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Keynote Speech by Mr Heng Swee Keat, Minister for Finance, At The 8th World Bank-Singapore Infrastructure Finance Summit, At The InterContinental Singapore, 5 April 2018

05 Apr 2018

Fellow ASEAN Finance Ministers,

Mr Joaquim Levy, Managing Director and Chief Financial Officer of the World Bank Group,

Distinguished Guests,

Ladies and Gentlemen


1.         A very warm welcome to all our overseas guests.  Thank you for joining us at this 8th World Bank-Singapore Infrastructure Finance Summit.

Strong growth backdrop enables ASEAN to focus on resilience and innovation

2.         We gather at a time of optimism for ASEAN. 

a.         By IMF’s estimates, collectively, ASEAN grew at an impressive 5.1% in 2017, and is expected to outstrip growth in most other regions in 2018[1].

3.         This is a strong backdrop against which we can continue to advance financial integration, financial inclusion and financial stability – the three strategic objectives for the ASEAN finance Pillar.  More specifically, we want to achieve a well-integrated and smooth functioning regional financial system, characterised by more liberalised capital account regimes and inter-linked financial capital markets.  To do this, Singapore will build on the good work of previous Chairs, and focus on three areas during our ASEAN chairmanship: 

a.         First, promote sustainable growth throughout ASEAN, through support for infrastructure financing, green financing and enterprise financing;

b.         Second, boost ASEAN’s resilience against catastrophes, and enhance collaboration on cybersecurity; and

c.         Third, foster innovation in the areas of intra-ASEAN Financial Technology (FinTech) cooperation, regional payment linkages and FinTech solutions to promote financial inclusion.

4.         At the broader level, we will press on towards the ASEAN Economic Community (AEC) 2025 Vision,

a.         Which strives, amongst other important objectives, for a connected region where transport linkages and infrastructure improve peoples’ lives and enable businesses to move efficiently and work more productively across borders; where infrastructure expands market reach and connects ASEAN to the rest of the world through ports and airports.

Why is infrastructure important?

5.         Infrastructure is key to this vision.

6.         A strong ASEAN infrastructure development agenda will boost member states’ productivity and economic competitiveness, and lift the region’s long-term economic potential.  How so?

a.         First, development of infrastructure can catalyse the growth of new economic clusters in ASEAN nations.

i.          Brunei, for example, is building new infrastructure to link its urban capital Brunei Maura to the rainforest hinterland of Temburong. The increased connectivity will position Brunei well to prosper in the niche ecotourism industry[2].

b.         Second, infrastructure development helps to strengthen intra-ASEAN partnerships and connectivity.

i.          The Thailand-Laos Friendship Bridges[3] are a good example. There are four bridges connecting Thailand and Laos, with a fifth in the pipeline. They enable thousands of people to commute between the two countries every day, lifting cross-border trade and tourism, and connecting the people of Thailand and Laos.

ii.          In the same vein, Cambodia and Vietnam had built the Phnom Penh - Ho Chi Minh City Highway as part of the Greater Mekong Subregion Initiative[4]. There are plans for greater connectivity via a new expressway[5].

iii.         Closer to home, Malaysia and Singapore are building a high speed rail to connect Kuala Lumpur and Singapore, and the Rapid Transit System Link between Johor Bahru and Singapore.

iv.         The Myingyan Power Project in Myanmar is another example of how ASEAN nations can partner up to share and transfer skills and knowledge. The collaboration between Sembcorp, a Singapore-based company, and the Ministry of Electricity and Energy of Myanmar is to build and operate a 225-megawatt power plant in Mandalay[6]. Once operational, it will be one of Myanmar’s largest gas-fired power plants, and will play a key role in meeting the country’s growing demand for electricity.

v.         There is great scope to draw from these cross-border experiences to further the connectivity agenda throughout ASEAN, particularly in the transport sector.  The ratification of the ASEAN open skies agreement in 2016 has paved the way for greater regional and domestic air transport connectivity, and will catalyse the development of an eventual ASEAN Single Aviation Market[7]. This will create fresh opportunities for infrastructure investments in the aviation sector.

c.         Third, infrastructure development is also critical to sustained urbanisation. ASEAN urban centres have seen huge growth over the last decade as people move from the countryside to cities to live and work.

i.          PWC estimates that urbanisation rates for Southeast Asia will reach 64% in 2050, up from 47% in 2014[8].

ii.          This will drive up demand for efficient transport networks, utilities and housing in the cities.

iii.         Concurrently, demand will rise for sustainable infrastructure such as solar farms and hydropower plants, as our societies seek to grow while taking climate change into account.

iv.         These are tremendous infrastructure opportunities.

