Welcome Remarks 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 3 August 2022, at Sands Expo & Convention Centre03 Aug 2022
Mr Ahmed Saeed, Vice-President of East Asia, Southeast Asia, and the Pacific, Asian Development Bank
Mayors, Ambassadors, High Commissioners,
Ladies and Gentlemen,
1. Welcome back to the second day of Asia Infrastructure Forum (AIF) 2022. Thank you all for joining us and once again, a very warm welcome to our overseas guests.
With the growing commitment to sustainable infrastructure, multilateral development banks (MDBs) can play a catalytic role in mobilising private capital to close the infrastructure financing gap in the region
2. We are seeing a greater commitment by countries in the region to combat climate change. Eight out of ten countries in Southeast Asia have committed to net zero targets including Singapore. With rapid urbanisation in Asia, achieving a more sustainable and effective transformation of urban areas to meet growing needs is a key priority of governments and municipal authorities. The challenge of safeguarding a resilient future is made even more difficult by the complexity of executing sustainable infrastructure.
3. According to a report by the Asian Development Bank (ADB) in 2020, Southeast Asia alone requires an estimated US$ 3.1 trillion for climate change-adjusted infrastructure investments. However, public funding has been diverted to battle the pandemic with many competing priorities for fiscal resources. To close this infrastructure financing gap, private capital needs to be mobilised and at scale.
4. This has become even more pressing today, with a report by the Global Infrastructure Hub showing declining private sector investment in infrastructure projects over the years. In 2010, private investment in infrastructure projects in primary markets was over US$ 180 billion. In 2020, this figure dropped to US$ 156 billion.
5. How can we close this gap? We believe multilateral development banks (MDBs) can play a critical role in catalysing private capital into infrastructure projects and accelerating the development of sustainable infrastructure in the region. In 2020, MDBs committed US$ 66 billion to climate finance. This attracted commitments of US$ 85 billion in the same year from other public and private external parties to co-invest in climate mitigation and adaptation activities alongside the MDBs.
6. MDBs also leverage their triple-A credit rating to provide financial de-risking solutions such as guarantees, to further help crowd-in private capital into sustainable infrastructure projects. One example is Sembcorp’s gas-fired power plant in Bangladesh. In addition to a loan from the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) also provided a political risk guarantee to Sembcorp for its equity investment in the project.
In addition to financing and de-risking projects, MDBs also conduct project preparation work to develop infrastructure in the region
7. Beyond contributing capital, MDBs also support capability development in the region by sharing expertise and knowledge, offering project structuring advice and conducting capacity building programmes. For example, in 2019, the ADB supported Cambodia’s national electricity utility to conduct project preparation for and later structure a public-private partnership (PPP) for a 60MW solar project, which achieved the lowest power purchase tariff for a solar project so far recorded in Southeast Asia.
8. MDBs play a pivotal and growing role in catalysing development opportunities in the region. Underscoring our belief in this, Singapore has recently signed a new Memorandum of Understanding (MOU) with the ADB to strengthen collaboration in infrastructure financing and innovation, to address new priorities in areas such as liveable cities and fintech. Under the new 2022 Singapore-ADB MOU, the ADB Singapore Office will work closely with Singapore agencies, such as Infrastructure Asia, to build a strong ecosystem and mobilise private sector support for infrastructure projects that address our region’s needs.
9. Growing the commitment and contribution of MDBs in this area would be a strong signal to the private sector that MDBs are keen to take on a more catalytic role in developing sustainable infrastructure in the region and help pull in private sector investment and expertise.
Singapore works closely with key partners to facilitate project structuring to advance the sustainable infrastructure agenda
10. Infrastructure Asia (InfraAsia) has established strategic partnerships with MDBs and regional government entities who are similarly committed to accelerating sustainable infrastructure in the region.
11. The Infrastructure Asia-ADB cooperation agreement, first signed in 2019, has recently been renewed. Under the agreement, we will establish a series of “Innovative Finance Clinics” to encourage governments to utilise innovative approaches and build in sustainability considerations in developing their infrastructure programmes.
12. During these clinics, regional government officials and industry experts will gather and showcase successful case studies that allow for the exchange of knowledge and expertise. This will strengthen and grow the pipeline of bankable sustainable infrastructure projects in the region, allowing us to better tap commercial funding sources and bringing us closer to a net zero future.
13. I am pleased to note that the first Innovative Finance Clinic on electric vehicles and green transport will be held in a few weeks’ time in Singapore.
14. InfraAsia is also partnering regional government entities to build a pipeline of bankable projects to attract private investors. Later today, we will witness the signing of an MOU to formalise the collaboration between InfraAsia and Invest India.
15. In the same collaborative spirit, InfraAsia supports its regional partners and will work with the ecosystem players in Singapore under three broad areas.
a. First, to provide project structuring advice to our regional partners to improve the feasibility and success of projects;
b. Second, to facilitate market sounding sessions organised by regional governments in the development, funding, and implementation of infrastructure projects to enable the Singapore’s ecosystem to gain better access and participate in regional projects. For example, at the Marketplace which will commence shortly, regional governments can highlight their requirements and challenges in implementing infrastructure projects. In turn, we will also see industry leaders, financiers, developers and entrepreneurs pitch their projects, technologies and solutions on this vibrant and interactive platform;
c. Third, to build capacity through the sharing of knowledge and best practices, thus encouraging cross-pollination of ideas and the establishment of new areas of collaboration.
16. As we enter the second day of the Asia Infrastructure Forum, I hope participants will make full use of the opportunities afforded by this AIF platform to engage in fruitful discussions, make new contacts, share ideas, find innovative solutions, get financing, and foster collaborations – all to advance the goal of sustainable infrastructure for a sustainable future.
17. Thank you all very much.