A Sustainability Trifecta: Society, Finance and the Region’s Influence on Infrastructure
Society, Finance and Collaboration – these are the three key areas of opportunities resonated by government and industry leaders from the discussion at the Asia Infrastructure Forum 2022 as Asia continues its effort to accelerate its sustainable infrastructure journey.
Asia’s sustainable journey has already started, and the region’s ability to shape infrastructure through society, finance and collaboration could be pivotal in quickening the pace of this effort.
These three factors resounded from discussions at the Asia Infrastructure Forum 2022 (AIF 2022), held on 2-3 August at the Sands Expo and Convention Centre in Singapore. Co-organised by Infrastructure Asia (InfraAsia), Ministry of Finance (MOF), Enterprise Singapore and the Monetary Authority of Singapore (MAS), the forum saw over 1,000 delegates across more than 30 countries discussing critical issues on sustainable financing, technological innovation and collaboration related to this year’s theme of Scaling Up Sustainable Infrastructure.
(Climate change is an issue that requires urgent action, said Minister Indranee Rajah,
Minister in the Prime Minister’s Office and Second Minister for Finance and National Development, at AIF 2022.)
“Under the Sustainable Development Goals, climate change is an issue that requires action today,” said Minister Indranee Rajah, Minister in the Prime Minister’s Office and Second Minister for Finance and National Development, highlighting the urgency of these discussions.
Minister Indranee added: “Meeting our Sustainable Development Goals requires radically transforming the way we plan, construct and operate infrastructure…There is much that we can do to decarbonise our current stock of infrastructure, including improving energy and resource efficiencies in the built environment.”
(InfraAsia’s Executive Director, Mr Lavan Thiru, also stressed the
importance of sustainable infrastructure development in his opening speech.)
InfraAsia’s Executive Director, Mr Lavan Thiru, also emphasised this urgency: “Investments need to be made, projects need to be structured, sustainable infrastructure needs to be designed and built. In other words, we have lots to do and to do so quickly.”
Against the backdrop of geopolitical and economic instability, many challenges remain in Asia’s sustainable infrastructure development efforts. Fortunately, the discussions at AIF 2022 provided public and private sector leaders with the perfect platform for the conception of new solutions.
Mobilising Society for Smarter and Greener Infrastructure
A common sentiment raised was the need for a whole of society effort. This would require a public-private partnership, in which the public and private sectors can work together to shape clear sustainability standards. This would allow the private sector to achieve these standards through innovation, expertise, and public support.
This view was apparent at the Advancing Low-Carbon and Energy-Efficient Technologies in Asia's Cities Ideation Roundtable where Hitachi Energy’s Managing Director, Ms Yvonne Toh, hailed Singapore’s policy toward sustainable data centres. The Singapore government has resumed data centre construction by lifting a three-year-old moratorium in Q2 2022, but introduced sustainable energy consumption and cooling requirements on newly constructed centres.
(Hitachi Energy’s Managing Director, Ms Yvonne Toh (Second from right), highlighted Singapore’s policy
towards data centre construction as an excellent example of the public sector’s guidance.)
“It will be difficult for the first player to do so…but once the first centre that meets the criteria is set up, the rest will follow. Having the government step in to put these criteria in place will pivot Singapore’s new generation of data centres,” Ms Toh said. With clear guidance, the private sector can then provide the variety of expertise needed to support sustainable infrastructure.
“One company may be able to achieve what another company cannot by thinking out of the box, and creating a new frontier,” said Mr Masahiko Murase, Director, Ministry of Land, Infrastructure, Transport and Tourism, Japan. Innovations, such as the EDGE, an online tool developed by the International Finance Corporation to benchmark a building’s energy and water consumption to guide the sustainable construction of newer buildings, could emerge.
The general public, as infrastructure’s primary users, can also drive sustainable infrastructure. This was highlighted by the Head of the National Electric Vehicle Centre, Land Transport Authority, Mr Mark Tan, at the Sustainable Mobility for Green Transport Ideation Roundtable.
(At the Sustainable Mobility for Green Transport Ideation Roundtable,
panellists exchanged views on the future of sustainable mobility in Asia.)
According to Mr Tan, “heartware” is needed within the general public to “build that culture of adoption” of electric vehicle (EV) infrastructure through public education campaigns. This would complement EV’s hardware (e.g., charging networks) and software (e.g., charging standards) developments.
Regional Collaboration on Infrastructure Challenges
For Asia and the world to tackle sustainability, we need to “marshal our forces globally” and approach it like a vaccine, said Dr Andrew Benedek, Chief Executive Officer, Anaergia Inc.
This call resonated with governments and industry leaders, who called for more opportunities to leverage the region’s knowledge and networks to accelerate sustainable infrastructure. At AIF 2022, countries such as Indonesia shared their best practice experiences in tackling existing sustainable infrastructural challenges.
