 Thanks to all of you who uh fought your way through traffic to uh to get here. It was a nightmare day. I uh I Knew this when the traffic report was urgent at 6 30 a.m Thanks all of you for making the effort to to be here and Want to welcome both those of you here in the audience and those of you watching this program at csis.org at the online feed You can follow us on Twitter at Hashtag csis live at shoal chair But we welcome those of you who are viewing Really around the world Thanks for your time and attention to this very important topic of infrastructure finance Innovation in the Asia Pacific. We're delighted to be Partnering for this event with the National Center for APEC. The National Center for APEC is a a business association Which leads the private sector engagement us private sector engagement in the APEC process They've done a wonderful job at this for a number of years the base in Seattle, Washington But they visit Washington DC on occasion and we're delighted to have them here today the National Center for APEC also serves as the Secretariat for the US APEC business advisory council the three Presidentially appointed business executives who represent US business interests in the APEC business advisory council process so we thank them for their general sponsorship of this event and I'd like to start the event by welcoming the President of the National Center for APEC to introduce our keynote speaker president Monica Whaley National Center for APEC Thanks, Scott. It's been the National Center's pleasure to work with csis now for I think this is our second and a half year of working together on the infrastructure and Investment work in APEC and it's always great to have they have wonderful resources here and obviously We're delighted to partner with you Scott old old friend of the National Centers This is the National Center's 20th year in existence When it started there was APEC was new itself And there was not a clear path as to how the private sector was going to engage with APEC but clear that APEC was going to be focusing on Issues and activities that we're going to deal with the private sector so early on a quite visionary person named Sandy Christoff and Larry We'll remember her well Said there's got to be something there's got to be a way to put these things together And so I was pleased to to work with her and a great team of folks that were Involved in the Seattle meetings in 1993 to pull together the National Center But one of the sort of the milestones along the way of these last 20 years have been working with the trade in US Trade and Development Agency The National Center was pleased to partner with the agency on several key know or key Initiatives that we did one first one was a Shanghai model port project back in 2001 when When China hosted APEC and then we worked on a trade Cargo security project in Thailand with the Port of Lam Chabang So it's been a great partnership there as well So it's my really my honor lead to introduce you this morning Lee Zach is the director of the US Trade and Development Agency and she's been there since let me my glasses on sorry And it doesn't say exactly when she starts to 2009 Thank you, and but before that is actually was an adjunct professor of law in International project finance, so I thought that was a particularly salient Piece of her history that brings her to this meeting this morning as well as all the work the agency does helping US exporters and In a variety of ways and really small and large US exporters I think they one of the best agencies that actually works across the board with small meme enterprises as well as very large Companies and getting these these exciting projects done, so please help me welcome Lee Zach and thank you again Scott for CSIS Thank you very much Monica for that kind introduction and thank you Scott as for to CSIS for inviting me here this morning It really is nice to look out and see so many familiar faces both from the work that we're doing here in Washington, DC But also the work that we're doing in the region So I feel like it's really we're all sort of coming home And that's one of the things I wanted to do this morning It's just to be able to make a few points and have a bit of a conversation And I guess I wish that you all were eavesdropping earlier today when Scott was talking about why we were having this event and Why this region is so important and as a matter of fact when I was at the APEC meetings President Obama had focused on the fact that Nearly in the next five years nearly 50% of the growth in the world is going to be in this region What that leads us to are great opportunities Both with respect to trade and that's why the administration is so focused on TPP and Again, I think we were mentioning this morning. I think clearly the people in this room understand the value of TPP But one of the things I'm going to ask you to do is to go home talk to your neighbors Talk to the people you work with About what the value is how important this region is to the US economy and How important it is with respect to the growth of jobs in the US and that's really what the focus is of TPP But the other thing that we mentioned this morning and that was mentioned at the recent APEC meetings is that we really will not be able to take advantage of these trade agreements if there is not the appropriate infrastructure and That's exactly where US TDA comes into play as Many of you know what US TDA does is it links US businesses with infrastructure Opportunities around the world and we've been particularly active in this region as a matter of fact over the past three decades We have funded over 600 projects in the region focusing on infrastructure development and As you know, we focus on win-win opportunities So with those 600 activities that has resulted in over 18 billion dollars of US exports So again, I think it demonstrates what we're talking about there are opportunities abroad But those are opportunities in the United States as well And it's a very important approach to be able to focus both on the win-win What are the goals abroad and what is it that US business in particular brings to them? As I've been traveling in the region and I've been doing quite a bit of that lately There are three things that come to mind and I know that during the panel there is going to be discussions with respect to what some of the challenges are with respect to infrastructure and I'd like to lay out three things that we've seen recently and I'm going to use Vietnam as an example, but it could be any place in the region that we're focusing on the first thing is That what we see is that there is a Significant need for appropriate project planning and I want to thank Monica for mentioning the project finance background and one of the very important aspects of that is Before you can finance a project You need to make sure that it's viable and that's one of the things