Media Release
For Immediate Release
ASEAN Needs Stronger Coordination, Skills and Transparency to
Elevate Sustainable Infrastructure Projects
The SIIA’s “Financing Sustainable Infrastructure in ASEAN” Report Calls for
Common Understanding to Unlock Capital Flows
Singapore, 2 April 2020 – With Southeast Asia facing a funding deficit to meet its burgeoning energy and infrastructure needs, the region needs stronger coordination, skills and transparency in elevating sustainable projects to investors. These findings, amongst 10 recommendations to government, banks and business, were shared in the report by the Singapore Institute of International Affairs (SIIA) that was launched today. The report was supported by HSBC and exclusive knowledge partner, KPMG in Singapore.
Titled “Financing Sustainable Infrastructure in ASEAN”, the report finds that underpinning Southeast Asia’s underutilisation of sustainable financing – in order to meet its vast infrastructure needs – is a lack of commonality in environmental and social (E&S) standards and risks considered by financial institutions, project developers, multilateral institutions and governments.
According to the Asian Development Bank, the infrastructure gap in the ASEAN region from 2016 through 2030 is approximately US$2.8 trillion, or US$184 billion annually. The limited state budgets in many countries have raised the urgency for private financial institutions to channel more green and sustainable financing towards infrastructure projects. This is especially in the power and transport sectors which have the largest climate-adjusted investment needs in developing Asia.¹
The report identifies 10 recommendations for project finance participants
As a result, the report provides 10 recommendations to different stakeholders on how to work towards gaining a common understanding of key E&S risks and opportunities in these sectors in the ASEAN context, in order to unlock more capital flows towards sustainable infrastructure.
Singapore Government and Industry Associations
- The Singapore government could take the lead in ASEAN to set up a platform featuring a pipeline of local power and transport projects available for investments, and to disclose the results of the Environmental and Social Impact Assessments of each project.
- The Singapore government and industry associations, such as the Association of Banks in Singapore, could work together to provide a standard E&S evaluation framework for the power and transport sectors.
- Singapore’s statutory boards, government entities and large companies should be encouraged to look at Green Financing as an option to raise funds.
ASEAN Governments
- ASEAN governments could convene an Infrastructure Summit to emphasise the Master Plan on ASEAN Connectivity 2025 (MPAC 2025) as a regional blueprint for infrastructure projects in ASEAN, grow initiatives by each ASEAN member state and track sustainable finance flows to power and transport projects.
- ASEAN governments, together with multilateral institutions and industry players, could train and equip workers with sustainability skills and knowledge in the renewable energy and sustainable transport sectors.
- The ASEAN Secretariat could take the lead in developing a directory of green and sustainable funds for infrastructure projects in the region.
Financial Institutions
- Financial institutions with an interest in ASEAN’s power and transport sectors, should disclose their sustainability policies with the key E&S risks incorporated, as well as general guidelines on how they handle context-specific challenges in countries where they operate.
- Financial institutions should cover the key E&S risks in their monitoring efforts and tailor the frequency of monitoring according to the duration of project construction.
- Financial institutions could develop expertise in specialised financing, particularly infrastructure financing or green investments.
Financial Services Providers
- Ratings agencies could develop a rating mechanism for the E&S impacts of power and transport projects.
The findings of the study stemmed from secondary research, two working group meetings and closed-door interviews involving a total of 118 representatives from 49 organisations. These organisations included government agencies, multilateral organisations, banks and investors, and project developers, financial services companies, non-governmental organisations (NGOs) and academics.
Ms. Chen Chen Lee, Senior Fellow at the SIIA, and one of the co-authors of the report, said, “Singapore and ASEAN need to make sustainable infrastructure the foundation for our long-term growth and resilience. We need to arrive at a common understanding around what sustainable infrastructure looks like so that we can walk the talk.”
She continued, “In many parts of Southeast Asia, the lack of infrastructure connectivity continues to hinder industrialisation and economic growth. Challenges such as natural disasters and traffic congestions are significant and they impact the quality of life for its people. Bridging the infrastructure gap requires green and sustainable financing as it promotes the efficient flow of capital towards activities that are more sustainable and responsive to climate concerns while achieving growth.”
Jonathan Drew, Managing Director, Sustainable Finance, HSBC Asia Pacific, said, “Banks have a responsibility to direct the flow of capital towards building a sustainable future. This report provides practical suggestions on the steps that banks and financial institutions can take to help facilitate a common understanding within the industry on the key E&S risks related to infrastructure projects, and build those into project selection and design. This will be vitally important as we navigate through the current challenges and also as we structurally shift towards a more sustainable future for all.”
Mr Satya Ramamurthy, Head of Infrastructure, Government & Healthcare, KPMG in Singapore said, “There is a strong business case for infrastructure sustainability. Besides being good for investor returns, it brings about many positive outcomes ranging from sound economic development and an effective use of financial resources to improved quality of life for people. We hope that this report can be the starting point to galvanise the stakeholders involved to engender change within the ecosystem, ultimately helping to position Singapore as the Transformation Capital of Asia.”
The SIIA’s “Financing Sustainable Infrastructure” report can be downloaded from the SIIA website at – https://siia.hellopomelo.space/reports/ and via the HSBC Centre of Sustainable Finance at https://www.sustainablefinance.hsbc.com/.
¹ https://www.adb.org/publications/asia-infrastructure-needs
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About the Singapore Institute of International Affairs
Insights ● Networks ● Access
Established in 1962, the Singapore Institute of International Affairs (SIIA) is a non-profit and independent think tank committed to producing policy analysis, fostering in-depth dialogues and bridging gaps between policymakers, private sector decision-makers and experts to shape public policy and social responses. Centred around ASEAN focused themes, the institute aims to deliver policy analysis in international affairs and on issues driving environmental sustainability. The SIIA has been consistently ranked as one of the leading think tanks in Southeast Asia and the Pacific, in the Global Go-To Think Tank Index by the University of Pennsylvania. Since 2017, the SIIA was ranked the No. 1 independent think tank in Asia. It was also recognised as one of the top 50 think tanks globally, excluding the United States of America. In 2019, it was recognised as the No. 1 think tank in South, Southeast Asia and Pacific (excluding India).
About HSBC
The Hongkong and Shanghai Banking Corporation Limited is the founding member of the HSBC Group. HSBC serves customers worldwide from offices in 64 countries and territories in our geographical regions: Europe, Asia, North America, Latin America, and Middle East and North Africa. With assets of US$2,715bn at 31 December 2019, HSBC is one of the world’s largest banking and financial services organisations.
About KPMG
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 147 countries and territories and have more than 219,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
