Closing the Financing Gap in Asian Infrastructure

Abstract

Infrastructure investment in Asia faces a massive financing gap, both in “hard” and “soft” infrastructure, despite the region’s high savings. Underlying this gap is a capital flow paradox in which Asia’s outflow of portfolio funds far exceeds the inflow. To change this, solutions in at least three areas are necessary: innovative measures to mitigate constraints, preparation of bankable projects, and mitigation of risks. This study presents examples from actual investment projects to illustrate the latest developments addressing some fundamental constraints on infrastructure financing. “[t]he infrastructure story is tantalizing—trillions of dollars needed in infrastructure upgrades and a global wall of money seeking yield. Yet the investable universe is small and funds take a long time to invest...” (BlackRock 2014)