On October 2, 2019, the Asian Development Bank (ADB) and Singapore’s Infrastructure Asia signed a cooperation agreement to help governments in Southeast Asia adopt innovative and green finance approaches to identify and develop bankable and sustainable infrastructure projects in the region, where the annual infrastructure investment needs between now and 2030 amount to some $210 billion.
To achieve this, the two institutions will launch the Innovative Finance Lab for Sustainable Infrastructure, a virtual space supported by a biannual event in Singapore, to gather stakeholders across Southeast Asia together to exchange knowledge, improve their policy-making capacities, and foster the adoption of innovative and green finance models in local infrastructure projects.
“Southeast Asia faces significant financing gaps in meeting its infrastructure needs, including for climate change mitigation and adaptation costs,” said Subramaniam. “We need innovative financing approaches to mitigate risks in projects and better leverage public funds to catalyze more financing from private and institutional partners, support greener and cleaner development, and help solve critical development challenges.”
The agreement was signed during the Asia Infrastructure Forum in Singapore by ADB Director General for Southeast Asia, Ramesh Subramaniam and Executive Director Seth Tan for Infrastructure Asia, a Singaporean agency that has the mandate of supporting Asia’s economic and social growth through infrastructure development.
“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,” said Tan. “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.”
Specifically, the agreement will allow ADB and Infrastructure Asia to help state-owned enterprises, as well as regional and municipal governments, in Southeast Asia improve their institutional, financial, and governance capacities for developing innovative and green infrastructure programs and projects.
The Innovative Finance Lab will also serve as a capacity-building platform for the Association of Southeast Asian Nations’ (ASEAN) Catalytic Green Finance Facility (ACGF), which was launched in April 2019 to boost the development of 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 (OECD), the Global Green Growth Institute, and the Overseas Private Investment Corporation.
Photo (courtesy of ADB) shows, from left to right: Enterprise Singapore Chief Executive Mr. Png Cheong Boon; Infrastructure Asia Executive Director Mr. Seth Tan; ADB Director General for Southeast Asia Mr. Ramesh Subramaniam; Minister in the Singapore Prime Minister’s Office and Second Minister for Finance and Education Ms. Indranee Rajah; and Monetary Authority of Singapore’s Deputy Managing Director for Markets & Development Ms. Jacqueline Loh.