Australia, Indonesia form regional PPP centre

With the backing of other APEC countries, the two nations are looking to form a regional infrastructure financing market. 

At the most recent Asia-Pacific Economic Cooperation (APEC) Finance Ministers’ meeting in Indonesia, the Australian and Indonesian representatives presented a joint proposal to form a regional infrastructure financing market, to which all finance ministers agreed, according to a statement from Joe Hockey, Shadow Treasurer for the Australian Parliament.

The proposal stipulated the establishment of a Public Private Partnership centre in Jakarta to drive infrastructure investment in Indonesia, which will be aided by an Expert Advisory Panel comprised of technical experts from APEC economies, business, and development banks.

The benefits of the centre will not be limited to Indonesia, however. It is estimated that $8 trillion of infrastructure investment will be needed by 2020 to support Asia’s current level of growth, and the statement claimed that the new PPP centre would help deliver capital to the entire region. It should also provide opportunity for Australian capital and infrastructure businesses.

APEC also held Asia Pacific infrastructure partnership dialogues in the Philippines and Thailand earlier this year. Another Hockey statement further suggests that the establishment of other PPP centres could follow.

“These key initiatives target the major infrastructure problem in the region, where economically viable projects fail to attract adequate funding from investors,” Hockey said in the statement.

Other nations also expressed an intention to contribute. China hopes to take the proposals further when they host the next APEC conference in 2014. The more developed nations of New Zealand, Singapore and Korea joined Australia in signing a statement of intent to develop the Asia Region Funds Passport, which is meant to ensure that savings in Asia can be invested back in the region.

At the same time, Hockey emphasised the necessity of making infrastructure commitments long term. At a time of increasing financial volatility, he views infrastructure investment as a way of attracting more stable and long-term capital flows to the region.

“These initiatives are not short-term fixes – they are part of a multi-year APEC commitment to infrastructure,” he said.