Saturday, August 19, 2017 - 10:57:50

ADB seminars talk investment, public-private partnership

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Two symposiums were held in Hanoi on May 5 as part of the ongoing 44th Annual Meeting of the Asian Development Bank (ADB) Board of Governors.

At the seminar, entitled “Asia’s Growing Investors: Agents of Change”, Standard & Poor's President Deven Sharma said Asia has made remarkable progress in developing much-needed capital markets, but the region still has a long way to go to realise its full potential, and priorities for policy makers should include adopting an investor-based mindset.

Standard & Poor's forecasts that public and private sector borrowers globally will need to raise or refinance around 70 trillion USD of bonds between now and the end of 2015, with demand for capital in Asia likely to grow strongly as governments push ahead with infrastructure projects and companies expand. Standard & Poor's believes the development of healthy and efficient capital markets will play a vital role in ensuring Asia's ongoing economic prosperity.

The ADB estimates that Asia will require 750 billion USD a year over the next 10 years to meet the region's basic infrastructure needs. The region's governments also expect that the ongoing shift to consumption-driven economies will result in increasing demand from small- and medium-sized businesses for bank support. "In turn, the corporate and infrastructure sectors will need to rely more heavily on the domestic and global capital markets to support domestic growth as well as the aspiration of many Asian companies going global," Sharma said.

Asia's increasingly important capital markets must be built on the free flow of reliable information, creditors' rights, and independent, objective credit analysis. Structural and regulatory restrictions on investors, including constraints on portfolio composition, local bond ownership, and requirements for local and foreign investors, can impede the development of strong capital markets.

Standard & Poor's Head of Asia Pacific, Tom Schiller said "These challenges should be discussed and addressed by policy makers, investors, and market participants”.

Standard & Poor's believes that well-calibrated and coordinated regulation and supervision, high levels of transparency, and careful monitoring and management of systemic risk can all contribute to a sound and sustainable system.

Schiller said "Standard & Poor's stands ready to support the region's continued progress, and remains deeply committed to helping investors navigate the credit risks".

At the seminar “The Role of the Private Sector in Promoting Regional Integration: Trade and Cross-border Infrastructure”, the panelists said that Asia and the Pacific needs to create better infrastructure and finance and closer trade links if the region is to establish a firm foundation for strong, collective and long-term growth.

Asia’s economy as a whole is expanding swiftly, with growth in developing Asia estimated at 9.0 percent last year and forecast at 7.8 percent this year and 7.7 percent in 2012. Despite its strong economic growth in recent years, the region still has nearly 2 billion people living on less than 2 USD a day.

However, with governments and development banks unable to finance the gamut of investments needed in the region, private sector participation is key. Guarantees, public-private partnerships, and other risk mitigation instruments can all help to mobilise hesitant private money.

Suitable frameworks, policies, and opportunities are key to attracting private sector investment in the region./.
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