Speech by Senior Minister and Coordinating Minister for National Security, Teo Chee Hean, at the 5th Singapore Regional Business Forum on 15 August 2019.
“Building a More Open, Innovative and Sustainable Asia”
Mr Teo Siong Seng, Chairman of the Singapore Business Federation,
Mr Jin Liqun, President of the Asian Infrastructure Investment Bank,
Excellences, Distinguished Guests, Ladies and Gentlemen,
I am happy to join you today at the 5th Singapore Regional Business Forum. This year’s forum is organised in conjunction with the inaugural Singapore Regional Infrastructure Summit. This is a timely initiative, and provides a useful platform for us to bring greater attention to the important work of regional development and economic cooperation.
Growth of Asia
One of the most dramatic developments over the past 30 years has been the growth of Asia. According to McKinsey, 21 of the 30 largest cities in the world are in Asia today, and more than 40 percent of the world’s 5,000 largest companies are Asian.
Growth, however, has not been a given, and there have been crises and downturns – most notably during the 1997 Asian Financial Crisis, and the 2007-2008 Global Financial Crisis when Asian countries also felt the chill. But in spite of these setbacks, Asian economies have demonstrated resilience, showing an upward trend across all its key economic and social indicators over this period of three decades. In 2000, Asia accounted for just over 20 percent of global GDP in terms of purchasing power parity. Today, Asia is on track to double its share of global GDP to 40 percent by 2030. This is driven by demographics. According to the United Nations, by 2030, 66 percent of the global middle-class population will be in Asia, accounting for 59 percent of global middle-class consumption. The overall population of Asia is also projected to continue growing until 2050.
But even as Asia grows at a rapid pace, real development challenges do remain. Many Asian countries struggle to provide the infrastructure, housing, power generation and other services that their populations need. This could entrench the growing disparities in income distribution and exacerbate stresses on the environment. Countries across Asia need to achieve more inclusive and sustainable economic growth to bring about a future of lasting peace and stability
Infrastructure – Key to Asia’s Future
Infrastructure has been an important foundation of Asia’s development over the last 30 years. New power generation brought significant human development and progress. Railways, roads and bridges connected rural areas and cities. Ports and airports opened new markets for goods and for tourism – and brought the people of Asia and other parts of the world closer to one another.
As Asia continues to develop, infrastructure will continue to be an important economic equaliser and lynchpin of growth. We need a new wave of infrastructure investments to meet power, transport, water, sanitation, telecommunication, housing and other needs, as well as to enable better connectivity between countries and cities.
The Asian Development Bank (ADB) has estimated that the Asia-Pacific needs more than US$22.6 trillion worth of infrastructure investments between 2016 to 2030. To give a sense of scale, this is 3,200 times what is needed for the US$7 billion, 414-kilometre Kunming-Vientiane railway line from China to Laos. This railway is just part of the US$300 billion worth of ongoing railway projects across Southeast Asia, which are expected to deliver over 16,000 kilometres of new or improved tracks. These include an extensive Pan-Asia Railway Network that connects Kunming and Singapore through Hanoi, Vientiane, Bangkok and Kuala Lumpur. These projects will open up new growth opportunities and global markets for everyone.
Asia’s rapid growth and infrastructure demand have generated strong international interest – from the bold vision of China’s Belt and Road Initiative; to Japan’s Partnership for Quality Infrastructure; and the Free and Open Indo-Pacific Strategy initiative by the US, India, Australia and Japan to improve connectivity in ASEAN and South West Asia. We welcome all these initiatives and encourage more countries, partners, international organisations and private sector players to join our region’s development journey, consistent with the ASEAN Outlook on the Indo-Pacific. Given the Asia-Pacific’s significant infrastructure needs, there is room, indeed there is a need, for everyone to participate.
Today, I would like to talk about three key areas where Singapore can provide a platform for Asia’s infrastructure development and help unlock Asia’s potential: Openness, Innovation and Sustainability.
