Infrastructure push in Asia: New S'pore agency to play investment broker

Second Minister for Finance Indranee Rajah speaks during a Bloomberg Television interview in Singapore, on Oct 22, 2018.
Second Minister for Finance Indranee Rajah speaks during a Bloomberg Television interview in Singapore, on Oct 22, 2018.PHOTO: BLOOMBERG

Singapore plans to spur investment in much-needed infrastructure in South-east Asia by helping to structure projects to make them more "bankable," said Second Minister for Finance Indranee Rajah.

A new government agency called Infrastructure Asia will help connect the "supply and demand" for these projects, she said in an interview yesterday with Bloomberg Television. Such an agency was first mooted by Finance Minister Heng Swee Keat in his Budget Day speech in February.

The Asian Development Bank estimates developing economies in Asia will need to invest US$26 trillion (S$36 trillion) in infrastructure projects until 2030, or US$1.7 trillion a year.

Ms Indranee said that currently, only about US$880 billion is being spent annually. "So you need to mobilise capital, you need to connect the demand and supply and make the projects bankable," she said. "We figured that Singapore can play an important role in this."

VITAL ROLE

You need to mobilise capital, you need to connect the demand and supply and make the projects bankable. We figured that Singapore can play an important role in this.

SECOND MINISTER FOR FINANCE INDRANEE RAJAH, on Singapore's role in Asia's infrastructure push.

China's massive funding of road, rail and other infrastructure projects in South-east Asia has raised concerns about the region's over-reliance on the world's second-largest economy, and more countries have been looking at home-grown solutions to attract investors. As a regional financial hub, Singapore officials have increasingly billed the city state as a conduit for that kind of investment.

"China has clearly identified a need," Ms Indranee said. "There is a demand out there. And for countries that need infrastructure, the key thing - it goes back to what I said earlier: bankability.

"So if you're able to structure it right such that the income stream, the revenue that comes in, enables you to pay off your loan or whatever financing you've taken, then the project will be fine and it's win-win for all."

She added that global trade tensions are a key risk to the economy and urged countries to find a solution that benefits all. "From the Singapore perspective, we strongly support a multilateral approach," she said.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on October 23, 2018, with the headline 'Infrastructure push in Asia: New S'pore agency to play investment broker'. Print Edition | Subscribe