Ensuring Sustainability in Financing Cross-border Infrastructure Investments

Cross-border infrastructure initiatives can help Asia economically and socially. If the required $8 trillion investment in pan-Asian connectivity in the region’s infrastructure is made between 2010 and 2020, total net income gains for developing Asia could reach $12.98 trillion (in 2008 US dollars) between 2010 and 2020 and beyond, with more than $4.43 trillion gained between 2010 and 2020 and nearly $8.55 trillion gained after 2020 [1]. By facilitating the movement of goods, services, and human resources, producing economies of scale, promoting trade and foreign direct investments, creating new business opportunities, stimulating inclusive industrialization, and closing development gaps between communities, countries, and sub-regions, infrastructure connectivity helps improve regional productivity and competitiveness. Despite this, progress in the creation of cross-border infrastructure in the region is slow due to a lack of funding. The goal of this paper is to look at the major obstacles to cross-border project financing and discuss the roles that various stakeholders—national governments, state-owned enterprises, private sector, regional entities, development financing institutions (DFIs), affected people, and civil society organizations—can play in facilitating cross-border infrastructure development. This paper, in particular, highlights the major risks that deter private sector investments and FDIs, and suggests that, in order to achieve the multiple United Nations Sustainable Development Goals (SDGs), more attention should be paid to sustainability-related measures and adaptation standards [2]. The integration of environment-social-governance (ESG) elements contributes to a more inclusive, sustainable, and resilient environment for cross-border infrastructure projects. Recommendations based on worldwide experiences are also presented to handle the funding demands and hazards associated with cross-border initiatives.

Author (S) Details

Jyoti Bisbey
International sustainable development finance specialist, US.

Dr. Lili Li
Lee Kuan Yew School of Public Policy, National University of Singapore, Singapore.

Qingyang Gu
Lee Kuan Yew School of Public Policy, National University of Singapore, Singapore.

Ching-Yuan Chu
Senior associate in the Valuation Advisory Service at Duff & Phelps, Taiwan

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