IN a bid to plug Southeast Asia’s infrastructure deficit, the Asian Development Bank (ADB) and Singapore-based Infrastructure Asia have signed an agreement to develop bankable and sustainable infrastructure projects in the region.
In a news statement, the Manila-based multilateral development bank said the agreement will launch the Innovative Finance Lab for Sustainable Infrastructure to help governments and state-owned institutions develop good infrastructure projects.
ADB Director General for Southeast Asia Ramesh Subramaniam said innovative and green finance approaches could be used to plug the $210 billion annual infrastructure investment needs of Southeast Asia until 2030.
“Southeast Asia faces significant financing gaps in meeting its infrastructure needs, including for climate-change mitigation and adaptation costs,” Subramaniam said.
“We need innovative financing approaches to mitigate risks in infrastructure projects and better leverage public funds, so that many more funds are catalyzed from private and institutional sources to support greener, cleaner and timely infrastructure development,” he added.
Through the initiative, state-owned enterprises, as well as regional and municipal governments in Southeast Asia can improve their institutional, financial, and governance capacities for developing innovative and green infrastructure programs and projects.
The Innovative Finance Lab for Sustainable Infrastructure, a virtual space supported by a biannual event in Singapore, aims to gather stakeholders across Southeast Asia to exchange knowledge.
The lab will also help them improve their policy-making capacities, and adopt innovative and green finance models in local infrastructure projects.
“Projects structured with better financial and technical elements, along with good partnerships, are key to helping improve the bankability of Asia’s sustainable infrastructure projects,” Singapore Infrastructure Asia Executive Director Seth Tan said.
“Through this collaboration with ADB, Infrastructure Asia will work in close consultation with the international financing, credit enhancement, and technology ecosystem in Singapore to improve municipalities and state-owned enterprises’ access to private capital,” he added.
The lab will also serve as a capacity-building platform for the Asean Catalytic Green Finance Facility (ACGF), which was launched in April 2019 to develop green infrastructure projects across Asean by catalyzing public and private capital and technologies.
The ACGF is part of the Green and Inclusive Infrastructure Window, launched by Southeast Asian governments, ADB, and major development financiers under the Asean Infrastructure Fund, a regional financing initiative established in 2011 that has committed $520 million for energy, transport, water and urban infrastructure projects across the subregion.
ACGF aims to mobilize around $1.3 billion from a number of sources, including the Asean Infrastructure Fund, ADB, the German development cooperation through KfW, the European Investment Bank, the Republic of Korea, and Agence Française de Développement.
The facility is also supported by other entities, including the Organization for Economic Co-operation and Development, the Global Green Growth Institute, and the Overseas Private Investment Corp.
The agreement between ADB and Infrastructure Asia was signed during the Asia Infrastructure Forum in Singapore by Subramaniam and Tan.
Infrastructure Asia is a Singaporean agency with the mandate of supporting Asia’s economic and social growth through infrastructure development.
In 2018, ADB made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members—49 from the region.