(Indonesia’s experience with sustainable infrastructure development was a core focus of the
Accelerating Sustainable Water and Waste Infrastructure Ideation Roundtable.)
For example, East Java’s Malang City successfully reduced water loss and theft in their infrastructure by 30% in 10 years by utilising strategic resources, the right financing model, and the adoption of digital solutions. A thought leadership piece on their lessons, co-authored by InfraAsia and the World Bank Group, was unveiled at AIF 2022.
Governor of West Java, Mr Mochamad Ridwan Kamil, also shared about his government’s experience in tackling water and waste challenges in one of Indonesia's most populated provinces at the Accelerating Sustainable Water and Waste Infrastructure Ideation Roundtable.
He briefly shared their success with the Citarum River, which was once coined “the world’s most polluted river”. The river’s cleanliness has improved through a Pentahelix approach that combined scientific solutions, academic partnerships, industry engagement, community mobilisation, effective law enforcement and media participation.
“We believe that if we can solve the crisis for our 50 million people (in West Java), it will help with building sustainability for the whole world, including your city. We need to have more collaboration, and less competition,” said Mr Kamil.
(The launch of the InfraAsia Project Portal, which aims to catalyse regional collaboration
in infrastructure projects, was one of the highlights of AIF 2022.)
New initiatives such as the InfraAsia Project Portal were also announced to catalyse regional collaboration. Developed by InfraAsia, the portal serves as a virtual marketplace to connect upcoming infrastructure projects with best fit solutions and investors in the region. The portal features exciting regional projects, such as the Phnom Penh Logistics Complex, which was highlighted in the Accelerating Logistic Infrastructure in Cambodia Project Discussion.
InfraAsia also renewed a cooperation agreement with the Asian Development Bank (ADB) to host a series of innovative finance clinics and signed a new memorandum of understanding with Invest India on knowledge transfers and project advisory.
A Consensus on Sustainable Financing
There were also robust discussions on financing sustainable infrastructure projects at AIF 2022. While the interest in adopting sustainable practices and technologies is high, receiving sufficient resources remains a challenge. In response, the investing community affirmed the need for improved finance frameworks to instill more confidence in sustainable infrastructure projects.
India’s improvements towards sustainable financing models provided a good case study on alleviating investors' anxieties towards high-risk projects, which was a topic of discussion at the Unlocking Value Through Infrastructure Asset Recycling in India Project Discussion. For example, India’s 2021 National Monetisation Pipeline offered clear frameworks for its pipeline of 8,000 projects worth approximately SGD $2 trillion.
(At the Unlocking Value Through Infrastructure Asset Recycling in India Project Discussion,
panellists discussed the success of India’s sustainable financing models and policies.)
“Today, what we see globally are very few countries who are as friendly to foreign capital as India,” said Mr Deb Hajara, Senior Principal of Infrastructure & Natural Resources, Asia Pacific of the Ontario Teachers' Pension Plan.
Several panellists agreed and spotlighted India’s improvements to its insolvency and bankruptcy codes, along with its bidding framework which helped reduce uncertainty in their infrastructure investing environment.
Mr Hajara added: “The government has been taking great steps to ensure international investors can have a basic level of policy certainty, which allows us to deploy more dollars in the region.”
Another opportunity for the infrastructure finance landscape is the development of common taxonomies between financiers and infrastructure players. Close public-private engagements can help bridge this gap, and this was raised during the Financing the Infrastructure Gap in Vietnam Project Discussion, where panellists discussed Vietnam’s first public-private investment (PPP) law passed in June 2020.
(Ms Vu Quynh Le, Deputy Director General of Vietnam’s Public Procurement Agency (in grey),
was open to more public-private engagement to enhance Vietnam’s public-private investment law.)
While the PPP law’s revenue sharing and reduced equity contribution clauses were welcomed by investors and lawyers, Mr Kok Chee Wai, Partner at Allen and Glenhill, shared suggestions on improving contractual templates expressing these laws. In response, Ms Vu Quynh Le, Deputy Director General of Vietnam’s Public Procurement Agency, called for more public-private engagement to craft these templates.
“In Vietnam, we encourage interaction between public agencies and the private sectors…in the next phase, I would invite more private sector (parties) to these exercises, so that such templates are digestible for the public and private sectors,” said Ms Le.
The Future is to Shape, Finance and Collaborate
The discussions from AIF 2022 have surfaced three opportunities in society, finance and collaboration that government leaders and industry players can begin to explore. Collaboration emerges arguably as the key factor, with knowledge and networks readily available to catalyse the birth of new sustainable projects and solutions for the region.
These collaborative efforts are already underway, with new initiatives launched such as the InfraAsia Project Portal and new partnerships forged with ADB and Invest India. Guided by the forum’s robust discussions, Asia has a new coordinated push to accelerate its sustainable infrastructure journey.
Special thanks to the various panellists for sharing their insights at AIF 2022.