The Asian Development Bank forecasts that Asia needs US$8 trillion in the period to 2020 to plug the infrastructure deficit.
As Asian economies move up the value chain and urban populations expand, demand for transport, logistics and utilities will only continue to grow, increasing the burden on public funds.
Given the regions' massive infrastructure financing requirement, Asia may still face a funding shortfall even if the newly launched Asian Infrastructure Investment Bank (AIIB) provides annual loans of US$10 billion to US$15 billion for the first five or six years.
Infrastructure development is not a silo initiative. It calls for a coordinated approach involving collaborative governments; multilateral development lenders; commercial banks with well-established global networks and expertise in appropriate risk structuring; viable capital markets and cash-flush institutional investors.
An efficiently structured infrastructure project ensures that the risks at each stage of an infrastructure project's life-cycle is appropriately mitigated and sits with the party best placed to take those risks.
The time is ripe to develop infrastructure as an attractive asset class.
If infrastructure projects are structured efficiently, and private funds brought in at the optimum time, the region's infrastructure gap can be narrowed. And institutional investors will have a new opportunity to put their funds to work for a worthy cause with potential long-term returns.
Opinion piece from Ajay Kanwal Standard Chartered Bank in todays Straits Times
Access to standardized data and information on infrastructure projects (financing, risk management, construction and operating performance); analytic tools; best practice deal documentation; as well as benchmarks is the key to the better structuring of infrastructure deals; establishing the right conditions for effective financing, and a pipeline of bankable projects.
Quality, usable data and information is fundamental to establishing infrastructure as an asset class, attracting new private sector investment and plugging the Asian infrastructure gap.
infraccess - smart data for infrastructure