Conference Presentation, Panel, Fireside Chat
Playing the Long Game: Investing in Infrastructure
- Global infrastructure expenditure is projected to reach approximately $3.3 trillion annually over the next 15 years, while the Asian Development Bank estimates a total requirement of $26 trillion by 2030, including climate financing, translating to an annual need of $1.7 trillion.
- A funding shortfall is anticipated to range between 11% and 15%, representing $300 billion to $400 billion in unfunded spending, exacerbated by challenges in matching capital to development amidst significant migration trends over the next two decades.
- Developing markets such as Thailand, Indonesia, and Bangladesh face difficulties attracting capital for new products, with investors specifically seeking tariff structures that cover debt service and deliver approximately a 17% internal rate of return.
- Regional multilateral development banks, including the AIIB and NDB, are expected to significantly increase lending, while the ADB plans to issue more local currency bonds, strengthen PPP monitoring, and provide seed money for capacity building to improve policy environments.
- The IFC intends to raise $300 million via an IPO for a Singapore holding company to facilitate greenfield projects in Bangladesh, aiming to double the country's generation capacity within two to three years, with infrastructure comprising roughly 30% of sector deployment in its Asian fund.
- Specific projects in the Philippines are anticipated to see train headways reduced to two minutes by year-end and toll road utilization reaching 60% on launch, driven by higher-than-expected demand and private investors entering projects immediately upon government approval.
- The public sector is expected to maintain a significant role in low-income and fragile countries and before 2030, with several Asian nations establishing state-owned financing mechanisms, as high-speed rail and other non-revenue-generating projects remain government-funded.
- Government strategies are shifting toward moving infrastructure spending to the private sector due to public debt concerns, potentially involving the sale of operating assets with expansion capacity, a shift from sovereign to corporate guarantees, and the removal of revenue guarantees in markets like Korea that have achieved long-term confidence.
- Vietnam is expected to attract a surge of renewable energy investment following the introduction of time-bound feed-in tariffs, and if governments replicate successful frameworks such as Korea's, momentum for funding in currently underfunded areas may be created within the next five years.