“Singapore can make meaniningful contributions in Asian infrastructure development.”
Ministers and senior government officials from Singapore, China and Bangladesh met at the Fourth Asia-Singapore Infrastructure roundtable in Singapore to discuss Asia’s growing demand for infrastructure and activities to bridge the investment gap. In his opening remarks at the roundtable, Lee Yi Shyan, Senior Minister of State, Ministry of Trade and Industry and Ministry of National Development, Singapore, highlighted the need to share the developmental experience and provide a platform for project scoping. He also emphasised the Singapore’s ever growing partnership with China and Bangladesh.
Southeast Asia Infrastructure presents excerpts from Yi Shyan’s remarks at the Fourth Asia-Singapore Infrastructure roundtable in Marina Bay Sands Convention Centre, Singapore, held on April 15, 2015.
Asia’s needs for infrastructure and the resulting investments are huge. In Southeast Asia, estimates put it at the ballpark of $1 trillion. Still, Asia is larger than these regions and countries.
But having the need for infrastructure does not automatically lead to infrastructure investments. In many developing countries, structuring infrastructural projects for project feasibility study alone is challenging, let alone project financing. But economic and social development cannot take place unless they are supported by enabling infrastructure. Infrastructure investment is, therefore, an urgent priority for most if not all developing countries. In this regard, the Asian Development Bank has published papers on the key role of infrastructure in promoting and sustaining rapid economic growth in Asia.
Singapore is willing to contribute to this larger good. There are three areas in which Singapore, working with partners, multi-lateral agencies and international organisations, can make meaningful contributions: Singapore can share its own developmental experience; Singapore can provide a platform for infrastructure project scoping, and Singapore can play a role in infrastructure project financing.
Sharing Singapore’s developmental experience
Singapore has developed on the basis of small geographical footprints and financial sustainability. Small physical space requires Singapore to plan our city very carefully and for the long term. Financial sustainability means whatever investments we make in infrastructure must generate economic returns, directly or indirectly, for us to repay our loans and generate further resources to invest in the future.
Our public sector has built up experience across various sectors from energy, public utilities, waste management to transport and connectivity. Our companies have also built up their expertise and track record across the infrastructure value chain. This includes master planners like Surbana, Jurong Consultants, project developers like Sembcorp Industries and Keppel Infrastructure; and engineering consultants like Meinhardt.
If we look at the functional area of urban development, it is not difficult to see that water, or the lack of it, has become a strategic security issue for Singapore. And I think it will be no different for any other country. Hence, generating enough drinking water for the population, and the resulting water conservation measures have always been a core design feature of our water infrastructure and urban planning.
In developing new water supply sources, we have found two viable methods over time. One is desalinated sea water. The second is the recycling of municipal waste water. With the good fortune of improving membrane technology and energy efficiency, some of our companies such as Hyflux, Sembcorp and Keppel have become experts in water reclamation.
Besides water reclamation, we have also enlarged our water catchment areas over time. Building on naturally occurring reservoirs, we have dammed up most rivers leading to the sea. By 2011, the water catchment area has increased from half to two-thirds of Singapore’s land surface. Singapore plans to increase our water catchment area to 90 per cent by 2060. Singapore is now one of the very few cities in the world that employs the city’s open drainage network as part of its water catchment areas.
Providing a platform for project scoping
The second area in which Singapore can contribute towards Asian infrastructure building is to provide a platform and meeting place for expertise in project scoping and feasibility studies. Whether it is a power plant, toll road, seaport, airport, township, public housing, water treatment, public health or education, Singapore
can offer itself as a knowledge centre for functional expertise and to focus on specific sectoral opportunities. For instance, Singapore has experience in scoping
complex private public partnership projects such as the Singapore sports hub, Tuaspring desalination plant and district cooling system.
Many related disciplines for project scoping or structuring are based in Singapore. This includes project finance banks (DBS, UOB), insurance companies, credit rating agencies and infrastructure advisories. Platforms like this roundtable, the World Bank-Singapore Infrastructure Finance Summit and the Project Finance International (PFI) Asia Best Practice awards allow the regional industry to meet and serve as avenues for projects to be discussed amongst stakeholders and potential partners.