ASEAN’s infrastructure investment needs cannot be financed by the public sector alone

7.         These infrastructure opportunities in ASEAN will require significant financing.

a.         The ADB[9] estimates that, for the 15-year period from 2016 to 2030, ASEAN’s infrastructure investment needs will total US$2.8 trillion (or US$184 billion per year).

b.         When addressing the financing needs, we should also be mindful of sustainable infrastructure planning.

i.          A McKinsey study[10] suggests that governments can boost infrastructure productivity by as much as 40%, by selecting projects more carefully, delivering them more efficiently, and addressing underutilisation of existing assets as an alternative to building new ones.

ii.          Otherwise, we spend far more taking remedial actions down the road.

iii.         Weak project preparation leads to alterations in project scope at a later stage, which would in turn contribute to cost overruns and project delays.

iv.         As Finance Ministers, we all share concern about a long tail of spending, so let us work together on how best we can manage this.

8.         Singapore, too, needs to spend more on infrastructure even though we are just a city.

a.         Our infrastructure expenditure will reach an estimated S$20 billion in FY2018[11] as we build and upgrade flats, and expand and maintain rail and bus networks. This is more than double the infrastructure spending of S$8.5 billion just 7 years ago in FY2011[12]

b.         This will increase further over the next decade and beyond as we spend more to develop, expand and upgrade existing infrastructure.  Major projects include Changi Airport Terminal 5, further expansion of the Mass Rapid Transit system, and a new port in Tuas.

9.         Traditionally, much of the responsibility for infrastructure spending has fallen on governments’ shoulders. While we must continue to prioritise infrastructure spending to sustain growth in ASEAN, we must also look beyond the public sector to finance these expenditures. 

10.       There is a genuine opportunity to attract long-term institutional investors into infrastructure financing. Indeed, ASEAN members have been successful at tapping the private capital market for infrastructure financing. Let me cite some good examples:

a.         Indonesia’s second biggest power producer, PT Paiton Energy, issued a US$2 billion project finance bond in 2017 that attracted some US$9 billion in the order book[13].

b.         In the Philippines, AP Renewables Incorporated, a subsidiary of major power developer AboitizPower Corp, successfully issued a landmark US$225 million green bond to finance the building of geothermal energy facilities[14].

c.         In Malaysia, a US$1.25 billion debt facility from a consortium of 9 private sector financiers will finance the development of an oil storage terminal in Pengerang, Johor[15].

11.       These are just some examples.

Mainstreaming ASEAN infrastructure financing as an asset class

12.       We should step up our efforts to crowd in private capital on ASEAN infrastructure projects. The opportunity set is large, but much work is needed to mainstream ASEAN infrastructure financing as an asset class.

13.       We therefore hope to build on the momentum of the Infrastructure Summit today, and the summits to come, to bring together ASEAN policy makers and the private sector, to collaborate on these initiatives.  What are some ways to do this?

a.         First, increase the visibility of ASEAN investment opportunities and projects.

i.          Greater awareness of ASEAN investment opportunities is key to unlocking private sector participation. We need to showcase the good projects available in each country, as well as promote ASEAN as an investment bloc.

•           A recent PwC report[16] found that there are a number of good sector-related but geographically diversified opportunities in ASEAN.

•           For instance, in the energy sector, there are about 77 renewable energy projects in hydro, solar, wind, geothermal and biomass, geographically spread out across ASEAN.  This sector has tremendous opportunities as demand for electricity in ASEAN is expected to grow at a compound annual growth rate of 4% per year from 2014 to 2025.

•           In transport, rapid urbanisation and increased mobility have raised demand for transport infrastructure and more efficient transport networks. There are 219 road and bridge projects alone in the pipeline in ASEAN.

•           We can capitalise on investors’ specialised interest in a particular sector by promoting ASEAN as an investment bloc. 

b.         Second, improve the bankability of ASEAN infrastructure projects, at the individual project level.

i.          The goal is to draw in private sector participation on projects that provide reasonable returns with reduced project volatility.

•           Where the project is appropriate for private financing, but where the expected revenue may not cover costs fully, governments can step in to increase its bankability, by providing co-funding, raising user charges, or extracting additional funding from value created from the project. 

•           Where there are sufficient revenues to cover cost but exposure to certain risks remain high, risk mitigating measures such as government guarantees and credit enhancements can come into play to reduce the risk premium.

