With economies across Asia-Pacific reopening following the pandemic, all eyes will be on how the unprecedented health emergency is likely to reshape future infrastructure investments in the region. Short-term slowing economies, elevated inflation and higher cost of finance are headwinds that could affect the pace of development.
The pandemic has revealed plenty of shortcomings in the region’s preparedness to respond to such a crisis. In particular, it has led to a greater attention on the development of infrastructure that supports public health and on the improvement of transportation systems to facilitate the delivery of essential goods and services.
The crisis has also accelerated investment in digital infrastructure, such as broadband, networks, data centres and online platforms, a trend that was underway even before Covid-19. With remote working and online education, these backbone technologies have become even more critical and necessary to meet future needs.
Indeed, infrastructure will continue to play a defining role in Asia’s growth story. With the threat of climate change ever growing, the region will also need to focus on sustainable infrastructure now more than ever. Asia has risen to this challenge and the quality and scale of sustainable infrastructure are likely to dominate future projects.
For example, greenfield projects, such as the upgrade of airports, toll roads and ports, which were disrupted or delayed during the past three years can resume, but they will now take into account the application of decarbonization solutions. There is an urgent need to build climate-resilient infrastructure that can support Asia’s rapid urbanization and boost digital connectivity. Accelerating Asia’s clean energy transition is a must if the region is to keep pace with its development goals while meeting its net-zero commitments.
Meanwhile, Asia’s infrastructure financing gap remains huge. With public fiscal resources strained, private capital can play a role in funding this gap. The recent launch of several Asia-dedicated infrastructure funds is pointing to the opportunities ahead. While private sector participation has increased in recent years, regulators can play a big role in further mobilizing private capital.
The Asset Events is pleased to host the 8th Asia Sustainable Infrastructure Finance Leaders Dialogue, an annual gathering of infrastructure finance leaders that will discuss the outlook for Asian infrastructure.
Infrastructure will continue to play an important role in Asia’s growth trajectory but the region must put greater focus on projects that can support its sustainable development goals. Decarbonization solutions must be put in place across sectors such as transportation, energy, water and waste management as well as digital connectivity. Sustainable infrastructure, however, presents a variety of challenges from financing to mitigating infrastructure risk.
Financing low-carbon initiatives is no longer enough as Asia needs to support high-emitting industries to meet their climate goals. Amidst this backdrop, the need for transition finance is expanding. But the lack of standards has stifled the development of this space. Southeast Asia’s updated sustainable finance taxonomy, however, is expected to unlock funds to help the region meets its net zero targets.
Asia’s renewable energy transition is in full swing. But while the region is launching more renewable energy projects, the challenge of ensuring a stable and reliable power supply remains. A RTC renewable energy strategy is crucial if Asia were to successfully reduce its dependency on fossil fuels. Battery energy storage systems will play a key role in solving intermittency issues.