that you again US TDA does So we get to see it up close and personal that we provide grant funding for feasibility studies that look at the legal financial in and regulatory feasibility of a of a project What that's led to is also recognizing the fact that in addition To looking at this feasibility That we there also may be other gaps between the point that a project is conceived and financed and There's a significant need for funding for those types of projects as a matter of fact Going back to the project finance days three to ten percent of a project the bricks and mortars is in the planning stage What that does however is it's kind of a high-risk environment. It's a little bit of the chicken or the egg People are afraid to invest in the project planning because they don't know how it's going to turn out Which is again why? Agencies like the US TDA are very valuable partners in this The other thing is it kind of gives us a bird's-eye view of other things that might be needed and As a matter of fact in Vietnam US TDA has been very Active with respect to renewable energy and we see that there's a significant interest in particular with respect to wind But there was a bit of a challenge as companies were looking to bring on wind power They had to be able to get it into the grid and as a result US TDA Worked with the government of Vietnam to tackle that particular problem So we worked on a wind grid interconnection code Which would allow for power to be able to get into the grid So again trying to fill those gaps so that we can move projects forward The other thing we did because we saw such a strong demand for renewables is that we brought Delegates to the United States from Vietnam project sponsors focusing on wind and I have to say I'm really delighted that one of those project sponsors, which is the Kong Lai construction and trading company then went on to develop a hundred megawatts of wind in Vietnam and When I talk about the wind wind opportunities When they went forward in developing this wind power They did it with GE turbines and they did it with Exxon Bank financing So what this demonstrates is bringing sort of a whole of government approach And I think that's one of the things that you're really going to see there really is today a team USA That we've really focused on how we can bring all the players together And so with this one project what you saw US TDA project planning Exxon Bank for financing Being able to bring people to the United States to visit wind wind for the United States The other thing of course that you're going to hear more about This morning are the challenges with respect to financing and as a matter of fact, I flipped through the PwC report And saw that you've indicated that there's going to be a need for I hate to step on your line here But one trillion dollars in infrastructure every year between now and 2020 One trillion dollars to continue the growth. That's a lot of money So again focusing on this whole of government approach One of the things that has happened is that the US government has launched the Asia Pacific Clean Energy program And this is all of the agencies working together I see representatives here Rochelle's here from the Commerce Department So this is the Commerce Department State Department US TDA Exxon Bank OPEC All focusing on how we can work together to be able to provide Financing for some of these projects in the region and as a matter of fact, we've developed a center OPEC has joined us at US TDA's offices in Bangkok and what the goal is is to be able to have a one-stop shop Where you can go to access team USA How it is that we can not only provide financing, but how we can leverage Other financing at the same time and frankly, I'm delighted to say among the group state department OPEC and Exxon Bank they have announced commitments of six billion dollars toward financing for clean energy in this area So again, this is another opportunity But I the real goal here is not just to be able to provide that financing But to see how it is that we can then leverage other financing as well And as a matter of fact, it's one of the things that I talk about, you know, it's one thing to spend our money I really love it when we can spend other people's money So a real goal is to see how it is that we can set up projects to be able to bring other people in to catalyze other capital for these projects and I'm very excited about some of the things that we're seeing come through the center now and Where it is that we're going to be going in the in the future The third piece and I want to leave some time for questions and answers But the third challenge and I know there also be continued discussion on this today But the third challenge that we see is one with respect to procurement. I Cannot tell you the number of times in my recent travels To APEC Vietnam Philippines China I've heard Where are the Americans? I? Want to be sure that when that question is asked we have a good answer and The other thing that I keep hearing it as a matter of fact I will confess it happened to be sort of in a discussion in the APEC terms with some of our partner countries The response was oh, you know us is not going to win that procurement. They're too expensive My response is the US is not too expensive. It depends how you value a procurement it depends how you determine what expensive is Expensive is having to pay for the same thing twice not pay for it once Expensive is having to pay for it next year instead of 10 years from now when you plan to So us TDA developed a program Frankly in response to us business community and to our partners who wanted to see more us business Which is referred to as the global procurement initiative focusing on best value Now this initiative is sponsored by US TDA But one of the things we did is that we actually selected a partner who's an expert in this area And that's GW law school And we reached out to the development banks all of the multilateral development banks Agreed to be partners in this program so we launched this program a little over a year ago and Our goal is to focus on areas and countries that are as I put it right at the tipping point Where they recognize they have an issue with respect to procurement They may not have received what they wanted to receive and now they want to make a change And I have to say that's the great thing about US today. We're always focused on change. We're always focused on innovation So as a matter of fact again, Vietnam Again, I'm using them as one of our examples, but it's many countries in the region Vietnam actually has seen this issue and they they changed their law to provide for best value not just low cost Now that is an achievement in itself and it's something I think we all need to work toward in the region but then the question came how do you apply it and Of course, you had procurement officials who have been applying low cost all along So