Local solutions could fix Asean infrastructure financing
It is no secret that there is a huge need for capital to fund infrastructure projects in the developing economies of south-east Asia – a gap of more than $100 billion is not being met.
Although infrastructure delivery can be complex in south-east Asia, the funding is there, both in local currency savings and from institutional investors in developed countries – the two just need to be brought together and put to the same end.
The problem is twofold. Of the wealth of projects that need financing, most need long-term local currency. Although the Association of south-east Asian Nations (Asean) has seen rapid growth in savings, local institutions have little ability to take on risk and so struggle to put the savings to use.
“If somebody provides credit enhancement to cover their risk, these local savings can be mobilized to finance local infrastructure development,” says Kiyoshi Nishimura, chief executive officer of the Credit Guarantee and Investment Facility (CGIF).