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 2022 on 2 August 2022, at Sands Expo & Convention Centre02 Aug 2022
Your Excellency Hem Vanndy, Secretary of State, Ministry of Economy and Finance, Kingdom of Cambodia,
Honorable Salman Rahman, Private Industry and Investment Adviser to Prime Minister, Bangladesh,
Mayors, Ambassadors, High Commissioners,
Ladies and Gentlemen,
1. Good morning everyone, and welcome back to AIF. It has been a good three years since we last saw each other and it is such a great pleasure to have all of you back here at the Asia Infrastructure Forum (AIF) 2022.
Climate change is a pressing issue and governments must invest in the future, today2. Let me start by touching on climate change. COVID-19 has been at the top of the global agenda for the past 2 years. While we learn to live with and manage COVID-19, there are other issues that need our attention too.
3. Under the Sustainable Development Goals, climate change is an issue that requires action today. Time and tide wait for no man. Neither does climate change.
4. Over 85% of global emissions and 90% of global GDP are already covered by various net zero commitments. But we still need immediate and deep emission reductions to achieve the Paris Agreement goal of limiting global warming to 1.5 degrees Celsius. We must work harder to accelerate the transition to a low-carbon world.
5. Earlier this year, Singapore announced that we will raise our climate ambition to achieve net-zero emissions by or around mid-century, in line with the Glasgow Climate Pact. We will ensure that our climate pledges are backed by the right strategies, policies and actions.
In order to meet our Sustainable Development Goals (SDGs), investments must flow into developing sustainable infrastructure at scale
6. Meeting our Sustainable Development Goals requires radically transforming the way we plan, construct and operate infrastructure. One opportunity that is frequently missed is in brownfield infrastructure, or existing assets, which are responsible for almost 80% of all greenhouse gas emissions, particularly across the energy, transport and buildings sectors. There is much that we can do to decarbonise our current stock of infrastructure, including improving energy and resource efficiencies in the built environment.
7. Investments into brownfield assets could require modest investments but lead to outsized gains in decarbonization. For emerging markets in Asia, the International Finance Corporation (IFC) estimates that retrofitting buildings for energy efficiency could reduce close to a billion tonnes of greenhouse gas emissions. This is equivalent to taking almost 200 million cars off the roads, which is about 15% of the world’s entire car population.
8. The benefits of retrofitting buildings for energy efficiency are clear. However, building owners are reluctant to incur the upfront expenditure, and individual buildings lack the scale needed to attract institutional capital meaningfully. To bridge this gap, Infrastructure Asia and IFC are working together on an Energy Efficiency Aggregation Platform to connect demand and supply partners to scale energy efficiency. This will create a pipeline of building retrofit projects in the region and facilitate access to finance.
9. Investments into brownfield assets are not limited to the building sector. An example in the water sector is the use of digitalisation to reduce non-revenue water caused by leakages and unauthorised connections. Globally, 346 million cubic metres of drinking water is lost every day. This amounts to a financial cost of US$39 billion per year.
10. To reduce non-revenue water, Infrastructure Asia and the World Bank are partnering water utilities in Indonesia to scale digitalisation and innovative financing solutions. This initiative will soon be expanded to Vietnam and the rest of the region. Infrastructure Asia and the World Bank have also co-authored thought leadership on the sustainable reduction of non-revenue water, which will be released at this afternoon’s Ideation Roundtable on Water and Waste. Such coordinated responses from the infrastructure ecosystem will go a long way towards meeting Sustainable Development Goals.
Large pools of capital are required to fund ASEAN’s sustainable infrastructure needs
11. While these solutions help us scale, we also need to ensure that they are accompanied by capital. An estimated US$2 trillion is needed to build sustainable infrastructure in Southeast Asia by 2030. Governments are cognisant of the huge amount of capital needed and are stepping forward to take the lead.
12. The Singapore public sector will be issuing up to S$35 billion of green bonds to finance sustainable infrastructure projects by 2030. The guidelines for the issuance of these bonds are set out in the recently launched Singapore Green Bond Framework.
13. Our inaugural sovereign green bond will be issued shortly to finance green, major and long-term infrastructure, such as our new electric rail lines, under the Significant Infrastructure Government Loan Act (SINGA). I am encouraged to see more countries in Asia embracing sustainable bonds, with the Philippines and India announcing the issuance of their own sovereign green bonds to mobilise resources for green and climate-resilient infrastructure.
14. Given the scale of what is needed, plus the fact that public funds have in the last two years been diverted to dealing with the pandemic, private capital is very much needed to complement government spending.
