In spite of the challenges the world has faced in recent years, Lavan Thiru, Executive Director of Infrastructure Asia, welcomed delegates to the organization’s 2022 forum by emphasizing that there is “cause for optimism” in the infrastructure sector.
The two-day forum, held in Singapore from 2 to 3 August, focused on devising ways to scale-up and accelerate efforts to deliver a pipeline of infrastructure projects, he said, building on existing relationships in the sector and forging new partnerships.
Critical issues that were discussed included ways in which government policy and regulations can be enabled, the importance of technology and energy transition, as well as sustainable financing to ensure that projects go beyond the drawing board and act as the driver for broader economic development.
The keynote address delivered by Indranee Rajah, Singapore’s Minister in the Prime Minister’s Office and Second Minister for Finance and National Development, pointed out that while the world has been preoccupied by the pandemic for the last two years, attention must now be refocused on combating climate change. The infrastructure industry has a critically important part to play in that endeavor, she emphasized, as it is one of the foundations “of a more sustainable future for Asia.”
Minister Indranee outlined a number of initiatives applied in Singapore that could similarly be introduced elsewhere in Asia, including taking advantage of brownfield sites, scaling energy efficiency through retrofitting projects and reducing losses in the water infrastructure sector.
She called on providers of private capital to complement government spending on projects across the spectrum, including renewable energy and transportation, adding that she hoped the launch of the Infrastructure Asia Project Portal would serve as a vital virtual marketplace to showcase regional projects and raise awareness of the technological and financial solutions available.
Ministerial Panel – Making Headway to Scale-up Sustainable Infrastructure
While every nation in Southeast Asia will have its own unique hurdles in the development of sustainable infrastructure, they also share many similar challenges and, as a consequence, can apply other nations’ best practices and solutions.
Singapore, for example, has traditionally been short of land and water, but long-term planning and putting legislation into effect helped mitigate those challenges. Innovation and partners are critic along with uniting the population in the cause of a greener future, said Minister Indranee, and are policies that can be replicated elsewhere in the region.
Bangladesh similarly lacks land and is menaced by rising sea levels, but the nation’s relative economic success through the difficulties of the last few years has been built on a nationwide electrification program, enhancements in the agriculture sector and seizing opportunities to be in the forefront of fifth industrial revolution, including through an aggressive digitalization policy to encourage IT-related exports.
Panelists agreed, however, that balancing development with sustainability poses constant challenges, with Dr Aaditya Mattoo, Chief Economist, East Asia and Pacific for World Bank Group, suggesting that governments need to introduce legislation that makes it “uncomfortable” for companies and individuals to continue on a carbon-heavy trajectory, such as through the imposition of new taxes on those that are slow to adopt new ways of operating.
Incentives were suggested as a course of action that might encourage the transition, while Hem Vanndy, Secretary of State for Cambodia’s Ministry of Economy and Finance, proposed the introduction of regulatory frameworks with clear criteria and standards to enable development.
Asked about the potential “game changer” in the scaling up of sustainable infrastructure, panelists identified the need for new technologies to be adopted, specifically large-scale batteries while Minister Indranee, emphasized that collaboration will be the solution.
“If we are all able to pull together, to support each other, that will allow us to scale up and accelerate,” she said. “And if we then partner with big countries and we all share, then everything will flow from that.”
Industry Leaders Panel – Strategies to Accelerate Sustainable Infrastructure
A critical requirement for the successful implementation of sustainable infrastructure is leadership and support from governments, including through proactive legislation and financial incentives, industry leaders emphasized during the second panel of the forum.
And there is demonstrable evidence that this approach works, said Dr Andrew Benedek, Chairman and CEO of Anaergia Inc., who referenced the example set by Germany in 2000, when the government passed sweeping legislation that made solar and wind power viable.
“Government leadership is what makes the carbon transition happen and if there is good cooperation between governments and companies, then that can benefit the country,” he said.
That support must include financial incentives to the private sector, said Scott Minerd, Global Chief Investment Officer for Guggenheim Partners, as the US has done. In instances where the government is not able to provide the funding required, then innovative financing solutions must be implemented to bring private financing into projects.
While certain sectors of the public are likely to resist increases in the spending on infrastructure by governments, several panelists underlined the importance of communicating the broader message that these projects will create jobs in the short term and help fight climate challenges over the longer term.
“We have to tackle our problems head-on and we need the whole ‘village’ to be involved,” said Wee Seng, Group Head of Energy, Renewables and Infrastructure at DBS Bank. “We need regional and even global collaboration to make sure that we move ahead at speed.”
Panelists also pointed out that a great deal of emphasis has been focused on energy infrastructure and called for other critical areas – including waste and water – not to be overlooked. Cindy Lim, CEO of Keppel Infrastructure Holdings, said she “cannot over-emphasize” the importance of providing clean water to communities throughout the region and proposed greater investment in new desalination technologies as one immediate priority.
Financing Panel – Scaling up Sustainable Financing
While there is growing demand for financing in infrastructure throughout Southeast Asia, the changing nature of projects and a greater need for transparency means that traditional financing models may no longer be adequate or appropriate, the financing panel heard.
Luca Tonello, Managing Director, Structured Finance Department at Sumitomo Mitsui Banking Corp., pointed out that there has been significant momentum for sustainable financing in recent years, driven by public opinion, with green bonds accounting for ten percent of the total issued last year.
If a regulatory framework was in place, he said, more investors would be open to the idea of sustainable infrastructure projects, with “angel” or philanthropic investors potentially providing good sources of capital.
Alongside regulation, investors also need to see that the sector has a viable pipeline of projects coming through and the emergence of new technologies that can be applied as solutions in areas such as waste treatment, water supplies and logistics.
Gary Addison, CEO of Akaria Natural Capital, agreed that companies are extremely keen to invest in green projects because that is what consumers and management want, but projects are often too limited or ineffective. His company has shown, however, that there are good investment opportunities in “countries with carbon-rich ecosystems in Southeast Asia,” such as Cambodia and Indonesia.
To win the support of investors, government-level decision makers and the public are often concerned about the short-term impact on their lives, and panelists emphasized the need for all actors in sustainable development projects to “have honesty and integrity” in order to sustain the transition to infrastructure that is beneficial to both the people and the environment. Failure to do so, said Zulkifli Baharudin, Executive Chairman of Indo-Trans Logistics Corp., will mean that progress is slowed and solutions that are urgently required are delayed.
Infrastructure for our Shared Future
The infrastructure sector faces multiple challenges in a rapidly changing world, from government policy and regulation to the adoption of new technologies, identifying ideal partners and financing.
AIF 2022 demonstrated, however, that a wave of optimism and honesty about the nature and scale of those challenges is sweeping through the sector. The forum helped to identify areas of concern, share ideas and propose potential solutions that will benefit all stakeholders.
And as Minister Indranee declared at the outset of the event, while the opportunities are vast, time is also of the essence if we are to create a more sustainable future for Asia.
To find out more, visit infrastructureasia.org