what we did is through this program we funded Advisors to be able to go to Vietnam from George George Washington law school as well as from US TDA and We trained a hundred and seventy procurement officials with respect to how to apply this best cost Analysis What we think this is going to do and we're already seeing some of the results of this This is going to level the playing field for US business It's now going to be a case when people look at the value that they get over time It's going to be a level playing field for US businesses The goal is for us not to hear where the where are the Americans but the Americans are here Because they have a fair system a transparent system a system that will get them what they want and also give us businesses an Opportunity as well to demonstrate what they have and I think this is going to be a very important part as The region is looking to develop their infrastructure to continue their economic growth To be able to get as many players as possible into the region I think it's also going to be vital to our trade to be able to get US businesses as part of developing the infrastructure So I think what we're seeing and you'll be hearing throughout the morning This really is a region of opportunity it's growing really quickly and There is a significant interest The interest is from around the world. There's a lot of competition out there that US businesses face But I think there's no doubt in my mind that we can meet that competition and Frankly, there's no doubt that we have to meet that competition It's important to our economy as well as the economic growth in the region because these are our markets These are the markets that are growing for us goods and services and I think the way that we can tackle some of these challenges and What we've seen and especially with NCA peck and others is it really is a matter of working together There's significant opportunities of partnership between the public sector the private sector US or international partners and frankly, that's what US today is all about is That partnership Connecting the right people but frankly looking head toward the future Because we're at the beginning of the process We have to be able to have the vision to see where we're going and it's again Why I want to thank CSIS and NCA peck to give us the opportunity to have meetings like this To gather information with respect to where we are going But I think one of the things that's really true is that the only way we're gonna get there is if we're doing it together So I want to thank you very much for inviting me this morning. I look forward to questions And I want to thank all of you who made it here through trials and tribulations of the metro and traffic I'm delighted to see you. Thanks very much Thank you. Director Zach Director Zach has to catch a plane to Chicago for a JCCT meeting So she's got a pretty busy day, but has agreed to stay and take a few questions. Let me ask one while you're thinking of yours You were you spent a lot of your fall in the region at both of the the apex leaders meeting and CEO summit And being on the ground always gives you a different perspective. So could you just talk about What what some of the highlights of your experience? What what what were your takeaways from being on the ground in in asia? Yes, and I I think it's been a tremendous time and being in In asia and focusing on where they want to go Clearly, you know, one of the things is this focus on infrastructure To there is a recognition of the fact that there has to be connectivity in the region And I think that is extremely important and I do want to give a shout out. I know they weren't able to be here Um to the philippines who are taking the leadership with respect to apex But from the moment that they started um in china at the apex meeting They're already beginning their planning for 2015 and this connectivity The um connection between the region is one that they have put as a priority And I know that all of the countries are working together And it's really interesting the other thing that i'm really noticing Is that there's actually quite an overlap with respect to sectors Um us tda focuses on infrastructure. So we focus on energy and and it and transportation But one of the things we're seeing is the overlap And an example of that is that right now we have two projects that we're working with apex on One is with respect to transportation and energy Focusing on emissions reduction And we're going to be doing a pilot project leading up to 2015 to working to reduce emissions With respect to aviation But the really interesting part about that Is that apex is also partnering with us They're putting funding in as well to fund some of the other countries So these crossover areas between different sectors As well as connectivity in the region I think is one that is becoming extremely important And one that people are focusing on and also one that people are willing to put money behind Thank you. Uh, we'll turn to the audience. Uh, just three three quick points before we open for questions First wait for the microphone after I call on you wait for the microphone because of our online audience They won't hear your question. Otherwise second Give us your name and organization before you ask the question and third But I call the alex turek rule make sure that the question is in the form of a question not a statement Thank you. Yes, sir Thank you very much Well, I'm andre so first of all, thanks for a great presentation Uh, I'll have to keep it short because of your time, but What I basically I I'm rep. I'm andre silver zero and i'm the chief representative in vietnam director for southeast asia and Washington dc for the interstate travel company And they've designed a high speed magnetic levitation rail. So I basically Your description of vietnamese interest in renewal energy and everything fits everything i've ever experienced And uh, so could I um, I would like to come back to your company. Yes, my question is can I get some help From your company to get restarted. It's a I want to tell you the story when maybe in email or something like that Because it would take too long. Well, I was going to say in response to your question I'm going to have tom hardy stand. He's with us and anna humphrey And clark's going to be scooting out with me. Um, so also please follow up with them afterwards But i'm going to quickly respond to something you said about transportation and vietnam in particular because when I was in vietnam One of the things we did is that we signed a grant Focused on the ho chi min city light rail and the interesting part about that again. It's one of these crossover projects It's focusing on the it aspects and the interconnectivity With respect to it and we actually had a very good partner in sisco So as an example of a u.s company working locally and where we can help provide additional information