Keynote Address By Ms Indranee Rajah, Minister in the Prime Minister's Office, Second Minister for Finance and National Development, at The Asia Infrastructure Forum 2021 on 23 June 2021, at Marina Bay Sands Expo & Convention Centre
23 Jun 2021The Honourable Mary Ng, Minister of Small Business, Export Promotion and International Trade, Canada
Your Excellency Nirmala Sitharaman, Minister of Finance and Corporate Affairs, Republic of India,
Honorable Mark Villar, Secretary of Public Works and Highways, Republic of the Philippines
Your Excellency Dr Awang Haji Abdul Manaf bin Haji Metussin, Deputy Minister of Finance and Economy, Negara Brunei Darussalam,
Your Excellency Hem Vanndy, Secretary of State, Ministry of Economy and Finance, Kingdom of Cambodia,
Mayors, Ambassadors, and High Commissioners,
Distinguished Speakers,
Ladies and Gentlemen,
1. Welcome to AIF and thank you all for joining us. I would also like to say a big thank you to overseas guests who came out specially for this event. We appreciate all the time and the trouble taken, and you are very, very welcome here. Thank you for joining us.
Infrastructure development remains a critical driver for Asia’s recovery
2. COVID-19 has brought about increasingly challenging economic conditions across the world with a 4.5 percent drop in global economic growth and almost 4 trillion USD in lost economic output. In ASEAN, all countries experienced a fiscal deficit in 2020, at an average of 7.6% of the GDP.
3. Asian governments and multilateral development banks have identified infrastructure as an important means of achieving economic recovery through increased access to financial flows, boosting construction activity and employment. To that end, some are proactively accelerating their infrastructure development. For instance, India’s budget this year saw a 34.5 percent increase in allocation to infrastructure development. In the Philippines, 13 infrastructure projects focusing on intensifying digital connectivity, water supply, transportation and healthcare were added to the priority list of projects under the “Build Build Build” programme.
Opportunities to invest in infrastructure development have increased for the region
4. While many Asian governments have already taken steps to drive economic recovery through infrastructure development, additional investments through public-private partnerships would be a welcome source of liquidity as countries continue to devote urgent resources to battle the pandemic.
Tackling climate change and enabling sustainable infrastructure is key for Asia moving forward
5. COVID-19 is without a doubt the immediate crisis facing us. However, climate change is also an ongoing environmental challenge and should not be neglected. Deforestation, ecological damage, and carbon emissions contribute to global warming and rising sea levels, which pose a threat to our survival.
6. Climate change can have a direct physical impact on infrastructure networks. It can also indirectly impact the economy via disruption to transportation and electricity supply, among others. Given Southeast Asia’s long coastlines and heavily populated low-lying areas, the region is potentially more vulnerable to climate change than other parts of the world.
7. In the face of these challenges, sustainable infrastructure will be critical for countries to build economic resilience and reduce the risks of direct losses and indirect costs of disruption. Countries should seek not only to build back, but to build back better, taking early action to build sustainable infrastructure.
8. To underscore the importance of sustainable infrastructure, the theme for this year’s AIF is therefore apt and timely - ‘Enabling Sustainable Infrastructure for Asia’s Recovery’.
Green finance enables sustainable development outcomes
9. Green finance is a critical enabler for sustainable infrastructure.
10. While there have been promising developments over the years to support Asia’s sustainable development needs, there remains a significant financing gap. Asia attracted approximately 70% of global inflows, or 22 billion USD, into Environmental, Social and Governance (“ESG”) funds last year, but green and sustainability-linked bonds and loans remain less than 5 percent of total global bonds and loans market share.
11. There is a pressing need for Asia to mobilise private capital to support its future infrastructure needs. The first step would be to overcome barriers in attracting private capital into sustainable infrastructure.
