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Commentary: Indonesia and Singapore, leading the way in infrastructure financing

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22.11.2017

JAKARTA: An estimated US$2.1 trillion of infrastructure investment is required across ASEAN but current budgets will cover only US$910 million.

Attracting the additional capital needed is a formidable task but not an unachievable one.

As the need for infrastructure investment intensifies and traditional bank lending tightens, governments are getting smarter at smoothing the path for private investment.

This includes prioritising projects that will be clearly valued and utilised by consumers, and transparent and open project tendering.

CLEAR POLITICAL WILL IN INDONESIA

Getting the right project selection and investment approach needs strong government policy.

Fortunately, there is clear political will in countries like Indonesia to achieve this.

President Jokowi has made infrastructure across the transport and power sectors his key priorities and has recognised that Indonesia needs to import both the capital and the expertise to deliver on these commitments.

A key plank of his focus is to increasingly open existing infrastructure assets to the private sector through debt securitisation and project bond markets.

Paiton Energy is a clear example of how debt capital markets have a potentially significant role to play in the funding of Indonesian infrastructure.

In August, the privately owned independent power producer – which is also Indonesia’s second largest - launched a two-tranche US$2 billion project........

© Channel NewsAsia