•           Multilateral development banks (MDBs) can play a role here. For example, the World Bank International Finance Corporation (IFC) Managed Co-Lending Portfolio Program[17]. The program facilitates the participation of institutional investors in infrastructure by allowing institutional investors to invest in infrastructure loans originated by the IFC, with some first-loss protection, and to enjoy benefits of scale and diversification through investing on a portfolio basis. 

ii.          In parallel, we need to improve in-country capabilities in the areas of project selection, preparation and implementation, for example through capacity building workshops for ASEAN officials and agencies.   

iii.         Good project structuring and proper risk allocation will help address investors’ key concerns.  This could be done in collaboration with MDBs and/or private sector professionals.

iv.         Another step in improving bankability is possibly through the development and use of standardised documentation and appropriately drafted Public Private Partnership contractual provisions. This will provide investors with greater assurance and help drive bankability. Standardisation of project documentation reduces costs and uncertainty, and helps identify common risks, issues and solutions.

c.         Third, enhance data availability on ASEAN infrastructure investment opportunities, to attract international investors into the region.

i.          We will continue to support the development of ASEAN infrastructure benchmarks and promote inclusion of ASEAN projects in global benchmarks and indices. This has been done in Europe, to good effect, and can support our efforts here too.

14.       Singapore is embarking on two endeavours that we hope can support infrastructure development throughout ASEAN.

15.       First, Singapore will set up an Infrastructure Office[18], which we have named Infrastructure Asia.  This office will harness the networks and collective capabilities of public sector agencies and private sector firms, and partner with key stakeholders across the region to catalyse more project opportunities to meet Asia’s infrastructure needs.   

a.         Infrastructure Asia is intended as a platform to connect local and international stakeholders across the value chain, enable information exchange, facilitate infrastructure investments and connect infrastructure players with relevant professional services.

b.         One of its key initiatives will be to develop a multi-year capacity-building programme for regional government officials. This could be a partnership with multilateral organisations, and institutions, to build up in-country capabilities in project preparation, structuring and bankability.

c.         Infrastructure Asia will create platforms to discuss potential projects amongst asset owners, financiers, multilaterals and governments, through forums such as the Asia-Singapore Investment Roundtable that will be held later this year. Through such discussions, we hope to better match demand (project sponsors) with supply (global investors and multilateral organisations), as well as unlock more infrastructure financing for ASEAN. 

d.         Infrastructure Asia will commence operations from April 2018 and build up its resources and capabilities progressively.

16.       Our second effort is for Singapore Statutory Boards and Government-owned companies to explore issuing bonds to finance infrastructure building[19].

17.       We believe this can spur more participation from the private sector on ASEAN infrastructure opportunities, and help to catalyse the development of a more vibrant long-term infrastructure bond market in ASEAN.


18.       Let me conclude.

19.       Sustaining infrastructure development is a challenge for every ASEAN member state. We all stand to gain much from sharing our experiences and helping one another.  In a while, the ASEAN Finance Ministers will be stepping up for panel discussions.  I am looking forward very much to the chance for all of us to hear from and learn with one another.

20.       As a collective, ASEAN must remain committed and united to mainstreaming ASEAN infrastructure as a viable asset class and crowding in private capital. With these, infrastructure development will be able to fulfil its potential as a powerful engine for sustained growth, resilience and innovation in ASEAN. 

21.       Thank you.


[1] IMF estimates, “Regional Economic Outlook Update – Asia and Pacific Department”, October 2017. 

[2] “Brunei branches into ecotourism”, 2 December 2017, Straits Times.

[3] “Building bridges between Laos and Thailand for better lives”, 4 March 2018, Channel NewsAsia.

[4] ADB report, “Greater Mekong Subregion: Phnom Penh to Ho Chi Minh City Highway Project”, December 2007

[5] “Phnom Penh – Ho Chi Minh Expressway Plan moves forward”, 13 January 2017, Cambodia Daily.

[6] “Sembcorp Myingyan Project powers ahead, with signing of Build-Operate-Transfer Agreement with Myanmar’s Ministry of Electricity & Energy”, 18 January 2017, Sembcorp 

[7] “ASEAN Open Skies a Reality”, 15 April 2016, Learning ASEAN.

[8] “Understanding Infrastructure Opportunities in ASEAN - Infrastructure Series Report 1”, 2017, PWC

[9] ADB estimates, “Meeting Asia’s Infrastructure Needs”, February 2017.

[10] Mckinsey estimates, “Infrastructure productivity: How to save $1 trillion a year”, January 2013.

[11] Singapore Budget 2018

[12] Expenditures of the Ministry of Transport, the Ministry of National Development, and the Ministry of the Environment and Water Resources. 

[13] “First project bond since 2000 bodes well for Asia’s debt market”, 15 August 2017, The Business Times.

[14] “ADB backs first climate bond in Asia in landmark $225 million Philippines deal”, 29 February 2016, ADB.

[15] “PT2SB signs financing agreement for Malaysia oil storage terminal”, 12 December 2017, Reuters.

[16] “Seizing Greenfield Infrastructure Opportunities in ASEAN - Infrastructure Series Report 2”, 2018, PWC

[17] “Mobilizing Institutional Investments into Emerging Market Infrastructure”, April 2017, EMCompass, IFC

[18] Singapore Budget 2018

[19]Singapore Budget 2018