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Singapore to make infrastructure assets mainstream for institutions: Indranee
SENIOR Minister of State for Finance and Law Indranee Rajah on Thursday stressed the importance of private sector's participation in the infrastructure sector, and said Singapore, as a regional infrastructure hub, is working to mainstream infrastructure assets for institutional investors by developing it as a standalone asset class.
At the inaugural Urban Week, organised by the World Bank with the Global Environment Facility and Singapore government partners such as International Enterprise Singapore, she said: "With the increased financial market volatility, downgraded economic outlook and fears of renewed global slowdown, policymakers are looking to boost growth through investments into infrastructure, in terms of both the quantity and quality aspects. . .
"Efforts from the MDBs (multilateral development banks) alone are not enough. Private sector players need to be activated, and governments need to be proactive in undertaking reforms to facilitate infrastructure and urban development."
In terms of financing, she said infrastructure investment will spur economic growth only if it is allocated to high-value projects and constructed in a cost-effective manner.
For investments to be sustainable, mobilising private-sector funding is imperative so that projects can benefit from private-sector innovation and efficiency.
"Singapore has a critical mass of global financial institutions that offer infrastructure financing options such as project financing for greenfield infrastructure projects, bond financing, business trusts to list infrastructure assets which are useful for capital recycling, and infrastructure equity funds.
"In fact, financial institutions in Singapore lead-manage 60 per cent of cross-border project financing in Asean," she said.
Global governments currently fund 60-65 per cent of the infrastructure investment, but will come under fiscal pressures as their populations mature, she said.
Currently, only about 3 per cent of the total US$57 trillion in assets under management globally is allocated to infrastructure investment. Out of this, less than 0.2 per cent goes to infrastructure debt, where investors extend private loans to fund infrastructure projects.
"This makes it a greatly underweighted asset class, and we are working to mainstream infrastructure assets for institutional investors by developing it as a standalone asset class,"she said.