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Finance

The Association of Southeast Asian Nations Infrastructure Centre of Excellence

  • Project Name: Regional Technical Assistance: Supporting Regional Project Development for Association of Southeast Asian Nations Connectivity
  • Region/Country: Southeast Asia/Brunei Darussalam, Cambodia, Indonesia, Lao People's Democratic Republic, Malaysia, Philippines, Singapore, Thailand, and Viet Nam
  • Sector and Themes: Finance
  • Year: 2012–2019
  • Project Leaders: Anouj Mehta
The Association of Southeast Asian Nations Infrastructure Centre of Excellence
ADB Principal Infrastructure Specialist Anouj Mehta and team in one of the seven high-level capacity building activities supported by the project. Singapore, July 2018.

The launch of the two new facilities—Inclusive Finance Facility and ASEAN Catalytic Green Finance Facility—is timely and much needed.

—Apisak Tantivorawong, minister of finance, Thailand

Development challenge

Countries in the Association for Southeast Asian Nations (ASEAN) face two large and interlinked issues: massive infrastructure financing needs, and the need to better connect their population of more than 600 million. These countries required an estimated $60 billion per year between 2010 and 2020 and had a massive financing gap. [1] ADB was already involved in developing an ASEAN regional growth focus, and had contributed equity and management expertise to establish the ASEAN Infrastructure Fund in 2011. However, there was a huge challenge: attracting the scale of private capital.

Solution

The ASEAN Infrastructure Centre of Excellence (AICOE) was formulated as a facility available to all ASEAN countries. This regional TA was cofinanced by the governments of Singapore and Canada.

Knowledge products and services delivered

Twenty-three infrastructure projects in the energy, sanitation, health, and transport sectors across Cambodia, Indonesia, Malaysia, Philippines, Thailand, and Viet Nam were screened, leading to various sector-specific public-private partnership (PPP) models. Six PPP bid processes enhanced the capacity of each of the governments. Seven high-level capacity building events, nine country workshops, and training sessions deepened the understanding of ASEAN government officials and stakeholders in designing and managing PPP and green and innovative finance project approaches. A “Beyond Traditional PPPs” model developed innovative forms of private capital mobilization, including green finance and capital market approaches. In all, six green and innovative financing concepts and structures were developed. A publication that included green and innovative finance models was disseminated at a 2019 ASEAN roundtable.

Impact and results

The Cambodia Solar Park project obtained the lowest bid of power tariff for a solar project in Southeast Asia. A second phase of the project is being supported by ADB. The project has both climate adaptation and mitigation impacts to help Cambodia meet its emission reduction commitments under the Paris Agreement. The ASEAN Scaling Up Renewable Energy Initiative program was initiated in 2019 to scale up the Cambodia project model across more countries, with three projects already commenced. Replicable PPP models were created for bus rapid transport, wastewater management, and Health Care, in three countries; capital market models led to bond issuances being supported by ADB’s SERD Innovation Hub in Thailand and Indonesia.

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ADB Vice-President Bambang Susantono promoted innovative finance mechanisms to accelerate green development at the Indonesia Green Finance Roundtable held in Jakarta, Indonesia in July 2018.

The ASEAN Catalytic Green Finance (ACGF) Facility—the region’s first regional green catalytic fund—was developed with AICOE support and launched in 2019 to accelerate green infrastructure investments in Southeast Asia. The ACGF received almost $1.5 billion in cofinancing pledges from more than 10 partners. The first global ASEAN green finance conference held jointly by ADB and the Organisation for Economic Co-operation and Development in France in 2019 led to several follow-on programs in some ASEAN countries, which are currently supported by SERD.

Lessons for Replication

The end-to-end support model used for the Cambodia solar park project and the PPP models for other sectors can be replicated for other infrastructure projects. Innovative financing models developed under the TA are also now being explored for other PPPs. The project also highlights the importance of building collaborative relationships with key government agencies, PPP units, and development partners. Partnerships with Canada and Singapore resulted in synergies with related initiatives such as the Asia-Pacific Project Preparation Facility.

We believe more governments in the region will adopt auction as a strategy to procure renewable energy generation capacity, and this structure and tariff will serve as a benchmark for future projects.

—Siddharta Shah, director, Office of Public–Private Partnerships, ADB