12. One key barrier is the lack of a common language on green finance. This is necessary to provide clarity and confidence to channel public and private capital towards green projects. In Singapore, the Green Finance Industry Taskforce is developing a taxonomy that sets out clear definitions and criteria about what activities can be considered green, or in transition towards green. The taxonomy includes sectors within the infrastructure segment. Singapore is also actively participating in ASEAN’s efforts to develop a regional taxonomy that takes transition into account, and caters to the varied development stages of each ASEAN member state in a multi-tiered approach. Singapore is also supporting global efforts at establishing alignment between taxonomies, through our membership of the International Platform for Sustainable Finance (IPSF).
13. Additionally, there is also a need to better understand the climate risk characteristics of infrastructure assets. There is currently little data available on the materiality of climate change risks embedded in infrastructure assets. EDHECInfra, with the support of the Monetary Authority of Singapore, is developing a database of climate risk characteristics of global infrastructure assets. This will inform investors of the climate risk profiles of infrastructure assets, how these risks can impact these assets’ financial performance, and facilitate investors’ asset allocation decisions.
14. As an international financing centre, and a champion of sustainable development, Singapore is well placed to support the region’s sustainable infrastructure journey through green finance. Singapore is ASEAN's largest green finance market, accounting for about 40 per cent of cumulative ASEAN green bond and loan issuances in 2020.
15. We continue to see good progress in deepening financing for sustainable infrastructure. Bayfront Infrastructure Management’s recent USD 401 million infrastructure loan asset backed securities (IABS), included a well-received sustainability tranche. MAS’ grant schemes, which defray the incremental costs of corporates taking up green and sustainable bonds and loans, have supported impactful outcomes in the region, including developing renewable energy projects, supporting firms in the smart cities and green transport sector, and improving the energy efficiency of buildings.
Partnership and co-creating a sustainable future through infrastructure for all
16. In addition to the importance of deepening capabilities in Asia, strong partnerships will also be key to driving sustainable infrastructure in the region. These can come in the form of public-private partnerships or deeper collaboration between governments and international financial institutions.
17. Given the diversion of public resources and expenditure to health and social programs to mitigate the impact of the pandemic, it is imperative that governments partner the private sector to develop infrastructure. As governments look to crowd in private sector capital into infrastructure projects, they can also consider engaging the private sector to better understand their considerations and risk appetite. Tools could include policy dialogues, sustainable business promotion and engagements with business associations. These tools help to promote mutual understanding of both parties’ goals and lay the groundwork for concrete partnerships.
18. Forming such partnerships early can expedite project development. For example, Infrastructure Asia has established close collaboration between various Cambodian and Singaporean ministries, as well as the private sector players to solicit their expert views on the restructuring of Phnom Penh’s waste collection system. These early discussions have created a pipeline of opportunities to enhance Cambodia’s waste management sector including the development of new waste sorting and sanitary landfill facility, Waste to Energy plant and a capacity building programme. Such partnerships create a win-win solution for both the Cambodian Government and the private sector.
19. Government to Government (G-G) partnerships are also crucial to enable exchange of ideas and support quality infrastructure development across Asia. One such partnership with Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT) will see Infrastructure Asia and MLIT working together to support infrastructure development on smart cities, roads and bridges, and this will be in Asia. InfraAsia is also working with the Government of Canada to enable Canadian institutional investors to tap the infrastructure opportunities in Asia. There continues to be significant pools of global liquidity looking to invest in Asia, which can be harnessed to advance infrastructure development in the region.
Co-create bankable projects during project origination for greater success
20. The early involvement of Governments, project owners and stakeholders during the project origination stage could result in stronger co-creation of bankable projects, by allowing for exchange of ideas and the generation of solutions that address specific needs of projects. This creates a shorter runway and reduces the risk premium of projects, thereby lowering the borrowing costs for project developers.
