[SINGAPORE] Indonesia, Thailand and the Philippines should consider tax incentives and other measures to meet a growing need for infrastructure funding in the South-east Asian countries, according to a senior executive of Malayan Banking Bhd (Maybank).
Such moves would encourage more private sector participation in the financing of toll roads, power plants and other needed infrastructure, said Muzaffar Hisham, Maybank's head of global banking. The bank has been working with regulators in the three countries to push for tax changes to boost involvement "not just for financial institutions, but for fund managers and sovereign wealth funds", Mr Muzaffar, 45, said on Thursday.
Emerging market countries in Asia need to spend more than US$1.7 trillion annually on infrastructure between 2016 and 2030, in order to improve ports, power plants, roads and other facilities, according to a World Bank estimate. Though banks and asset managers have been looking to increase their exposure, many are wary of the risks associated with foreign exchange fluctuations and the long-term nature of the funding that's required.
Mr Muzaffar said Kuala Lumpur-based Maybank has been encouraging South-east Asian regulators to take steps to encourage more longer-term debt issues in the local currency. He noted that Malaysia has already taken several measures to develop its ringgit debt markets, such as an exemption from stamp duty for sukuk issues.
China has the capacity to boost its infrastructure funding in the region, according to John Chong, the head of Maybank's investment banking unit. For example, it accounts for only about 2.5 per cent of Malaysia's foreign direct investment, below other countries such as the US, he added.