Speeches

1    Most countries, especially in the Asian region have recognised first, the importance of investing in infrastructure for the future if not as catch up, and second, the need to mobilise and catalyse private sector investments. The reasons for the financing gap are really diverse; therefore the solutions will have to be tailored to each country's or even each state's circumstances. This can range from developing capital markets, enhancing risk mitigation tools, or improving financial intermediation. Also, apart from financing, I think

2    Let me share briefly Singapore's experience in the public transport sector as an example of what we would consider as an example of a sustainable funding model and good urban planning. Firstly, we wanted a funding framework that is sustainable in the long term – one that avoids problems of under-investment while at the same time not acting as a drain on public resources.  Road and rail projects take many years to complete and they require heavy investment. So the Singapore Government conducts rigorous studies to ensure that they are viable, and this would include analysis of projected demand and operating costs. In Singapore, the Government funds the once-off capital outlay for the construction of public transport infrastructure such as train stations, tunnels, the first set of rolling stock, viaducts, public bus interchanges and bus shelters. This is part of the Government's commitment to support and improve the provision of public transport to the citizens. However, the Government does not subsidise the operating costs of public transport services in terms of manpower, energy, and depreciation of the operating assets. The users pay for the services they consume, to prevent over-consumption. This means that operations have to be financially viable over the long term.  In other words, the revenue generated from the services would have to cover the operating costs. To keep services efficient, public transport services in Singapore are run by private sector entities, which happen to be public listed companies as well, so they are subject to scrutiny by the shareholders.

3    I will end off by talking briefly on the Cyclical Problems in Infrastructure Financing. Firstly, I would like to welcome project developers to tap onto the resources available in Singapore. Singapore seeks to act as a regional centre for infrastructure financing, having a critical mass of global financial institutions with sizeable project finance teams which provide a wide range of lending, advisory and structuring services to the region. I would also like to add that project bonds, though not common in Asia now, have the potential to be an alternative to bank loans.

4    As we have heard, in terms of the projections, with the ballooning of infrastructure financing needs in Asia, the current reliance on bank loans will result in a constraint to banks' lending capacity. Therefore, project developers will have to seek to diversify their funding sources, and we think that project bonds could be an alternative solution. Within this context, the MAS will continue to build a deep and vibrant Singapore dollar bond market to serve as a complementary pillar to bank financing, and we hope that this can be done through the workings of our strong bond market.