15. There is an abundance of private capital ready to be deployed into sustainable infrastructure. Lenders and asset owners are placing greater emphasis on deploying capital into projects that fulfil environmental, social and governance (ESG) criteria to meet stakeholder demands. We are already seeing global asset owners channel capital into infrastructure projects with sustainable development outcomes in Asia Pacific, including renewable energy and transportation. This has contributed to the growth of Singapore’s alternatives sector.
16. We are also seeing growing familiarity and uptake of sustainable financing instruments. Last year, two significant sustainability bonds were launched in Singapore.
a. First, Sembcorp Industries launched a S$675 million sustainability-linked bond (SLB), which was anchored by a S$150 million investment by IFC. This marks the first issuance of a SLB by an energy company in Southeast Asia, as well as IFC’s first investment globally into a SLB.
b. Second, a subsidiary of Vietnamese conglomerate Vingroup issued a US$425 million Exchangeable Sustainable Bond on the Singapore Exchange. The proceeds of the bond will follow Vingroup’s Sustainable Finance Framework, which covers projects in renewable energy and green mobility.
c. These transactions signal Singapore’s strength as an intermediation hub to drive the region’s sustainable development.
17. Meeting the region’s infrastructure needs is a mammoth task. Projects are becoming increasingly complex as they involve multiple stakeholders and cut across numerous sectors and disciplines.
18. Due to the multi-disciplinary nature of sustainable infrastructure projects, new skillsets will be required across the ecosystem, including in the professional services industry. There is a need for professionals like lawyers, accountants, engineers and architects to have robust knowledge of sustainability issues to advise companies embarking on their sustainability journey. To that end, the Singapore government will work with the various trade associations and chambers to identify the new skillsets needed for their members to navigate sustainability requirements and take on emerging opportunities in the sustainability space.
19. To tackle these complex projects, governments and businesses must also bring together expertise at each stage of the project life cycle. Tuas Nexus here in Singapore is an example of how synergies across the water-waste-energy nexus can be harnessed for higher resource efficiency and carbon savings.
a. Tuas Nexus is the world’s first integrated water and waste treatment facility to be conceptualised and planned from the ground-up. The co-location of Singapore’s national water agency’s Tuas Water Reclamation Plant and the national environment agency’s Integrated Waste Management Facility (IWMF) will optimise land use and maximise resource recovery.
b. The IWMF is expected to be completed in phases from 2025 onwards. In the first phase, a Waste-to-Energy Facility and Materials Recovery Facility will be developed by a consortium comprising Keppel Seghers, China Harbour and ST Engineering Marine. They are supported by a professional service team led by consultants Binnies and AECOM from the UK and US respectively, in association with Ramboll from Denmark.
c. When completed, Tuas Nexus will be energy self-sufficient and is expected to save more than 200,000 tonnes of carbon dioxide annually.
20. Platforms like AIF are key to cultivating a more tight-knit ecosystem, as they bring together public and private stakeholders in the infrastructure space to discuss all facets of sustainable infrastructure, including designing, developing and financing. I look forward to the many insightful discussions that will be surfaced at the Ideation Roundtables and Project Discussions over the next two days. Do also join the interactive Marketplace tomorrow to discover identified projects that you can collaborate on.
21. Partnerships are key to uncovering project opportunities for more partners to come on board. Infrastructure Asia’s partnership with the Cambodian government on waste management is a case in point. In 2020, numerous opportunities along the waste value chain were identified through a waste characterisation and pre-feasibility study by Ramboll and KPMG. For the first stage of waste collection and transportation, Singapore company 800 Super was awarded a contract for one of the three zones in Phnom Penh. Infrastructure Asia is now working with the Cambodian government to expand the waste management scope into efficient waste processing for a circular economy.
Launch of the Infrastructure Asia Project Portal to build visibility, awareness and collaboration
22. A major barrier to leveraging such exciting growth potential is the lack of visibility of project opportunities, the lack of awareness of the best-fit solutions available, and the lack of collaboration in bringing together complementary experts.
23. As our contribution to overcome this barrier, I am pleased to announce that today we will be launching the Infrastructure Asia Project Portal.:
a. This Portal will improve the visibility of the region’s infrastructure project pipeline.
b. It will raise our regional counterparts’ awareness of, and build their confidence in technological and financial solutions from more than 600 of Infrastructure Asia’s Singapore and Singapore-based partners.
c. And it will also serve as a virtual marketplace to connect like-minded partners to develop these infrastructure projects.
25. I encourage all participants to make full use of AIF to explore new partnerships and capture project opportunities to build a more sustainable and resilient future for Asia. Thank you all very much.