Infrastructure Development in Asia
Infrastructure Development in Asia
Infrastructure Development in Asia
Fauziah Zen
Project Financing and Sustainable Development of
Railway Infrastructure
Asian Development Bank Institute and Ministry of Finance, Thailand
Bangkok, 10 August 2016
Outline
The demand for infrastructure: factors
Financing Modality
Sustainable Infrastructure Development
Financing Infrastructure
Challenges
Opportunities
Drivers
Challenges
Uneven population and income distribution: need for integrated
and multimodal services
Inequality issues: inclusive development planning, distribute
centers of production, improve skills accordingly
Environmental issues: diversification of energy resources,
carbon emission, waste management, integrating power grid,
food security
Financing Infrastructure
FINANCING MODALITY
Sources of Financing
Public
Tax
Direct:
general,
earmarked
Private
Portfolio
investment
Non-tax
Indirect:
loan,
bonds
User-fee
Natural
resources
revenue
Grants
Loans
Bonds
Investment types
Financing Scheme
Priority
Advanced
infrastructure
Private goods
Public funding
PPP
state finance
loan from
investment bank
loan from
development bank
Private
project bond
SOEs
mix finance
13
Efforts
Ownership
Capital market
Country efforts
Local infra
Government bond
Bilateral efforts
Direct Investment
Regional efforts
National infra
Regional/Crossborder infra
14
Determinants
Private - Influenced by:
Regulatory framework and enforcement
Investment climate
Supporting system: capital market, consultants, contractors,
experts, local companies, etc.
Public:
Regulatory framework
Political process
Governance system (political interference, decentralized
system, public participation)
Fiscal Capacity (debt level, tax revenue, growth, economic
structure)
16
17
Capital Market
Capital market has significant role as intermediary
It does not mean that banking system should be put
aside in infrastructure finance.
Infrastructure bonds development.
Long-term Institutional investors: insurance and pension
funds.
Requires a complete system, especially: regulation,
hardware and software infrastructure, reporting
mechanism, transparency, omitting burdensome tax(es),
openness v. vulnerability management, professionalism.
18
19
Indonesia case:
What would it take to stop the capital stock decline?
140
60%
120
50%
100
40%
80
30%
60
16%
CAGR
40
20
0
20%
10%
0%
APBN
APBD
SOE
Private
Estimates
Future projection
Financing Infrastructure
SUSTAINABLE INFRASTRUCTURE
DEVELOPMENT
22
Sustainable Development
Sustainable development is development that meets the
needs of the present without compromising the ability of
future generations to meet their own needs (The
Brundtland Commission report, 1987)
Nurture economic growth, inclusive, and preserve
natural resources:
Long term vision of economic development.
Efficiency
Participatory
23
Infrastructure Industry
Financing
Financier
Creditor
Sponsor
Regulatory
Framework
Intermediaries
Management
Construction
Owner
Users
Building
M&E
Intermediaries/Support System:
Advisors (legal, project management,
financial advisory, etc.)
Challenges:
Thin market
Few domestic players
Capacity of public sector
Absorption capacity
Economic Research Institute for ASEAN and East Asia
25
Thank you
[email protected]