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Leveraging infrastructure opportunities in South-east Asia

Infrastructure Asia aims to develop solutions that are scalable yet customisable, whether it is for multiple projects in a country, or in the same sub-segment across different countries.

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Mr Tan says Infrastructure Asia can work with governments and the private sector to structure specific cases so they are more bankable while addressing the needs of the government.

INFRASTRUCTURE Asia, an organisation set up by Enterprise Singapore and the Monetary Authority of Singapore, aims to support Asia's economic and social growth through infrastructure development.

Officially launched at the 8th Asia-Singapore Infrastructure Roundtable on Oct 23, it will serve as a bridge for different industry players across the infrastructure ecosystem, multilateral development banks and the public sector, and be a one-stop platform for the information exchange and sharing of best practices in Asia.

Seth Tan, executive director of Infrastructure Asia, elaborates on the organisation's work and its upcoming plans.

What are the infrastructure opportunities in South-east Asia?

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South-east Asia is a region with huge growth potential, given its sheer size, GDP growth and stage of development.

The Asian Development Bank estimates that the region requires US$3.1 trillion in infrastructure investment from 2016 to 2030.

Over this period, its urban population is expected to increase by 90 million, which creates an increase in demand for infrastructure and services, especially in areas such as energy, urban solutions, water and sanitation, transportation and social infrastructure.

Regional governments have already been doing a lot to address the infrastructure needs, but there is room for greater involvement from external parties including companies in the private sector and financial institutions.

These include:

  • Project conception and planning;
  • Feasibility study;
  • Project tender and award;
  • Developers' and financiers' due diligence, contract negotiations and financing;
  • Construction and commissioning;
  • Operation and maintenance;
  • Upgrade or decommissioning (for older infrastructure).

What are the issues concerning infrastructure projects in the region?

As with most infrastructure projects, it is important to distil the project pipeline to those that are more easily addressable by Singapore-based companies and financial institutions.

Proper due diligence and selection of projects are key because if these are not done properly, there can be risks when it comes to implementation.

To attract investors, financiers and private capital, projects must first be bankable. Projects have to be designed and structured so that the risks and returns are appropriately allocated.

Also, as infrastructure in South-east Asia is not homogeneous, those less familiar with the region will need to seek reliable partners and the right networks to gain access to the markets and projects.

Understanding the specific infrastructure requirements is important as well to ensure that solutions meet the needs of the local governments.

What are Singapore's inherent strengths to contribute to these needs in South-east Asia?

Singapore is well placed to support infrastructure development in South-east Asia, given our neutrality, strong connectivity and familiarity with the region.

Singapore also has a comprehensive infrastructure ecosystem that includes developers, financiers, professional services and other supporting services.

The rapid and successful development of Singapore's built environment over the past 50 years has also cemented our experience in this field.

Some of our infrastructure "sub-segment champions" have already started to contribute to developments in South-east Asia - in industrial parks, smart energy, smart infrastructure, smart mobility, and so on.

We also have a ready talent pool that understands South-east Asia's market nuances and can manoeuvre the different markets.

In recent years, Singapore has contributed to various aspects of infrastructure needs in South-east Asia:

  • 60 per cent of project finance transactions in South-east Asia are lead-managed by Singapore-based banks.
  • Singapore-based companies are top investors in South-east Asia. For example, Singapore is the top investor in Indonesia, second in Myanmar and third in Vietnam.
  • Singapore now offers a full suite of dispute resolution options, including arbitration, litigation and mediation, and has been ranked as the most preferred seat of arbitration in Asia.
  • Many international companies in the industry have chosen Singapore as their regional headquarters due to policies in place such as the ASEAN Comprehensive Investment Agreement and conducive double tax agreements.

With continuous efforts to augment Singapore as a financial hub, it is well placed to channel more sources of financing and capital into infrastructure projects in the region.

How is Infrastructure Asia helping in this effort?

Infrastructure Asia's focus is to enable not just efficient and effective, but also good fit solutions that meet the needs of the local governments.

In South-east Asia, a big proportion of infrastructure is government-owned and even new projects that involve private sector ownership are tendered by the local governments as they are considered essential infrastructure.

Leveraging our networks in the region, Infrastructure Asia can play a role connecting companies and financial institutions with the relevant governments.

We will also work closely with Singapore government agencies including Enterprise Singapore and the Monetary Authority of Singapore to bring in relevant Singapore companies and financial institutions across the value chain for such project development.

Infrastructure Asia can work with governments and the private sector to structure specific cases so they are more bankable while addressing the needs of the government.

We will also work with relevant countries to strengthen capacities for infrastructure project structuring, financing, implementation and operation, alongside our partners like the World Bank Group.

Over time, our aim is to develop solutions that are scalable yet customisable, whether it is for multiple projects in a country, or in the same sub-segment across different countries.

This is akin to building more runways so that more aeroplanes can take off.

We will work with the public and private sector to increase the number of "runways" and also deepen existing "runways" to enable more solutions that meet the needs of the local governments in the region.