Hong Kong could be a hub for financing infrastructure projects in the region and play a significant role in the financial and operational aspects of projects related to the Asian Infrastructure Investment Bank, the financial secretary said.
Writing on his blog, Paul Chan Mo- po noted that different researches have pointed out that Asia has enormous demand for capital in developing infrastructure, and that to merely rely on governments and multilateral banks such as AIIB for capital is insufficient.
He said studies by the Asian Development Bank pointed out that, between now and 2030, developing areas in Asia need some US$1.7 trillion (HK$13.26 trillion) a year to maintain the momentum for development, reduce poverty and meet challenges posed by climate change.
“The key is how to make efficient use of the enormous resources in the market and direct capital that are looking for long-term steady returns toward these infrastructure projects,” Chan posted.
He said certain risks such as politics, costs, financials, currencies and construction of infrastructure projects in emerging markets in the past have caused many investments to come to a stop, especially greenfield projects.
Chan, who attended the second annual meeting of the AIIB board in South Korea, said Hong Kong can take advantage of its experience as an international financial center to help match projects and capital.
He said the Infrastructure Financing Facilitation Office of the Hong Kong Monetary Authority has gathered over 60 multilateral financial institutions, pension funds, insurance companies, institutional investors, infrastructure investors and operators, among others, to share information about potential infrastructure projects and look for solutions to reduce risks related to the infrastructure projects.
Chan said since the AIIB’s launch in January last year, membership has expanded from 57 to 80, including the most recent members Argentina, Madagascar and Tonga.
Chan said the AIIB supports the Paris climate accord and that one of the bank’s important goals is to help its members move toward a low-carbon future.