Singapore to standardise project finance documents

MS INDRANEE RAJAH, Minister in the Prime Minister's Office.
MS INDRANEE RAJAH, Minister in the Prime Minister's Office.

Move is part of effort to make infrastructure projects more bankable and investable

Singapore aims to standardise 50 per cent of the terms in project finance documents in the coming year, said Minister in the Prime Minister's Office Indranee Rajah yesterday.

This is one effort to make infrastructure projects more bankable and investable - two key requirements to attract private sector capital.

Few governments have resources to fund projects fully, and developing Asia needs US$51 trillion (S$70.7 trillion) in infrastructure investment through 2040 to maintain its current growth momentum, said Ms Indranee, who was speaking at the two-day Asia Infrastructure Forum at Marina Bay Sands.

Infrastructure Asia, an organisation set up by Enterprise Singapore and the Monetary Authority of Singapore, is working with law firms to standardise clauses in project finance loan documents, to reduce time and cost and make processes more transparent.

The remaining 50 per cent of clauses will remain customisable according to individual project needs.

Ms Indranee, who is also Second Minister for Finance and Education, said: "We hope this will contribute to a more vibrant secondary market in infrastructure debt, and attract non-bank investors into this asset class."

The agency inked five pacts during the conference, including with Cambodia's Ministry of Economy and Finance on sewage and waste water treatment; with Indonesia's Sarana Multi Infrastruktur on public-private partnership (PPP) capacity building; and with the Philippines PPP Centre to develop and implement projects.

Also exchanged were collaboration agreements with the World Bank Group on regional capacity building, and with the Japan Overseas Infrastructure Investment Corporation for Transport and Urban Development on third-country projects in smart infrastructure.  

Addressing around 800 business leaders and officials on the theme of "Partnerships for the Future: Reimagining Infrastructure", Ms Indranee stressed that even as Asia pursues growth, the infrastructure it builds should not contribute to climate change.

A WIN-WIN SITUATION

Sustainable infrastructure aids climate resilience, which ultimately helps economic resilience.

MS INDRANEE RAJAH, Minister in the Prime Minister's Office.

The Asian Development Bank (ADB) has forecast that, left unaddressed, climate change could reduce the region's gross domestic product by 11 per cent by the end of the century.

Ms Indranee said that in times of disruption, sustainable infrastructure that uses good resource management and innovative technology is likely to be more resilient. "Sustainable infrastructure aids climate resilience, which ultimately helps economic resilience."

 
 

Infrastructure Asia will also work with the ADB to develop an innovative finance lab for sustainable infrastructure, to improve credit access to projects by regional municipal governments and state-owned enterprises, she added.

Mr Tay Peng Cheng, a partner at law firm WongPartnership, told The Straits Times the standardisation of document clauses is a step in the right direction. "The use of standard templates will reduce the time needed to draft and negotiate complex agreements," he said. "While there are existing standard forms used both internationally and domestically, such forms are usually extensively amended by the contracting parties.

"This move by Infrastructure Asia will hopefully, over time, create a suite of documentation readily acceptable to parties in these large-scale projects."

Ms Elaine Lam, OCBC Bank's global corporate banking head, said environment and sustainability considerations are increasingly important in project assessments. "Capital will flow towards projects with a positive impact on the environment like renewable energy, water treatment and energy efficiency, and away from projects that do not."

A version of this article appeared in the print edition of The Straits Times on October 03, 2019, with the headline 'Singapore to standardise project finance documents'. Print Edition | Subscribe