SINGAPORE — With growing infrastructure needs in the region, Finance Minister Heng Swee Keat called on member states of the Association of South-east Asian Nations (Asean) to step up efforts to attract private investors to fund these projects, stressing that these investment needs cannot be financed by the public sector alone.

Speaking at the 8th World Bank-Singapore Infrastructure Finance Summit on Thursday (April 5), Mr Heng said: “The opportunity set is large, but much work is needed to mainstream Asean infrastructure financing as an asset class.”

Promoting sustainable growth through infrastructure financing, green financing and enterprise financing is one of three main objectives for Singapore as Asean chair this year.

Infrastructure is key to the Asean Economic Community’s vision to have a connected region with transport linkages that allow businesses to move efficiently across borders within Asean as well as to the rest of the world.

Singapore has been spearheading efforts in making infrastructure investments more mainstream and available to a larger pool of investors.

During his Budget speech this year, Mr Heng announced the setting up of a new office, Infrastructure Asia, which will bring together Singapore and foreign firms across the value chain to develop, finance and execute infrastructure projects.

It is also exploring borrowing from private capital markets to fund critical national infrastructure, with statutory boards and government-owned firms providing guarantees for the long-term loans.

Singapore’s infrastructure spending is expected to reach S$20 billion this financial year — more than double the expenditure of S$8.5 billion in the financial year of 2011 — and this will likely increase further over the next decade.

Mr Heng said on Thursday that a strong infrastructure development agenda will boost each of the 10 member states’ productivity and economic competitiveness, and lift the region’s long-term economic potential.

CATALYST FOR ECONOMIC GROWTH

Infrastructure development can catalyse the growth of new economic clusters, Mr Heng added, pointing to the Brunei government’s endeavour to link its urban capital Brunei Maura to its rainforest hinterland in Temburong, putting the country in good stead to develop its ecotourism industry.

When completed, a 30km highway bridge is expected to shave travelling time between the two districts from two hours to 30 minutes.

Infrastructure development is critical to sustaining urbanisation, and helps to strengthen partnerships with the region, Mr Heng said. For instance, Singapore and Malaysia are building a high-speed rail connecting Kuala Lumpur and Singapore, as well as a rapid transit system between Johor Baru and Singapore.

These projects in Asean will create “significant financing needs”, he noted. While much of the responsibility for infrastructure spending has fallen on governments’ shoulders traditionally, it is possible to attract long-term institutional investors into infrastructure financing, he said.

A good example of such partnerships is the consortium of nine private sector financiers that is supporting the development of an oil storage terminal in Pengerang, Malaysia. Another is Filipino energy firm AP Renewables Incorporated, which successfully issued a US$225 million green bond in 2016 to finance the building of geothermal energy facilities.

To boost these efforts, nations must create greater awareness of investment opportunities in the region and improve the bankability of these projects.

“We need to showcase the good projects available in each country, as well as to promote Asean as an investment bloc,” Mr Heng said, noting that there are a number of projects in the pipeline in the energy and transport sectors.

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

“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 power engine for sustained growth, resilience and innovation in Asean,” he said.