21. One example is the Phnom Penh Logistics Complex (PPLC) in Cambodia where YCH Group, a Singapore leading regional supply chain and logistics player, has signed the framework agreement with the Royal Government of Cambodia, to design, develop, and operate the PPLC. The project started off in early 2019, while Cambodia was still finalising its logistics master plan. Cambodia’s Ministry of Public Works and Transport (MPWT) highlighted the project concept in the Asia Infrastructure Forum 2019 for discussion where it was attended by over 10 international private entities in the logistics sector. Infrastructure Asia supported the discussion and subsequently connected MPWT to different stakeholders during project origination that could complement Cambodia’s logistics sector. This enabled MPWT to better shape and structure the project quickly.
Asia Sustainable Infrastructure International Advisory Panel
22. With an ecosystem of public sector agencies and private sector firms that can support across the entire value chain, the sustainable infrastructure ecosystem in Singapore can be helpful to bring private capital and expertise not just to Singapore but also to meet regional needs.
23. To that end, I am pleased to announce that we will be launching the Asia Sustainable Infrastructure Advisory (ASIA) Panel today. Members of the ASIA Panel are internationally renowned leaders in the field of sustainable infrastructure or have extensive experience in the development and implementation of such infrastructure in Asia.
24. The Panel will serve as a platform to exchange the latest thinking and best practices on sustainable infrastructure, promote opportunities for the private sector to support Asia’s sustainable infrastructure development, and recommend focus areas based on global key trends which can be applied to infrastructure development in the region.
25. I am pleased to welcome some of our Panel members, who are with us here in person today.
Conclusion
26. So in conclusion, let me say that delivering quality sustainable infrastructure will be challenging in these unprecedented times and will be even more complex due to climate change and rapid urbanisation. There is much to be done, but the opportunities for infrastructure are exciting.
27. Partnerships and co-creation between regional governments, multilateral development banks, and the private sector are key to driving sustainable infrastructure and economic growth in the region. The establishment of the ASIA Panel will help us uncover new tools, approaches and promote opportunities to support Asia’s sustainable infrastructure development.
28. I encourage all participants to please make full use of this platform to forge new connections, make new friends and contribute ideas on how we can work together to build a better future for the region. Thank you, and I hope all of you have a very fruitful session today. Thank you very much.
Your Excellency Nirmala Sitharaman, Minister of Finance and Corporate Affairs, Republic of India,
Honorable Mark Villar, Secretary of Public Works and Highways, Republic of the Philippines
Your Excellency Dr Awang Haji Abdul Manaf bin Haji Metussin, Deputy Minister of Finance and Economy, Negara Brunei Darussalam,
Your Excellency Hem Vanndy, Secretary of State, Ministry of Economy and Finance, Kingdom of Cambodia,
Mayors, Ambassadors, and High Commissioners,
Distinguished Speakers,
Ladies and Gentlemen,
1. Welcome to AIF and thank you all for joining us. I would also like to say a big thank you to overseas guests who came out specially for this event. We appreciate all the time and the trouble taken, and you are very, very welcome here. Thank you for joining us.
Infrastructure development remains a critical driver for Asia’s recovery
2. COVID-19 has brought about increasingly challenging economic conditions across the world with a 4.5 percent drop in global economic growth and almost 4 trillion USD in lost economic output. In ASEAN, all countries experienced a fiscal deficit in 2020, at an average of 7.6% of the GDP.
3. Asian governments and multilateral development banks have identified infrastructure as an important means of achieving economic recovery through increased access to financial flows, boosting construction activity and employment. To that end, some are proactively accelerating their infrastructure development. For instance, India’s budget this year saw a 34.5 percent increase in allocation to infrastructure development. In the Philippines, 13 infrastructure projects focusing on intensifying digital connectivity, water supply, transportation and healthcare were added to the priority list of projects under the “Build Build Build” programme.
Opportunities to invest in infrastructure development have increased for the region
4. While many Asian governments have already taken steps to drive economic recovery through infrastructure development, additional investments through public-private partnerships would be a welcome source of liquidity as countries continue to devote urgent resources to battle the pandemic.