First, by helping to create an open and inclusive environment, we can bring together interested partners with the right expertise, from a wide range of countries and organisations, to facilitate projects from the conceptual to the development and operation phase. Singapore is already a significant source of funds and expertise for infrastructure projects in the region. For example, Singapore-based banks have provided loans or advisory services for an estimated 60 percent of infrastructure projects in Southeast Asia.
The presence of many Multilateral Development Banks (MDBs) and international organisations in Singapore has added to the vibrancy of our infrastructure ecosystem. These include the International Monetary Fund (IMF), World Bank, United Nations Development Programme (UNDP), Asia-Pacific Economic Cooperation (APEC) and Asia-Europe Foundation (ASEF). The ADB has just announced that it will open an office in Singapore to support the expansion of its private sector operations. I am glad that Asian Infrastructure Investment Bank (AIIB) President Jin Liqun is here with us today and will speak later. AIIB has already done a lot of good work and we look forward to AIIB’s continued contributions to addressing Asia’s infrastructure needs.
Singapore initiated Infrastructure Asia in October 2018, to create an open platform for industry players from across the infrastructure ecosystem to bring projects from conception to fruition. Infrastructure Asia has been working hard to bring in more global partners and introduce more collaboration platforms. For example, in March this year, Infrastructure Asia signed an MOU with the US Overseas Private Investment Corporation (OPIC) to help US companies access more project opportunities through information sharing, deal facilitation, structuring and capacity building in sectors such as energy, water, transportation and urban development. Infrastructure Asia also facilitated the set-up of the Silk Road Fund–Surbana Jurong Co-Investment Platform. This is a partnership between a Chinese state-owned investment fund supporting the BRI and a Singaporean infrastructure consultancy firm. Over the next few years, this platform is expected to invest about US$500 million in greenfield infrastructure projects across Southeast Asia.
Given the high cost and lumpy nature of infrastructure project financing, Governments usually do not have enough resources to meet these financial needs on their own. This is where multi-lateral and private sector capital can play a role. For example, together with funding from the ADB, AIIB and the International Finance Corporation (IFC), Clifford Capital, which is a Singapore-incorporated finance solutions provider, worked with private sector financiers to bring to fruition the US$300 million Sembcorp Myingyan power project in Myanmar. In particular, Clifford Capital led the restructuring and negotiation of the financing documents on behalf of the lenders. Sembcorp Myingyan began full operations last October, and it is the first internationally and competitively tendered power project in Myanmar. It has also established a useful benchmark for bankable project documents for private sector financing in Myanmar.
In addition to bringing together the right players, we also need to strengthen the capabilities of host countries to ensure the success of the projects. Infrastructure Asia is working with Multilateral Development Banks to provide the relevant training to government officials in the region. Last year, Infrastructure Asia signed an MOU with the World Bank to strengthen capabilities in Asian countries for infrastructure project structuring, financing and implementation.
Second, innovation, By leveraging Singapore’s understanding of the region and our strengths as a financial centre and legal hub, we can help to provide new, innovative infrastructure solutions for Asia.
Singapore can harness expertise across our ecosystem to undertake feasibility studies and make infrastructure projects more bankable and investible. We help structure the financing for infrastructure projects across their entire life cycle – from greenfield to brownfield. This helps to match financing needs in each phase of the project with the risk-return appetite of suitable funding parties. For example, Bayfront Infrastructure Capital was set up to unlock and mobilise additional capital for Asia-Pacific infrastructure by transitioning the financing needs for these projects from banks to institutional investors at the appropriate phases. This allows banks to recycle their capital, and the projects to access a new and expanded pool of institutional capital which is looking for mature, stable long-term returns.
Singapore can also provide efficient, timely and cost-effective dispute resolution to bring projects back on track quickly when disputes arise. Singapore offers a full suite of dispute resolution options, including litigation, arbitration, and mediation.
