Private sector involvement crucial

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The participation of the private sector in Association of Southeast Asian Nations (Asean) infrastructure projects is crucial to sustain regional growth and attract much-needed investments.

This is what panelists from the private sector, multilateral institutions and governments said in a forum on Monday during the ongoing Asean Business & Investment Summit.

Ayala Corp. CEO Jaime Augusto Zobel de Ayala said that with robust growth and demographic dividends, the region was now facing the challenge of rapid urbanization and population shifts.

With this, Ayala said Asean urban centers would have to be upgraded as these are catalysts of growth.

“This is an extraordinary time for Asean but with growth comes challenges and we have to rely to government and the private sector to surpass this,” he said.

For Japan International Cooperation Agency Senior Vice-President Shinya Ejima, quality infrastructure is needed to achieve quality growth in the region.

“It means that it should be very inclusive and consistent with the strategies for development and should take into consideration the social and environmental aspects very carefully,” he said.

Ejima said the situation of every Asean country was very different, so connectivity projects like ports, airports, and highways are the key for every member state.

In connection with this, AirAsia Group CEO Tony Fernandez said policymakers should further discuss the issue of achieving connectivity through private sector participation.

“I would encourage more PPP (public-private partnership) in Asean. Privatization is critical to get infrastructure going,” he said.

Fernandez also encouraged the implementation of infrastructure projects outside big cities to stimulate economic activity in the countryside.

Asian Development Bank (ADB) Vice-President Diwakar Gupta, meanwhile, said Asean had a long way to go in terms of infrastructure, needing to invest up to $60 billion annually to catch up with other regions.

While a huge amount of money is available, what actually flows into investments is barely 1 percent, he claimed.

“So why does that happen? It happens basically because investors will send their money where they are comfortable sending it. In other words, you need to therefore create a matrix where the risk for investing is commiserate with the return,” he said.

Gupta said governments should create conducive markets, which means macroeconomic and political stability, proper dispute resolution, dependable laws and enactments, and enabling environments.

“Also, this kind of money will not come from the government, you have to pull it from the private sector. PPPs are an excellent way forward because they tend to leverage the related strengths of both parties,” he said.

“There are stuff like regulations that only governments can do. And then there is running business that has to be in private sector hands where efficiencies in execution can be leveraged. I think that is really the way forward,” Gupta added.

Thomas Hardy, acting director of the United States Trade and Development Agency, said the success of PPPs depends on finding the right private sector partner.

“They have to have strong partners that are professionals and recognize that they are taking the taxpayers money to build a certain infrastructure project,” he said.

International Container Terminal Services Inc Chairman and CEO Enrique Razon focused on the Philippines, saying the country has a lot of catching up to do in terms of infrastructure.

“We have to really focus on our own infrastructure. My hope is that this administration will really change the culture of how things get done in this country. The private sector has proven that we can do things. So it is really the government that needs to change the culture,” Razon said.

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