural and urban areas. Surya: My favourite BRI project currently happens to be not in ASEAN but the Middle East. So, that is one opportunity that as a bank and with our deep links in China and ASEAN, we are keen to facilitate more of, and be the conduit for corporates and governments alike. Government financing accounts for 90 per cent of infrastructure expenditure in Asia, compared to a worldwide average of 40 per cent. The emergence of cross-border initiatives like China’s ambitious Belt and Road Initiative (BRI) is also expected to be a catalyst to help Southeast Asian countries fulfil their infrastructure gaps. The report highlights the challenges financial institutions face in channelling capital towards sustainable projects, as well as the government measures that could be applied to channel more financing for sustainable infrastructure. Surya: The public sector needs to invite participation from commercial banks which are key intermediaries that can help multilateral development banks and development finance institutions mobilise private capital. And transparent BRI countries the local corporates will be launched in November 2019 ASEAN! Keep private money at bay to cover about 50 per cent ) related! 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