LTB Reports: ASEAN Faces Infrastructure Financing Paradox

By By Farhana Poniman | Source: Bernama
KUALA LUMPUR, Aug 25 (Bernama) — ASEAN faces the paradox of infrastructure financing – a gap between financing need and supply – even though both savings rates and foreign reserves are high in ASEAN.

According to the Lifting-The-Barriers (LTB) Reports 2015 by the ASEAN Business Club (ABC) and CIMB ASEAN Research Institute (CARI), the majority of ASEAN member states, except Singapore and Malaysia, could only feed less than half of the estimated demand.

Projections show that ASEAN economies need to invest over US$60 billion a year in infrastructure until 2020 to support and maintain the region’s high economic growth.

However, infrastructure supply in ASEAN economies remains low relative to the needs.

According to the Reports, with inadequate financial sources from the government and overseas development aids, private financing participation is expected to increase through Public Private Partnership (PPP) scheme, equity participation, and privatisation.

The LTB Reports suggested that the public sector provide or expand the market for long-term credit and widen access for cross border financial flows, especially for infrastructure financing.

It said the private sector, on the other hand, has to actively participate in nurturing the market and supporting the public sector accordingly, whereby among crucial efforts were maintaining good communication with the host country’s government, recruiting local talents and transferring knowledge to local experts.

The Reports were launched Tuesday by International Trade and Industry Minister Datuk Seri Mustapa Mohamed and witnessed by ABC President Tan Sri Dr Mohd Munir Abdul Majid.

Besides infrastructure, the Reports covered other sectors, including transportation, financial services and capital markets, tourism, healthcare and retail.