So interesting things going on in transportation in vietnam Thank you Excellent another question Yes, sir Hi, i'm ean furgusson with the congressional research service You were talking about uh, if the beginning about the trans specific partnership the tpp and how important it was to this um, but could you sort of describe I guess what would what would actually be different in your job in infrastructure in apeck You know in this topic if the tpp was finalized and completed than what it is now Thank you. Good question a couple things. Um one, I think we're going to be very active Because there's going to be a tremendous amount of infrastructure that's going to be needed As the tpp is in place to be able to get those goods and services Moving in the region and to be able to get them moving in a timely manner There is going to need there's going to be a need for infrastructure And they're going to be in need for assistance from outside the region So it's a great opportunity for us businesses The other thing that it will do it was it'll allow for us goods To be able to get into the region as one as part of this infrastructure development But generally so there are significant benefits to the us And what we do is we help um to get those exports um abroad. That's our mandate It's economic development on one side, but focusing on how do you bring us exports? So for us tda, I look forward to being extremely busy In the region and I you know really look forward to being able to bring sort of the export numbers To the region that the nation should have to develop jobs here in the us Yes, sir Hi, my name is john. I'm a student at georgetown university I had the pleasure of doing an internship last year in singapore and I met with many companies involved in infrastructure development there um american companies say it's hard to compete because of the japanese They basically show up at a government store step with a complete package with all the firms and financing and Basically, everyone needed to be involved in a project. So you mentioned the asia pacific clean energy program to bring together all the relevant agencies is this kind of a Similar kind of initiative to make a one-stop shop. So american companies are more competitive in the region Thank you. Great question. And yes Clearly, I think the us has focused on the fact that we really have all the tools And one of the things we want to be able to do is to be able to bring them together In a way that project sponsors exporters, etc can access them So clearly it's one of the reasons behind the center in bangkok But I have to say that all of our embassies in country Have great representation from the commercial service and where there's not a commercial service representative the state department Where they are on the phone with us constantly And I think that's one of the things that I have seen Is that there is collaboration In communication Among the us partners like I've never seen before in government And I think this has made us extremely effective and it has been A way that we can bring our team usa To level the playing field for us businesses And frankly to show the support in the same way that other countries show support for their exporters and for their project developers One more question Yes in the back. Yes, sir Thank you, and we take interns too Thank you rob tobias informally with us treasury in a tax position now a private consultant Thank you for your presentation when tda Does its feasibility studies looks into feasibility grants? Do you take into account assessments of the soundness and efficiency of the regulatory systems in a country the tax taxation systems Corruption issues in those do you do you look at not only developing the business side? But taking into account the regulatory taxation environment of the of the country in particular I have a one word answer. Yes Um, you know clearly one of the important parts for investment So you'll be hearing more about is the regulatory environment And that's a very important part when we do our feasibility studies Is to be able to look at the regulatory environment as well as the technical And financial feasibility of a project Well, please join me in thanking director zack for her presentation. Thank you Next we are going to turn to the substance of the the challenge and opportunity of asia-pacific infrastructure Price waterhouse cooper's or also known as pwc is a global professional services firm And is also the knowledge partner of the national center for apek We're delighted to turn to pwc for a substantive overview of the opportunities and challenges of the asia-pacific infrastructure environment Representing pwc is peter rehmann america's leader for capital products and infrastructure peter Thanks very much scott and it's an honor to follow director zack. Thank you so much for what a great introduction to the topic Um scott just a technical question for you. How do I advance the slides? So I should have checked the logistics before I got up here That's all right. And while we're waiting for that. Let me just uh Let me just provide a few opening comments pwc has been involved in the infrastructure business for many years And what i'm going to present to you today is some research that we have done on the development of the infrastructure markets Across the globe and you'll see the significance underscoring what director zack had said you'll see the significance of asia-pacific in that area of development for infrastructure, so Okay, I see the clickers on its way I could speak extemporaneously, but I've got some interesting graphs and charts that I think you'll appreciate as well Okay, I don't think I'll need a keyboard but I'll put that there and so let's see if I can operate this effectively. Okay Here we go. Thanks very much So interestingly as As we're talking about infrastructure development in asia-pacific Many of us were affected by infrastructure issues in the in washington dc today Water main break affecting our metro system. So we all know how dependent we are on infrastructure Just by a show of hands. I'd be curious how many people have recently been in asia in the past two years And how many have been in china in the past two years? So most of you who have been in asia have been in china pwc conducted research with oxford economics looking at the expected growth of infrastructure investment Capital projects and infrastructure investment across the globe from 2012 to 2025 and when I say capital projects and infrastructure So we're expanding the purview. It's more than transportation utilities power Water and telecommunications. We looked at fixed capital investment in areas such as oil and gas manufacturing and Schools hospitals, etc. We wanted to get a comprehensive picture of what fixed capital investment might look like over the next decade or so And what i'm showing you in this chart it may be a little difficult to uh to