Asean countries need to find ways to attract investors

"Asean’s gross domestic product of US$2.6 trillion means that, if it were one country, the market would be the seventh-largest economy in the world. So it is impossible for global investors to not pay attention to this region," Azhar Zabidi told The Nation in an exclusive interview. "Each country is at a different level of economic growth with different priorities, where some have crossed a certain level and some are still emerging. But what we are facing as a country is challenges in infrastructure, and one of those key challenges is the ability to raise capital to fund infrastructure," the CEO said.

Zabidi recommended that in order to match funding needs to fund providers, a country had to recognise its own demography, ensure the availability of a strong capital market, ease the regulations regarding the issuance of debt security to fund an infrastructure project, and ease the restrictions on putting money into greenfield government projects that have yet to generate income.

"It is happening to many countries in Asean where funds are restricted from putting money into a greenfield project simply because these are long-term projects which take time to build – roads, [railways], ports and airports – so it very difficult to convince investors to invest where there [will be] no return for several years while taking on an exposure to completion risk," he said.

"As Asians we have a very high private savings rate when compared to the West, since it is in our blood and it is in our nature to do that, which means that there is this huge pool of money that could be used to fund all those infrastructure [projects]. But if we do not facilitate the necessary framework for that to happen, then it is going to be very difficult to efficiently allocate funding for infrastructure," he said. Zabidi explained that this meant a country’s legal and regulatory systems along with the tax regime had to be efficient in terms of creating channels from the large pool of savings to infrastructure projects, such as strong capital-market regulation where people can, with certainty, put money into the system and know that it is safe. Another example is to ease regulations to make it more flexible for companies that hold large sustainable concessions and contracts for government projects, such as energy and large transport-infrastructure projects, to raise funds in the capital market.