As Asia recovers from the pandemic, countries in the region are reviving their infrastructure plans. Covid-19 is a stark and an unwelcome experience, a tragic reminder of the years of neglect especially of the creaky healthcare infrastructure. Expect governments to energize efforts and once again position infrastructure as a cornerstone of their development and growth agenda.
Plenty of work is ahead. From China to India and to Southeast Asia, momentum is building to construct more roads, highways, railways, mass transits, sea and air ports, as well as healthcare facilities. Rapid urbanization in the coming decades will reshape Asia’s cities and towns. The adoption of digital technology means the infrastructure of the future will accelerate demand for energy, 5G/6G telecoms and broadband, logistics, cloud and data centres.
Against the backdrop of costly Covid-19 relief measures and the recently concluded 2021 United Nations Climate Change Conference (COP26), the infrastructure sector is facing two big challenges – an ever-growing funding gap and climate change.
Climate resilient infrastructure was a major discussion point at COP26 and the conference has served as a catalyst for Asia to accelerate its transition towards a sustainable economy by prompting some of the region’s top carbon-emitting nations, most notably China and India, to pledge support for the global net-zero strategy.
Financing will play a major role as Asia steps up its efforts to meet its ambitious infrastructure and net-zero targets. The region requires huge amounts of funding to have a chance at meeting them and with public financing and bank lending increasingly under pressure, tapping private capital and working with multilateral institutions are becoming more crucial. Moreover, the introduction of innovative funding tools which can help create bankable projects, de-risk investment and optimize asset value will be important to bridge the financing gap.
Increasingly too, project sponsors are seeing the value of accessing the capital markets via green, social, and sustainability bonds. Global issuance in 2021 was close to US$650 billion, 50% more than in 2020. In the green bond market, China took the third spot with nearly US$60 billion of issuance, ahead of France and Germany.
India, which issued some US$6.8 billion in 2021, is predicted to have a record year for green bonds in 2022 including from the sovereign, which is looking to issue up to US$3.3 billion. Recently, the Philippines offered an inaugural US$500 million green bond to support clean energy projects in the country.
The Asset Events+ is pleased to host the 7th Asia Sustainable Infrastructure Finance Leaders Dialogue focusing on the theme of Infrastructure of the Future. The annual gathering of infrastructure finance leaders will discuss the outlook for Asian infrastructure and how financing will shape up in a post-COP26 world.