see Is that we've seen a definite recovery from the financial crisis era? Where infrastructure capital projects and infrastructure investment is ticking up significantly across the globe To give you some numbers on this The anticipated investment in capital projects and infrastructure between 2012 and 2025 is 78 trillion dollars That is a huge number Um, it is not going to be surprising to you Then that a significant amount of this investment is going to take place in asia. So let's turn to that Nope, sorry guys. I'm just learning my navigation here There we are So as you can see from this chart and it'll be difficult probably for those in the back Thank you that um That the there is a significant growth of infrastructure investment Coming in asia pacific and this is going to be largely driven by china So let me give you a few statistics asia's share of global infrastructure spending is set to grow from 30 percent in 2012 To 40 percent in 2018 to 48 percent in 2025 We expect that in asia by the year 2025 some 5.3 trillion dollars will be invested that year in capital projects and infrastructure Clearly in order to enable this kind of investment government policies are going to be very important So I want to show you some other dimensions of this investment Put this up here So this i'm going to show you Fixed asset investment as a percent of gdp What you see in this chart is that the world average for fixed asset investment is about 22.2 percent That's the average around the world and you'll see a number of countries here are falling below that Average investment for a fixed capital investment, but I want to take a deeper dive and look at infrastructure in particular So we're going to look at infrastructure as a percent of gdp infrastructure investment and what you see here is that globally the average investment in infrastructure Per gdp is about 3.8 percent. Whoops. Sorry guys My navigation skills are still developing But philippines and indonesia for example are under investing In their infrastructure development and what we're seeing as a result and this has been corroborated by a ceo survey We did and the apek nations is that ceos who have responsibility for Operations in a zion nations are saying that they expect significant Infrastructure bottlenecks coming over the next several years as opposed to the past several years So what you're seeing is that ceos are saying we're going to have a problem getting products to market getting our Produce our goods shipped and delivered or manufactured in the region Looking beyond the headlines then in terms of data What we tried to do is identify The drivers of infrastructure development in the region and we and we identified five demand for new transport and utilities infrastructure schools health care facilities and aged care the wiring of asia pacific Bright lights and big cities which has to do with urbanization and finally private sector platforms For for growth and what i'd like to do is talk about These trends or these drivers in a little bit more detail and then talk about the financing issues that are associated with This kind of infrastructure development and then turn to some of the constraints that we're seeing in the development of infrastructure in asia so Let's go first to transportation What you see here is the expected increase in investment in transportation and utilities infrastructure in select asian pacific nations Comparing 2025 with 2010 and you can see that significant investments are expected and needed in these nations with The philippines at the very end But you see the republic of china is obviously people's republic of china is obviously continuing a massive investment program in its transportation Infrastructure and then you walk down the the stack that way. This is roads infrastructure What we're also seeing is a significant uptick in investment in heavy rail Light rail urban rail mobility etc all areas that are expected to increase over the next 10 to 12 years If the investment environment is correct But hard infrastructure Like roads and rail are not the only things that are going to be Affected by this wave of infrastructure investment Okay, here we go schools healthcare facilities and aged care When we started looking at the data, we wanted to understand what the impact of demographic shifts were going to be in the asian globally but particularly in asia pacific and what you see is a dichotomy There are countries with significantly aging populations and countries with very young populations and not surprisingly what we found Was the expected trend in investment in health care was much more significant amongst the aging populations Whereas the investment education was more significant amongst those countries that are rising into the middle income and have a younger populations But overall we're seeing upticks in investments in both health care and education across across the region So let's talk then about Moving to a digital economy As many of you know, China is emerging as one of the largest e-commerce markets in the world Uh, a number of you probably have investments in alibaba Among others, but there are many other firms in china. Whoops I swear i didn't touch it There we go There are many other firms in china that are involved in the digitization Of that economy. We see much more coming However china Overall ranks relatively behind the curve in terms of digital infrastructure when you compare it with countries like the united states or countries in europe Only 20 to 25 percent of small businesses in china have internet connections Compared to 75 percent in the us This is according to oxford analytica. So what you see is there is significant opportunity for growth in the digital economy Digital connections are very important across the region as well as it will enable trade and commerce much more quickly When we turn to the next trend What we call bright lights in big cities What this really is addressing is the growing trend towards urbanization Across the world and this is particularly the case in asia as many of you are aware The oecd expects 70 percent of the global population to be living in cities By the year 2050 and 60 percent by the year 2030 but already Asia is home to seven of the world's largest mega cities Urbanization has a very interesting dynamic Pwc has conducted a number of research studies with respect to this Let's call it a maturity model for cities as they move from kind of provision of basic electricity Water and shelter to more advanced stages of development. And that's what you see in this graph here Moving from survival mode to quality of life mode as cities move into this quality of life direction What you see is greater and greater investments in things like urban mobility environmental protection sustainable sources of transportation and and and living energy conservation, but also investments in research and development and Aspects of city