Investing in infrastructure can boost economy: Indranee

As Asia recovers from the fallout of Covid-19, building and investing in infrastructure can help to create jobs and boost the economy, said Minister in the Prime Minister's Office Indranee Rajah.

Ms Indranee, who is also Second Minister for Finance and National Development, said Singapore sees infrastructure as a way to boost the economy, and that while construction was halted during the circuit breaker, it has resumed on projects like the North-South Corridor.

She said: "Infrastructure can be used to prime the economy, provided it's planned right and you have the relevant measures in place for safe distancing. In the short term, a lot of attention has to be paid to Covid-19... (but) investors are still looking for good quality infrastructure investments."

She made the point during an online panel discussion yesterday titled "Reigniting Asia's Infrastructure Plans: What Are The priorities now?". It was organised by the British newspaper Financial Times.

The other panellists were Asian Infrastructure Investment Bank (AIIB) chief economist Erik Berglof and pension fund AustralianSuper deputy chief executive and chief investment officer Mark Delaney.

Ms Indranee said governments that are looking to borrow should take advantage of the current low interest rate environment.

An area with strong potential is sustainable infrastructure, which spans the entire economy - from financing and planning, to design, construction, operations and maintenance, she added.

But it has to be done right from the outset, she said, citing Tengah, an upcoming development which has been dubbed Singapore's first smart energy town, powered by artificial intelligence.

"For developing countries, it is a chance to get it right from the very beginning, rather than do it the old way and then have to go back and retrofit it."

Mr Berglof agreed that, post-Covid-19, infrastructure must be thought of in new ways and that a more holistic approach is needed.

On this count, he said, AIIB has invested more heavily in healthcare than it did previously.

In a separate, closed-door, round-table session with senior representatives from infrastructure companies, Infrastructure Asia (IA) executive director Seth Tan said that in order to realise the "immense" opportunities from sustainable infrastructure, co-creation between governments and the private sector is important.

He said: "This sends the signal that we want the infrastructure of the future, and also helps with de-risking (projects) so that the private sector can come in to invest and bring in technology."

IA, jointly set up by Enterprise Singapore and the Monetary Authority of Singapore, works with developers, financial institutions and multilateral development banks to broker infrastructure deals and share best practices.

Participants also flagged challenges. Mr Kunal Shah, the managing director of waste solutions firm Anaergia, noted that it continues to be difficult to get multilateral agencies to bridge the financing gap.

KPMG principal David Ng said sustained government efforts are needed to ensure a conducive regulatory framework: "It goes back to proper project preparation to make sure that the value of sustainable infrastructure is understood."

Mr Andy Hodgson, advisory services leader for professional services firm Arup, said the lack of capacity and capability is an issue.

"There seems to be a misconception that schemes which otherwise aren't seen as bankable, if they have a green aspect to them, suddenly become investible," he said.

Mr Low Kian Min, chief development officer of energy firm Jera, noted that renewable energy may not be appropriate in countries which need agricultural land to sustain livelihoods. In such cases, traditional sources of energy may still be required, he said.