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I received an invitation from the Government of Japan, Ministry of Foreign Affairs (MOFA) to participate in the ASEM Seminar in Tokyo on 12 September 2018 and make a presentation there on Master Plan on ASEAN Connectivity 2025, ASEAN's perspective on how we intend to advance connectivity. Presentation slides can be found on the “ASEM Infoboard”. (https://www.aseminfoboard.org/events/asem-seminar-on-sustainable-connectivity-and-quality-infrastructure)
Connectivity means different things to different stakeholders. In ASEAN, we see from physical, institutional, and people-to-people connectivity. So it is not just about infrastructure, it is also about self-infrastructure, institution arrangements, as well as the people component where culture, education, and travel come into picture.
Let me briefly touch on this given that the organizers have asked me to focus a little bit more on infrastructure, but over my presentation, I will also touch on other aspects, but focus a little bit more on sustainable infrastructure. You have heard from many speakers this morning and just now, that infrastructure demands are high, are large, but most of them in terms of financing are largely unmet. The challenge is how do we get these infrastructures financed There are various estimates out there but demands are really high. In order for us to address this issue, ASEAN has adopted the ‘Master Plan on ASEAN Connectivity 2025.’
This master plan focuses on five strategic areas, which are sustainable infrastructure, digital innovation, seamless logistics, regulatory excellence, and people mobility. These five areas we see as mutually reinforcing. Infrastructure is important for commerce, for trade, as well as for people mobility, as well as having good regulation is also important for us to advance our infrastructure development. They all can be seen as five different layers, but interacting five different areas.
In terms of specifics, under sustainable infrastructure, we will be looking at building an infrastructure pipeline, enhancing infrastructure productivity, developing a sustainable urbanization strategy.
In terms of digital innovation, we are looking at how to support micro, small, medium enterprises, participation in digital economy. We will be looking at financial inclusion, open data, as well as digital data, governance framework.
In the area of seamless logistics, we will be looking at having a database on trade routes, as well as to look at how we can enhance supply chain within the region.
In terms of regulatory excellence, it is on harmonization of standards and mutual recognition, as well as addressing trade distorting non-tariff measures.
In the area of people mobility, we will be looking at how we can facilitate greater travel, how we can ease visa arrangements in the region.. We are looking at also more responsive technical education and vocational training, as well as higher education exchange.
The connectivity agenda in ASEAN covers a wide range of issues and requires multiple stakeholders participation. What we want to do is to bring down this vision at 10,000 feet to something that is 3 feet. For us to do so then we have to translate each of these different initiatives into specific projects. Partnership will be very important in this context, and ownership will be very important in this context. Things would not happen by its own. We need to make it happen by translating them into specific projects.
How we envisage the implementation of this particular plan? In order to implement the master plan, we are looking at three different phases. The first phase is what we call a planning phase. So the planning phase is 2017 and 2018. This is where we get all the different initiatives, translate them into project proposals, map out what we intend to do with this particular initiative from now till 2025.
Concurrently we look for partnership. We work with different partners, partners within ASEAN, partners beyond ASEAN in order for us to realize these different projects. Once we have that firm up, then we go into implementation phase 1. For us, many of these initiatives need to be stakeholders’ focused. It also needs to be partnership-focused in that context. It takes a village to deliver some of this.
Let me now go into a little bit more detail in terms of the three different initiatives under sustainable infrastructure. Currently, the first initiative is to establish a rolling priority pipeline list of potential ASEAN infrastructure projects. For these, we have currently engaged the World Bank. We are also currently discussing with the Asian Development Bank and the Asian Infrastructure Investment Bank. In establishing this pipeline, we have to come up with a criteria and a project application form, so that each of the member states will be able to submit different projects for inclusion into the pipeline. For us to do so, we will also need to do quite a bit of country consultation so that they can eventually build this connectivity story of infrastructure within ASEAN.
So far, I think, we have received a number of project applications. The World Bank will be going into a screening and a scoring process over the next few months. Hopefully, early next year, we will be announcing an initial pipeline of ASEAN infrastructure projects.
After the initial announcement, the next step is to look into developing pre-feasibility studies for those projects within the pipeline. We are envisaging a few projects at this moment to undergo such an assessment. We are also looking at an assessment on financing options including how we can mobilize private capital for some of these projects. The pipeline does not confine itself to private investments; it also looks at some other public sector projects.