life that improve not only the quality of living But the economic vitality of those cities and their competitiveness on a global stage What we see in asia is significant purposeful investment In city infrastructure to achieve that kind of outcomes for a number of cities And what that means is significant investments in urban transportation and in mobility In improved electricity grids improved water and wastewater systems, etc As these cities emerge as economic power centers and economic competitors on the world stage So cities are going to be a significant driver of infrastructure investment Finally private sector platforms There we go Again, this is driven off of our apex ceo survey or basically CEOs in the region Are saying They are expecting to invest something like 56 billion dollars over the next three to five years in distribution facilities Logistics manufacturing facilities, etc in the region This is over and above the investments that governments and others may be making in core and hard infrastructure such as transportation networks Powering utilities, etc. This is directly from the ceo surveys One of the issues that they are trying to address Is this connectivity between the regions? So as you as you can imagine with a very fractured region geographically Infrastructure is essential to move products quickly to market So the combination of private sector investment in manufacturing distribution and other facilities needs to be linked With investments in ports rail roads and other infrastructure to enable infrastructure to grow and the economies to grow in asia So having looked at kind of five drivers of growth for infrastructure development in asia, let's take a look at The issue of finance This is data from prequen And i'm going to discuss two sources of finance here Unlisted infrastructure funds and sovereign wealth funds to give you a sense of you know What sources of capital are out there to help fund some of this infrastructure development? Director zack had mentioned this one trillion dollar gap in investment Availability in asia pacific How is this investment gap going to be met? Some of that will come from these sources of capital these sources of capital are a little easier to track Than one-on-one private flows of capital But they are not the only sources of capital But i think that they point to an interesting trend what this chart shows you Is something in the in the um in the technology or the terminology of the industry is dry powder This is the amount of funding that funds have available to invest in new infrastructure projects And what you see here is that while um the top line is north america and while you know There were some variations obviously During the financial crisis more and more capital is moving into north america for investment in infrastructure in north america As compared to europe and then asia is very much at the bottom So what that tells you is that the money is not flowing to asia as one would expect it to Given the demands that i just went through the drivers of infrastructure development and the growth prospects in asia Another look at this another way to look at this Look at this there it is Is to look at this is a snapshot of funds that are in the market for capital raising in the third quarter of 2014 By region And what you see is that asia again lags behind 22 funds Seeking about 11 billion dollars in capital Compared to europe where you have 48 funds looking for 32 billion dollars in capital now. This is just a snapshot, but it underscores The theme that i'm trying to highlight here and that is that despite the enormous opportunity For infrastructure development and investment the money is not yet flowing to asia the way you would expect it to And finally a quick look at sovereign wealth funds I will get this navigation down Here we go, um A final look at sovereign wealth funds Whoops, sorry guys Final look at sovereign wealth funds. What we see here is that interestingly This graph shows that 47 percent Of assets under management are actually held by asian infas Asian sovereign wealth funds With only 22 of those funds Actually being in asia What that tells you is that the expertise For investing in infrastructure already exists in asia But again the money has not been flowing there as you would expect it to so let's talk about some of the reasons why It's not flowing there. This is data prepared by the world bank It's from their ease of doing business report and it's a ranking of apek economies According to the ease of doing business and i know this is going to be hard to see But down at the bottom here, you see a number of very important economies in asia Indonesia 114th the philippines number 95 vietnam 78 china number 90 The remarks that director zack was making about TDA's efforts and other US government entities efforts to improve the investment environment are very much targeted at many of the challenges You see here with respect to ease of doing business And i'm going to talk a little bit more about what we think is necessary to accomplish Effective investment in the region Small small round of applause. Thank you So what this is is this is a kind of a hierarchy Of needs that we have developed over time and working with our clients around the world What are the basic building blocks to create an effective environment where infrastructure investment can happen more easily more effectively Regardless of the country So this is a a general framework that we've used and we we are working to advise Countries and regions on how to develop these basic Building blocks so that they can create a sustainable infrastructure investment program So let me highlight a few of them laying the foundations Obviously, what's very important here is an effective and transparent regulatory environment which allows Investors to understand The basic Environment in which they will be placing their money So for example, if you have or you if you're going to invest in the electricity sector in a country We heard about wind power for example What are the offtake arrangements for the power that you are generated and how certain are you that you will receive The tariffs the rates that have been pledged in that contract environment So getting that basic foundation Underway is really important and then you've got to be able to move To procuring private sector engagement Effectively Directors act again set up the conversation very nicely Most of these countries do not have sophisticated procurement Structures and processes in place that will allow sophisticated infrastructure developers and investors To effectively enter those markets on a regular routine basis procurement processes are essential You have to have transparency. You need to have well-developed projects You need to bring them to market in a consistent fashion You need to adjudicate those contracts in an effective way and then you need to maintain the