Tackling climate change and enabling sustainable infrastructure is key for Asia moving forward
5. COVID-19 is without a doubt the immediate crisis facing us. However, climate change is also an ongoing environmental challenge and should not be neglected. Deforestation, ecological damage, and carbon emissions contribute to global warming and rising sea levels, which pose a threat to our survival.
6. Climate change can have a direct physical impact on infrastructure networks. It can also indirectly impact the economy via disruption to transportation and electricity supply, among others. Given Southeast Asia’s long coastlines and heavily populated low-lying areas, the region is potentially more vulnerable to climate change than other parts of the world.
7. In the face of these challenges, sustainable infrastructure will be critical for countries to build economic resilience and reduce the risks of direct losses and indirect costs of disruption. Countries should seek not only to build back, but to build back better, taking early action to build sustainable infrastructure.
8. To underscore the importance of sustainable infrastructure, the theme for this year’s AIF is therefore apt and timely - ‘Enabling Sustainable Infrastructure for Asia’s Recovery’.
Green finance enables sustainable development outcomes
9. Green finance is a critical enabler for sustainable infrastructure.
10. While there have been promising developments over the years to support Asia’s sustainable development needs, there remains a significant financing gap. Asia attracted approximately 70% of global inflows, or 22 billion USD, into Environmental, Social and Governance (“ESG”) funds last year, but green and sustainability-linked bonds and loans remain less than 5 percent of total global bonds and loans market share.
11. There is a pressing need for Asia to mobilise private capital to support its future infrastructure needs. The first step would be to overcome barriers in attracting private capital into sustainable infrastructure.
12. One key barrier is the lack of a common language on green finance. This is necessary to provide clarity and confidence to channel public and private capital towards green projects. In Singapore, the Green Finance Industry Taskforce is developing a taxonomy that sets out clear definitions and criteria about what activities can be considered green, or in transition towards green. The taxonomy includes sectors within the infrastructure segment. Singapore is also actively participating in ASEAN’s efforts to develop a regional taxonomy that takes transition into account, and caters to the varied development stages of each ASEAN member state in a multi-tiered approach. Singapore is also supporting global efforts at establishing alignment between taxonomies, through our membership of the International Platform for Sustainable Finance (IPSF).
13. Additionally, there is also a need to better understand the climate risk characteristics of infrastructure assets. There is currently little data available on the materiality of climate change risks embedded in infrastructure assets. EDHECInfra, with the support of the Monetary Authority of Singapore, is developing a database of climate risk characteristics of global infrastructure assets. This will inform investors of the climate risk profiles of infrastructure assets, how these risks can impact these assets’ financial performance, and facilitate investors’ asset allocation decisions.
14. As an international financing centre, and a champion of sustainable development, Singapore is well placed to support the region’s sustainable infrastructure journey through green finance. Singapore is ASEAN's largest green finance market, accounting for about 40 per cent of cumulative ASEAN green bond and loan issuances in 2020.
15. We continue to see good progress in deepening financing for sustainable infrastructure. Bayfront Infrastructure Management’s recent USD 401 million infrastructure loan asset backed securities (IABS), included a well-received sustainability tranche. MAS’ grant schemes, which defray the incremental costs of corporates taking up green and sustainable bonds and loans, have supported impactful outcomes in the region, including developing renewable energy projects, supporting firms in the smart cities and green transport sector, and improving the energy efficiency of buildings.
Partnership and co-creating a sustainable future through infrastructure for all
16. In addition to the importance of deepening capabilities in Asia, strong partnerships will also be key to driving sustainable infrastructure in the region. These can come in the form of public-private partnerships or deeper collaboration between governments and international financial institutions.
