- Innovative financing mechanisms are needed to attract capital to fund critical infrastructure that will create jobs and generate income.
- Governments in ASEAN+3 can learn from the critical success factors from actual case studies in and outside Asia.
- ADB can work with ASEAN+3 to create a greener, more sustainable, resilient, and inclusive future for all.
Over the past 5 decades, infrastructure development, supported by traditional sources of financing such as government revenue and debt financing, has been a key pillar of economic growth and development in the ASEAN+3 region.
However, the COVID-19 pandemic has unmasked the large infrastructure gaps in healthcare, education, digital, and social infrastructure. Thus, there is a pressing need to identify new ways to encourage greater private sector participation in financing infrastructure development in the region to build back infrastructure in a more sustainable and inclusive manner, in alignment with the Sustainable Development Goals.
A new publication, Reinvigorating Financing Approaches for Sustainable and Resilient Infrastructure in ASEAN+3, examines how innovative finance can facilitate public–private infrastructure partnerships and become a magnet for private and institutional funds. It summarizes critical success factors from actual case studies, from within and outside the ASEAN+3 region, that can be adapted, replicated, and upscaled in the ASEAN+3 context for successful implementation.
COVID-19 has widened the infrastructure gaps in the ASEAN+3 region.
It has also raised the urgency to build better infrastructure in the region.
In the wake of COVID-19, pandemic-related spending has crowded out investments in critical infrastructure.
It has stalled the development of new infrastructure and the replacement of old ones.
It has also exposed a pressing need for greater investment in healthcare, online education, and social infrastructure.
If not addressed soon, these rising infrastructure gaps could drag the region’s long-term growth and development.
Beyond the immediate infrastructure needs, the region needs to prepare for a number of long-term challenges.
The region ought to balance between reducing emissions, addressing climate-induced risks, and accelerating digital connectivity.
It must also prepare against possible future pandemics which might be more transmissible and devastating than the current one.
At the country level, it needs to support affordable, secure, and just energy transitions.
The region must therefore scale up investment in renewable energy, climate resilience, digital infrastructure, and healthcare facilities.
Presently, public sector finances are strained. Rising debt and budget deficits have severely cut available public funds for new infrastructure investments.
Additional funding sources must be mobilized through multilateral development banks, philanthropic organizations, and private investors.
With this in mind, ADB and the ASEAN+3 worked together on a report that outlines innovative ways to merge public, private, and other forms of capital to make sustainable and resilient infrastructure projects more attractive investment options.
The report provides the first comprehensive list of innovative financing solutions to support infrastructure investments.
It describes 12 types of innovative financing solutions and explains their mechanics in layman’s terms while citing practical applications for each solution.
It is a user-friendly toolkit for governments, development finance organizations, and private investors.
It also outlines the critical success factors in an ASEAN+3 context that will promote more sustainable and resilient infrastructure development across the region.
Through practical applications of the report, ADB can work with ASEAN+3 to create a greener, more sustainable, resilient, and inclusive future for all.