integrity of those contracts over time So getting the procurement process right is very important and and I will say That um, those of you who are in the project finance arena will know this these tend to be very complex Engagements to get done very complex deals require a lot of legal support a lot of arrangements that can lock in the value for both parties the public sector and the private sector if you have Weak or flawed procurement processes You're going to end up with either bad projects or no projects You may get the occasional good project done But the the experience around the world is if you've got a solid procurement process in place You will end up with good results, but that means also well equipped and trained individuals And finally that next level is building then a sustainable infrastructure investment program So once you build you have laid the foundations you have the regulatory and legal frameworks in place You've got a good procurement process in place Now you can start to develop a whole series of pipeline of projects that you can bring to market And you can bring to market successfully as you build that track record of success You attract more investors into the market and then you start being able to enable other things like Greater local financing of these projects as they're as the risk declines In executing and financing these projects You'll see more money from the domestic economy moving into the infrastructure investment area As well as more global funds moving into that arena So this kind of hierarchy of needs if you will the structure is something that most countries in the region are Working on in one way or another Efforts of tda and other organizations to enhance this will be greatly appreciated and will facilitate the flow of investment Oh, there it is So finally in a couple of summary thoughts here What you see on this chart are the basic economic Social and environmental factors that we believe are necessary to encourage infrastructure investment Whether it's in asia pacific or right here in the united states Or elsewhere around the world. You have to have solid economic factors A national vision helps Say we we are opening our markets to infrastructure investment indonesia recently made a similar announcement Um, this is the kind of investment we're looking for these are the sectors We're looking for that investment in we're going to set up the procurement processes to get it right Obviously macroeconomic stability is key stable legal and regulatory frameworks I've talked about capacity to procure and develop and then a risk and return balance Many of these projects are risky And many of the challenges that we've faced in infrastructure development not only in asia pacific But in the united states have been that we've not gotten the risk reward trade-offs right We've not understood the risks of certain projects and who should bear those risks Having the ability to analyze the risks on a project Is critical to being able to get those projects right We haven't talked much about this, but we cannot ignore it Ethics and transparency is absolutely critical Particularly if we want to attract investors from across the globe The ability to collaborate between the public and private sectors and civil society is key as well Because these are generally public private partnerships that are being developed And a willingness to pay A number of years ago actually in the 1990s There were a number of water deals done in asia many of you may be familiar with those And one of the challenges those deals And encountered and one of the challenges that water deals tend to encounter around the world Is a willingness on the part of people in the society to pay the increased tariffs To allow water to actually take to get potable water to their houses and to their areas And that has been a challenge in many cases Unfortunately, those deals have been reversed because popular opinion has been against them Anticipating those kinds of challenges early on Is critical to being successful in getting these deals done I mentioned a track record of success There is a there's nothing more compelling than a series of successfully executed projects in a standardized Framework that attracts Investment much more effectively than one-off projects do and finally Everyone is concerned about environment and the impacts on environment It's really important to have a transparent process by which environmental issues are identified and adjudicated And a transparent permitting process These things can hold up projects indefinitely So in conclusion No rats. I thought I was going to get it right the last time In conclusion Infrastructure investment in asia obviously is increasing and increasingly important The competitive advantage of these nations will often be reflected in their infrastructure capabilities Many of you may have seen the imf's report that said one dollar properly invested funds in infrastructure yields three dollars of economic benefit to a country So those countries that are effectively and efficiently investing their money in infrastructure are likely to see outsized returns compared to their neighbors and competitors Private capital is interested and available for infrastructure investment But the conditions must be right and this is where I think apek and other organizations can help in creating those conditions For more effective infrastructure investment. So thank you very much Thank you, peter and I hope you'll be able to take a few questions Sure. Thank you very happy to any questions from the audience Same rules as before wait for the microphone. It's a question up here State your name and organization and actually ask a question. Thank you. Please don't ask how to operate the The slide this is I wanted Murphy's law has a number of corollaries applied to power points So Okay, thank you. I'm jeff hardy and with caterpillar And caterpillar is one of the abac members and I'm an alternate member for caterpillar and abac and You mentioned apek can help and I just wanted to mention one initiative that's taking place in abac That abac usa is promoting and that is uh to encourage countries to complete Enablers of infrastructure investment checklist That looks at it's a self analysis a self review that countries would do looking at How ready they are to attract investment And all the the blocks that you have Building blocks, these are built into the checklist And so it looks at our government's organized to attract investment. How did the agencies work with one another? our ppp projects Viable projects and what kind of track record do they have in organizing those is financing available Financing and local currency financing. What kind of risks? What kind of investment climate is there land acquisition? IPR protection other things So the u.s. Government has just indicated they will complete the checklist Uh by abac one which is coming up in in