Experts Seek Ways to Increase Sustainable Infrastructure Financing
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An expert group meeting convened by ESCAP discussed how developing countries in Asia and the Pacific can increase the flows of financing to meet infrastructure needs in the region.

The discussions drew attention to the need for sustainable and resilient infrastructure development in developing countries (SDG target 9.1) and for facilitating financial and other kinds of support to small island developing States (SIDS) and landlocked developing countries (LLDCs) (SDG target 9.A).

Participants discussed various strategies for promoting and accessing financial flows for sustainable infrastructure, and reviewed parts of a forthcoming ESCAP book on financing sustainable infrastructure.

8 March 2019: An expert group meeting discussed how developing countries in Asia and the Pacific can increase the flows of financing to meet infrastructure needs in the region. The discussions, convened by the UN Economic and Social Commission for Asia and the Pacific (ESCAP), drew attention to the need for sustainable and resilient infrastructure development in developing countries (SDG target 9.1) and for facilitating financial and other kinds of support to small island developing States (SIDS) and landlocked developing countries (LLDCs) (SDG target 9.A).

The expert group meeting took place from 7-8 March 2019, in Bangkok, Thailand, featuring speakers from infrastructure-related and financing facilities such as the Group of 20’s Global Infrastructure Hub, the World Bank, the International Finance Corporation (IFC), the Asia Development Bank Institute (ADBI) and several universities in the region. The organizers highlighted that developing sustainable infrastructure is a complex but critical element of the 2030 Agenda for Sustainable Development. They noted that, since the region emits more than half of all global greenhouse gases (GHGs), it will be necessary to find sustainable solutions for transport, energy, information and communications technology (ICT), and water systems.

Maintaining existing infrastructure can be a viable strategy; the public sector should think “smart” rather than “more.”

Meeting participants discussed various strategies for promoting and accessing financial flows for sustainable infrastructure, including through multilateral development banks, green bonds, taxation reforms, governance reforms, and infrastructure investment programmes such as China’s Belt and Road Initiative. On public efficiency in infrastructure services delivery, speakers stressed that maintaining existing infrastructure can also be viable strategy for increasing the stock of resilient and sustainable infrastructure, urging the public sector to think “smart” rather than “more.” They noted that government strategies could demand “purpose maximization” instead of “profit maximization,” and highlighted the continued role of governments in measuring performance and payments, budgeting, environmental and social risk management, regulation response and enforcement, stakeholder engagement through the life-cycle of the infrastructure, land acquisition, and permits and licenses. They also highlighted the use of technology as a way to solve problems, for example, through “smart cities” approaches that make use of live camera feeds and Area Traffic Control systems that use data from vehicle detectors to optimize the timing of traffic signals.

On good governance of infrastructure investment, speakers suggested that improving the planning, transparency and governance of public infrastructure projects would increase their attractiveness to private investors. In SIDS, speakers suggested improving investment flows and opportunities through establishing cooperation with neighboring countries and taking part in regional and global value chains in tourism and other industries. For LLDCs, they noted that the main challenges relate not so much to remoteness and distances from sea coasts, as to the need to make better use of existing global infrastructure financing options and to address domestic governance issues that result in high transportation costs, a lack of economies of scale, and corruption.

Speakers also discussed various options in financing through capital markets, noting the existence of various bond types or “colors” that governments in the region have deployed. These include green bonds for financing environmentally-friendly projects such as renewable energy, blue bonds for financing marine and ocean-related projects, “masala bonds” issued by the Government of India and structured in a way to eliminate the currency risks involved in an overseas bond issuance and internationalize the Indian currency, and Islamic bonds issued in Malaysia, Indonesia and Turkey, which avoid the practice of usury through sharing of risks and revenues.

They also discussed countries’ experiences of cross-border investment in transport, energy and ICT infrastructure, such as the Nam Theun 2 hydropower project in Lao PDR.

Mathias Lund Larsen, Stanford University and the International Institute of Green Finance, stated that there is an increasing need for host countries involved in China’s Belt and Road Initiative to understand how to deal with Chinese financiers and construction companies. He cited existing policy documents that regulate China’s overseas investment and its application of sustainable finance principles in such investments. He presented an analysis of Asia-Pacific countries’ progress toward achieving the SDGs by 2030, showing that the region is well on the way toward achieving SDG 1 on ending poverty, SDG 3 on health for all, and SDG 4 on education for all, but has made less progress on other SDGs.

The meeting also provided opportunity for participants to review and comment on several draft chapters of a forthcoming book to be published on financing sustainable infrastructure by ESCAP. [Meeting Announcement] [Meeting Agenda]

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