Singapore is also well connected to the regional market. This allows our neighbours to tap on the expertise here readily. The 8,000 multi-nationals based here stand ready to complement the knowledge pool with their market insights in Asia and the region.
Infrastructure financing
As a financial centre, Singapore is fast developing expertise in infrastructure financing. We offer infrastructure financing options such as: project financing for green field infrastructure projects; bond financing for bundling projects to raise capital for future pipeline development; business trust to list infrastructure assets and for capital recycling and infrastructure funds for equity.
Many infrastructure players are already utilising Singapore for their financing needs. For example, Singapore has a strong Business Trust Act to protect business trust listings. This has been tapped on by Singapore companies such as Keppel Infrastructure Trust but also by Hong Kong-based Hutchinson Ports Trust. Most recently, Hainan Airlines from China also raised bonds in Singapore.
In recent years, International Enterprise (IE) Singapore has enhanced our partnership with various development banks to gather and develop the relevant expertise. In March 2014, IE Singapore and Asian Development Bank commenced operations of the Asia Infrastructure Centre of Excellence (AICOE) to structure more bankable projects with governments of various countries.
Singapore is now in advanced discussions on being a founding member of the Global Infrastructure Facility (GIF). The GIF co-ordinates the efforts of multilateral development banks, private sector financiers, and governments interested in infrastructure investment in emerging economies. It enables collective action on complex projects that no single institution can achieve alone. Singapore is proud to work with other global funding partners such as Australia, Canada, China, Japan and the World Bank Group to enable such a facility.
Examples of Singapore’s partnership with China and Bangladesh
The Singapore-China friendship is warm and underpinned by substantial co-operation in a variety of fields. Singapore was China’s largest foreign investor for both 2013 and 2014. Increasingly, Chinese companies are also internationalising by using Singapore as a base to expand their regional operations.
As Chinese infrastructure players go global, there is scope to partner Singapore companies with strong engineering capabilities as well as financial institutions with innovative and wide-ranging project financing tools. This would further complement the One Belt One Road initiative, which helps to enhance infrastructure connectivity in the region.
Singapore and China continue to have several successful collaborations in the infrastructure space. The Singapore-Suzhou Industrial Park and Sino-Singapore Tianjin Eco-City are internationally acclaimed examples of bilateral co-operation where Singapore companies have shared our urban planning experiences overseas.
A recent study suggests that China and Singapore companies have collaborated successfully on more than 100 projects globally and I believe this list is not exhaustive. For example, Sembcorp Design and Construction entered a 50-50 joint venture agreement with Sinohydro Corporation Ltd. in July 2014 to undertake the S$500 million contract from the Land Transport Authority of Singapore for the construction of the Marina South station and tunnels for the Thomson Line. It is expected to be completed by 2021.
Last year, Singapore engineering company, ISDN, signed an agreement with China Huadian Engineering Company Limited for the development of mini-hydropower projects across Indonesia. China Huadian will act as ISDN’s technology and project development partner. It may also become an investment partner. Their partnership is likely to extend beyond Indonesia into other Southeast Asian countries.
Further, a memorandum of understanding (MoU) has been signed between IE Singapore and Bangladesh’s Ministry of Power, Energy and Mineral Resources. Under this backdrop of strong and diverse partnerships, I am also pleased to note that IE Singapore and Bangladesh’s Ministry of Power, Energy and Mineral Resources will sign an MoU to address the demand for electricity in Bangladesh. Bangladesh was Singapore’s second largest trading partner in South Asia in 2014, and remains an important partner for collaborations in the infrastructure sector. The signing of this MoU will further strengthen friendly relations between our two countries and promote further economic co-operation, especially in the power sector.
Conclusion
This is the fourth of the series of round tables since the first one held in October 2013. Taking stock, IE estimates that this series of roundtables has catalysed over $4 billion worth in regional projects involving more than 20 companies. I am hopeful that we can further catalyse more infrastructure projects to benefit more economies and peoples.