17. Given the diversion of public resources and expenditure to health and social programs to mitigate the impact of the pandemic, it is imperative that governments partner the private sector to develop infrastructure. As governments look to crowd in private sector capital into infrastructure projects, they can also consider engaging the private sector to better understand their considerations and risk appetite. Tools could include policy dialogues, sustainable business promotion and engagements with business associations. These tools help to promote mutual understanding of both parties’ goals and lay the groundwork for concrete partnerships.
18. Forming such partnerships early can expedite project development. For example, Infrastructure Asia has established close collaboration between various Cambodian and Singaporean ministries, as well as the private sector players to solicit their expert views on the restructuring of Phnom Penh’s waste collection system. These early discussions have created a pipeline of opportunities to enhance Cambodia’s waste management sector including the development of new waste sorting and sanitary landfill facility, Waste to Energy plant and a capacity building programme. Such partnerships create a win-win solution for both the Cambodian Government and the private sector.
19. Government to Government (G-G) partnerships are also crucial to enable exchange of ideas and support quality infrastructure development across Asia. One such partnership with Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT) will see Infrastructure Asia and MLIT working together to support infrastructure development on smart cities, roads and bridges, and this will be in Asia. InfraAsia is also working with the Government of Canada to enable Canadian institutional investors to tap the infrastructure opportunities in Asia. There continues to be significant pools of global liquidity looking to invest in Asia, which can be harnessed to advance infrastructure development in the region.
Co-create bankable projects during project origination for greater success
20. The early involvement of Governments, project owners and stakeholders during the project origination stage could result in stronger co-creation of bankable projects, by allowing for exchange of ideas and the generation of solutions that address specific needs of projects. This creates a shorter runway and reduces the risk premium of projects, thereby lowering the borrowing costs for project developers.
21. One example is the Phnom Penh Logistics Complex (PPLC) in Cambodia where YCH Group, a Singapore leading regional supply chain and logistics player, has signed the framework agreement with the Royal Government of Cambodia, to design, develop, and operate the PPLC. The project started off in early 2019, while Cambodia was still finalising its logistics master plan. Cambodia’s Ministry of Public Works and Transport (MPWT) highlighted the project concept in the Asia Infrastructure Forum 2019 for discussion where it was attended by over 10 international private entities in the logistics sector. Infrastructure Asia supported the discussion and subsequently connected MPWT to different stakeholders during project origination that could complement Cambodia’s logistics sector. This enabled MPWT to better shape and structure the project quickly.
Asia Sustainable Infrastructure International Advisory Panel
22. With an ecosystem of public sector agencies and private sector firms that can support across the entire value chain, the sustainable infrastructure ecosystem in Singapore can be helpful to bring private capital and expertise not just to Singapore but also to meet regional needs.
23. To that end, I am pleased to announce that we will be launching the Asia Sustainable Infrastructure Advisory (ASIA) Panel today. Members of the ASIA Panel are internationally renowned leaders in the field of sustainable infrastructure or have extensive experience in the development and implementation of such infrastructure in Asia.
24. The Panel will serve as a platform to exchange the latest thinking and best practices on sustainable infrastructure, promote opportunities for the private sector to support Asia’s sustainable infrastructure development, and recommend focus areas based on global key trends which can be applied to infrastructure development in the region.
25. I am pleased to welcome some of our Panel members, who are with us here in person today.
Conclusion
26. So in conclusion, let me say that delivering quality sustainable infrastructure will be challenging in these unprecedented times and will be even more complex due to climate change and rapid urbanisation. There is much to be done, but the opportunities for infrastructure are exciting.
27. Partnerships and co-creation between regional governments, multilateral development banks, and the private sector are key to driving sustainable infrastructure and economic growth in the region. The establishment of the ASIA Panel will help us uncover new tools, approaches and promote opportunities to support Asia’s sustainable infrastructure development.
28. I encourage all participants to please make full use of this platform to forge new connections, make new friends and contribute ideas on how we can work together to build a better future for the region. Thank you, and I hope all of you have a very fruitful session today. Thank you very much.