Europe 2020 Project Bond initiative to attract additional capital through long-term debt
instruments. The Brazilian Agency for Funds and Guarantee Management has been set up
to provide more competitive insurance policies for infrastructure projects.
While several developing countries have set up infrastructure guarantee funds to attract
investors, the utilisation of the national funds has traditionally been low, especially
relative to those set up by multi-lateral organisations (e.g., World Bank’s Multi-lateral
Investment Guarantee Agency). International investors must be typically convinced that
the national guarantee funds do not have the same sovereign risks as the infrastructure
projects themselves; partnerships between the national guarantee funds and multi-lateral
organisations may help attract international investors.
Further, improving the funds flow between ASEAN countries, including pooling
investments from multiple ASEAN countries for infrastructure projects could open up the
market to long-term foreign investments as well. The Japanese government was cited
as a best practice example for investing in international markets by working closely with
local regulators and companies as well as taking a long-term view on their investments.
Infrastructure funding and finance is likely to become more challenging, especially if the
regulatory environment continues to be unpredictable in these countries. Tapping new
revenue streams and innovating with sources and structures for finance will become even
more critical.
While addressing these immediate challenges will begin to create the right environment
for long-term infrastructure planning and investments across the ASEAN region, they
will be insufficient to meet the large and growing demand in the developing countries.
Governments and the private sector need to re-think how they can build better-quality
infrastructure for less, i.e., make the sector more productive across the region in order
to realise the ASEAN connectivity goals. In the next chapter, we elaborate on potential
approaches to selecting, designing, delivering and managing infrastructure projects to
raise the productivity of the infrastructure investment substantially.