We have been ranked the most preferred seat of arbitration in Asia in the 2018 International Arbitration Survey by the Queen Mary University of London. Singapore is also recognised as a regional hub for mediation. Just last week, 46 countries gathered here to sign a new UN treaty, the Singapore Convention on Mediation. Singapore played a significant role by chairing the working group that drafted and negotiated the Convention. The Convention provides an efficient and harmonised framework to allow disputing parties to enforce and invoke settlement agreements across borders.
We have also developed the Singapore Infrastructure Dispute-Management Protocol (SIDP) to help parties involved in mega infrastructure projects manage disputes and minimise the risks of time and cost overruns, which are important for projects like these.
By providing a range of reliable, cost-effective and timely dispute resolution modalities, we provide international partners with greater confidence and ease of mind to come and invest in Asia’s growth.
Third, sustainability. Asia needs to pursue a more sustainable and resilient development path to achieve lasting development.
Climate change is one of the most complex global challenges facing us today, and Asia is particularly vulnerable. Many Asian cities are located in low-lying coastal areas, and face sinking land levels. The low-lying deltas in South and Southeast Asia produce 88 percent of the world’s rice supply but they are now at risk of flooding and sea water intrusion. Many Asian countries are also highly vulnerable to the effects of severe weather such as drought, floods and typhoons.
Given the long gestation period of infrastructure projects, infrastructure decisions taken today must be resource-efficient and resilient to the effects of climate change.
The Master Plan on ASEAN Connectivity 2025 identified the risks of climate change and lack of access to basic resources like energy as two key challenges. This requires us to deploy new sustainable solutions. This includes reducing power consumption and carbon emissions, tapping renewable energy, and factoring in possible rises in sea-level and more frequent extreme weather.
For example, Singapore’s clean-energy provider Sunseap Group worked with InfraCo Asia, an infrastructure development and investment company which is funded by the UK, Netherlands, Switzerland and Australia, to build a US$150 million solar farm project in Ninh Thuận province in Vietnam. This project was completed in June and has been connected to Vietnam’s national grid. It is a 168 megawatt-peak (MWp) solar farm which can power the equivalent of 192,000 homes and reduce carbon emissions by 240,000 tonnes annually. This is one of the first large-scale solar projects in Vietnam and contributes to Ninh Thuận province’s plan to become the renewable energy centre of the country.
On Singapore’s part, we have always placed emphasis on developing in an environmentally responsible way. We are among the 20 best countries out of 142 countries in terms of greenhouse gas emissions per dollar of GDP. So it is possible to develop and grow but in a responsible way. But we are still learning and improving, and working hard to reduce our overall carbon footprint. For example, we are aiming to make 80 percent of our buildings green buildings by 2030.
Through the Singapore Cooperation Programme, we also share experiences with other countries, especially solutions that are tailored for tropical climates. The World Cities Summit hosted every two years in Singapore provides a platform for city leaders, industry experts and leading academics to explore how cities can be more liveable and sustainable through innovation in urban planning. Last year, 128 cities participated in the World Cities Summit in Singapore.
Ladies and gentlemen, Asia’s economic potential can be fully realised only if we can overcome our development hurdles and meet our significant infrastructure needs. No country can overcome these challenges on its own. To succeed, we must harness our collective expertise and work together – private players, governments and Multilateral Development Banks. We can define a new chapter for a more open, innovative and sustainable Asia. Only by doing so can we leave a lasting legacy for our future generations.
I am glad that today’s Forum will be followed by the inaugural Singapore Regional Infrastructure Summit tomorrow. I encourage everyone to make full use of these two days to exchange experiences and explore ideas on how we can work together for Asia’s infrastructure development.
I thank all our speakers, agencies, companies and participants for your strong support. I wish all of you new insights, new ideas and new friendships. Thank you very much.
Explore recent content
Explore related topics