SINGAPORE – Singapore aims to standardise 50 per cent of the terms in project finance documents in the coming year, said Minister in the Prime Minister’s Office Indranee Rajah on Wednesday (Oct 2).
This is one effort to make infrastructure projects more bankable and investible, the two key requirements to attract private sector capital.
Few governments have resources to fund fully from their budgets, and developing Asia needs US$51 trillion (S$70.6 trillion) in infrastructure investment through 2040 to maintain its current growth momentum, said Ms Indranee, who was speaking at the two-day Asia Infrastructure Forum at Marina Bay Sands.
To do this, Infrastructure Asia, a year-old government agency, is working with legal providers on standardised clauses in project finance loans, to reduce time and cost and make processes more transparent.
The remaining 50 per cent of clauses are customisable according to individual project needs.
Ms Indranee, who is also Second Minister for Finance and Education, added: “We hope this will contribute to a more vibrant secondary market in infrastructure debt, and attract non-bank investors into this asset class.”
The agency inked five collaboration agreements with multilateral development banks, public and private sector agencies during the conference including with Cambodia’s Ministry of Economy and Finance on sewage and waste water treatment; with Indonesia’s PT Sarana Multi Infrastruktur on public-private partnership (PPP) capacity building; and with the Philippines PPP Centre to develop and implement projects.
Speaking to around 800 business and government leaders on the conference theme of “Partnerships for the Future: Reimagining Infrastructure”, Ms Indranee stressed that even as Asia pursues growth, “the infrastructure of the future cannot be the infrastructure of the past” – the infrastructure that is built, and how it is built, should not contribute further to climate change.
The Asian Development Bank (ADB) has forecast that, left unaddressed, climate change could reduce the region’s gross domestic product by 11 per cent by the end of the century.
In times of disruption, sustainable infrastructure that focuses on good resource management and uses innovative technology is likely to be more resilient, she said.
“Sustainable infrastructure aids climate resilience, which ultimately helps economic resilience.”
She highlighted Infrastructure Asia’s agreement with the ADB to develop an innovative finance lab for sustainable infrastructure.
This will improve credit access to projects by regional municipal governments and state-owned enterprises.
Singapore is also playing its part in green finance to support sustainable development, she said.
Examples include the sustainable bond grant scheme which started in 2017, and the first green Belt and Road inter-bank regular bonds by the Industrial and Commercial Bank of China in Singapore, launched in April this year.
Calling for greater cooperation among Asean members, multilateral institutions and private sector players, she said that technology can revolutionise the infrastructure landscape and help tackle the region’s rapid urbanisation.
In Singapore for instance, the Public Utilities Board plans to install 300,000 automated water meters by 2023, which will enable it to detect leakages early and reduce water wastage.
OCBC Bank’s global corporate banking head, Ms Elaine Lam, welcomed the initiative to standardise clauses in documents.
She told The Straits Times: “This will go a long way towards improving the bankability of infrastructure projects, which are often complex with many parties involved. Standardised terms will increase transparency and help facilitate smoother execution of infrastructure projects, which means cost and time savings for those involved.”
She said that environmental, social and governance considerations will be increasingly important in project assessments.
“With increasing focus on sustainability and climate change, capital will flow towards projects that have a positive impact on the environment like renewable energy, water treatment and energy efficiency, and away from projects that do not,” she said.