ASIAN INFRASTRUCTURE FINANCE 2019
Bridging Borders: Infrastructure to Connect Asia and Beyond
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EXECUTIVE SUMMARY

Infrastructure projects focused on cross-border connectivity present significant investment opportunities and are vital for long-term growth in Asia.

This is the main conclusion of the inaugural Asian Infrastructure Finance report developed by AIIB.

Using snapshot analyses of financing cost, financing value and construction costs across eight key markets– Bangladesh, China, India, Indonesia, Pakistan, Philippines, Russia and Turkey—the report explores how tensions, rising nationalism and macroeconomic developments are impacting cost drivers and investment potential on a country-by-country basis.

For the eight countries considered, the total value of market transactions reaching financial close fell in 2017 and is likely to also register a small decline in 2018 compared to 2016
(see Figure 1 and Figure 2).

The report also identifies where infrastructure opportunities are still largely untapped by investors and are at risk of remaining so with increasing uncertainties. These report highlights, among others, can be found below.

HIGHLIGHTS

The Asian Infrastructure Finance report identifies significant infrastructure opportunities that can bring about trade and development that supports income growth:

  • Increased regional rail connectivity in Central Asia has the potential to bring about more Europe-China trade and integrate Central Asia with other regions.
  • Falling renewable energy generation cost, coupled with greater awareness on climate change issues, will lead to increased investments but must be complemented by infrastructure to enhance cross-border renewable energy trade.
  • Information and communications technology is a key enabler to facilitate trade and integration, but some countries will require greater support from the international community.

Stakeholders in the infrastructure sector will face a very difficult situation in the next few years:

  • Interest rate hikes due to central banks’ policy normalization will drive a flight to quality.
  • Trade frictions and market volatility have increased uncertainty around project pipelines.
  • Rising geopolitical tensions and a busy election cycle will increase investor caution.
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