After we have done that, the next step beyond 2019, 2020 is to hold an investor forum. The specific of that particular date now we are looking at 2020, but it could be 2021. It depends on the details. It depends on the different agencies that are involved in order to do so. For this to happen, for us, the multilateral development banks will be one of resource people because they are, in a way, our trusted partner who will be able to communicate with the investor community.
The second initiative links to enhancing infrastructure productivity. This project is still at the early stages. We have finally completed a proposal. We have already got a partner to implement this. So hopefully, by early next year, we will able to start this particular project. So the focus is going to be very much on how we can select project better, how we can make better use of existing infrastructure. So it is not just always build build build, sometimes it is also make better use of existing infrastructure through technology one way, through systems and so on.
That is something that we are currently working on. Hopefully, we will get a framework by 2019 or early 2020.
The third aspect is when we talk about connectivity, we cannot be talking about connectivity at a capital level. We need to engage the provincial level, we need to engage the cities, and they are particularly important in this context. As you may be aware, under Singapore’s chairmanship this year, the initiative on ASEAN smart city network is an important endeavor here. Within the connectivity context, we will be having an ASEAN sustainable urbanization strategy out sometime in November this year at the sideline of the ASEAN summit.
The strategy basically looks at what are the priority areas for us to advance sustainable urbanization, what are the actions that we can take. Actions could be things like flight management system within ASEAN. Within cities, it could solid waste management within ASEAN cities. There are a number of areas that we have prioritized. I think that will be released later this year.
For us to realize infrastructure in all these different areas, whether it is national government, provincial government, cities, sub-regional levels, we look at five different components. First there is still considerable gap in regional institutional capabilities to develop viable project pipeline. We hear a lot about PPP, so we need to have more properly prepared project rather than poorly prepared projects. We hear about philanthropy, I think that is a good new source to look into. Most importantly, we think that multilateral development banks is a critical source of project structuring expertise. Our various partners, because we also work with export agencies of different partners, and they do have quite a bit of knowledge in this area.
The second aspect is strong infrastructure governance are particularly important. And clear regulations or operating environment will create greater certainty for investors, so for us legal framework and so on should be priority for us.
The third aspect is robust funding and financing framework. Most often than not, we are always confined to government sources, or even in private sources, we are looking at commercial banks and so on. This morning we hear about various innovative financing solutions, involving pension funds, insurance, local community, bonds, project bonds. We should work on tapping these sources of financing.
The fourth aspect is to streamline delivery of projects. We try to see how we can look at infrastructure as an ecosystem itself, bringing in different parts of infrastructure towards greater delivery. I think that is particularly important for us.
The last aspect, we build collaboration with partners. Collaboration does not start when we are done with the pipeline. Collaboration starts when we want to develop the pipeline. Before we start the process, in fact, we invited all the multilateral development banks. We also invited our dialog partners. In ASEAN we have dialog with different partners on connectivity issues so that we bring them in at an early stage, and then once we have an initial pipeline, we should also be talking to private sectors just to market-test and to get some ideas whether some of these projects actually work.
Therefore, building that collaboration, having a partnership focus is very important for us.
Let me just touch briefly on the broader issue. Connectivity is not a short-term plan. It is a long-term plan, it is multi-year, it involves cross pillar in a sense that cross-pillar here means we involve multiple agencies within ASEAN so that we make sure that there is ownership, there is buy-in into the initiatives. This cannot be a one of engagement, this has to be a continuous engagement.
In March this year, the Lead Implementing Body for Sustainable Infrastructure was established. These are mainly officials dealing with public works or planning of the respective ASEAN governments. They have been established to coordinate infrastructure development in ASEAN.
We need to build partnership for sustainable infrastructure. For all that we talk about in terms of whether it is smart, whether it is sustainable, at the end of the day, it is the people at the heart of all these developments.
What are the potential opportunities in this context? We need to look at various frameworks because connectivity definition is different in different forums, whether it is in ASEM or APEC. ASEAN connectivity, sub-regional connectivity, connectivity beyond ASEAN, so there are many many frameworks out there. Whenever we talk to different sub-region or different areas, everybody has their own approach.
I think what is important for connectivity here is how we can improve what we have been doing. It is your connectivity, my connectivity, or their connectivity; it is about what we have been doing now, how we can do it better through connectivity. For that to happen, we need to identify specific projects. For that to happen, we need to have constant dialog. We need to have cooperation. And we need to create synergies on some of these areas that I talked about.
Japan is an important dialogue partner of ASEAN, and we look forward to further strengthening cooperation in the context of ASEAN connectivity.