ASIA-PACIFIC Economic Cooperation (APEC) delegates are meeting in Iloilo City on Thursday and Friday for the Workshop on Infrastructure Financing and Capital Market Development, which aims to address the challenges in the Asia-Pacific region’s infrastructure sector.
Although Asia-Pacific economies have achieved significant progress in raising living standards, the region’s infrastructure has not kept pace with economic growth.
The increasing congestion of roads, power shortages, and inadequate public services imperil hard-won economic gains for many economies in the region.
Insufficient progress in expanding infrastructure to less-developed areas has resulted in uneven growth, contributing to regional and social inequalities and threatening to mire them in the middle-income trap.
Discussions held under the auspices of the APEC Finance Ministers’ Process (FMP) in previous years have identified two major obstacles.
The first is the lack of a pipeline of bankable infrastructure projects in developing economies that can attract capital from institutional investors.
The second concern is the lack of appropriate financial instruments and enabling policy frameworks for pension funds and insurance firms to expand their investment in emerging market infrastructure.
By addressing these two issues, the FMP can remove two major obstacles to the advancement of the APEC’s vision of sustained, balanced and inclusive growth.
The APEC seminar in Iloilo City will seek to identify concrete and practical initiatives to address these issues that can be progressed by the FMP in coming years as part of the Cebu Action Plan.
The meeting’s agenda includes building capacity to expand the pipeline of infrastructure projects.
Much work has been undertaken in previous years to address this challenge. There has been much focus on this aspect in the work of multilateral and public agencies, for example, in assisting economies with project preparation.
The FMP’s initiatives in this area are establishing the Asia-Pacific Infrastructure Partnership (APIP) to serve as a platform for public-private sector dialogue, and the creation of a regional network of PPP Centers among interested developing economies to help improve cross-agency coordination and to serve as channels for technical assistance.
Also part of the agenda in Iloilo is the development of capital markets, because it provides the most important channels for investing long-term funds in infrastructure.
The active participation of pension funds and insurance firms benefited the region’s infrastructure development.
At present, many economies in the region have become increasingly aware of the importance of local currency bond markets both for financial stability and for economic growth.
Also, a number of regional and domestic initiatives have been under way for several years to strengthen these bond markets.
The APEC delegates will also tackle initiatives to mobilize long-term investments in the region.
While efforts to develop capital markets take time, the FMP can explore other ways to mobilize long-term investments through collaboration among institutional investors, financial institutions and multilateral development agencies as well as private equity funds.
The APEC meeting in Iloilo City, to be held at the Royal Garden Hall Convention Center, is being organized by the Department of Finance, in collaboration with the APEC Business Advisory Council, Asia-Pacific Financial Forum, and Asia-Pacific Infrastructure Partnership. PND