january in hong kong and a few other countries have done the same And so this is an opportunity. I think for pwc that the tremendous information you've provided and you share with apek Um for us to try and publicize the outcome of these checklists so that we actually encourage Companies to invest in the countries and it helps if they know what is going on so Maybe we can partner with pwc in some way and also Companies here we can have public private dialogues. I just want to throw this out as an opportunity for us As we plan within abac what we're going to do to promote the checklist Going into 2015 jeff. I wasn't aware of that initiative, but I think it's a terrific one. Um, and I think uh You know publishing lists like that allow countries then to focus on what they think they need to do to improve Um those various elements of that checklist. I'd be delighted to speak with you afterwards and and see how we could help in And getting that word out. That's great a great initiative. Thank you jeff. Is there a question here in the front? Yes, ma'am Good morning. My name is paloma. Um, I'm working in united nations doing a recommendation for Doing pvps in infrastructures that are connected with international trade and e-business and my goal is to Recommendate to governments and private sector to doing this kind of business and the legal framework In ppp is is not well developed. Nobody knows who is what is a ppp project So the how What are the tools that you recommend me? to solve The gaps in the legal framework. I know that the ppp units are In some cases are doing a very good job But in other countries it's uh, there is a lack of transparency and there is no any Unit or departments to help of that What what what do you think is the key factor to improve that the gap? That's a that's a great question and and fortunately, I think we have some speakers from the adb and potentially the world bank here today Those organizations usa id other bilateral multilateral agencies have Spent a fair amount of time and effort in developing legal Framework examples and procurement examples and Structures and guidance documents There is now as opposed to about 10 years ago. There is now A wealth of information available through those organizations that are models that countries can look at the the challenge is Adapting and adapting those models to the particular issues of any country And so that's where you need to take that kind of repository of global insight and translate it effectively for a country And a ppp unit can do so, but it really does take national leadership to Get a successful ppp program launched and sustained and and that's really important So it often takes A political leader in a country to say this is a priority for us We are going to make the changes That we need to adjust the legal frameworks or the contractual frameworks so that we can enable more investment And sometimes that takes time and and and sometimes then you have changes of government that Where the next government's maybe places less emphasis on it, but there are good reference materials But getting them translated into the national environment. I think is is key and probably the bigger roadblock at this point Yeah, thank you. It's a great question and hold that thought for the panel because I think you may have some more People who will want to comment on that, but thank you for the question. Is there another question? Yes, sir Good morning. My name is samuel to miwa. I'm with the asian development bank here in washington dc I just had a question about The infrastructure and the amount of financing, but I think one of the biggest Barriers has been Project development. It's not like there's a big shelf of projects that you go I'm going to finance this project and I'll take this one and take that one I think the biggest barrier is you know, there is no they aren't no they're sorry I can't speak english properly, but there are no projects that are out there. They're just ready for financing Do you have in this study? Do you have any opinion on on this whole project development cycle that needs to be addressed? That's a another great question and and clearly These projects are not just sitting out there Um Available to be financed they need to be developed structured packaged and brought to market in the right way And that um, I think directors act had made a reference to the fact that three to ten percent of the cost of a project Is in planning and there are some risks in doing that because you may not be able to bring those projects to market because you decide Oh, it's not going to work. Um, there are ways to do that. In fact, there's some good research and and experience around the world on Investment frameworks a prioritization a way in which governments can look at All different potential projects and decide this one looks like it Or this set of projects look like they are capable for private investment So we'll take those a little bit further this next basket over here Looks like maybe it's just a public sector investment basket to smaller projects more Um dispersed geographically etc and and those tools can Can be useful, but that goes along with uh, the previous question getting the The frameworks right having the legal environment right having a unit or a function in the government that can look at projects and start that Preparation, but it often takes Expertise legal expertise and financial expertise To bring these projects ultimately to the point where they can they can be financed and engaged on by the private sector That's a it's a big constraint So one final question gentlemen, uh over here um, my name is kikuchi and i'm With a small consulting from nearby washington research and analysis um, I spend uh time in japan teaching a course in project financing And uh in the excellent presentation you had especially of the building blocks I thought one thing missing and following on to the this agent development bank gentlemen's point Is one of the toughest things is to determine The initial need and demand In your presentation, it may have been hidden Within say risk avoidance and also willingness to pay But government plans often could be grandiose And has nothing to do very often In the actual demand of let's say the society and the toughest thing Minus even in democratic conditions is how to determine demand and perhaps price waterhouse may have a Better way especially looking behind Back on projects to see that how the demand determination process could have been flawed. Thank you another great question And I think the answer to that is it's it's often the case that ambitions government ambitions are Greater than the you know public purse or even the private purse can can support This goes back to the question of proper analysis of projects some projects are just inherently governmental they're You're not going to get private finance unless you you can just set it up so that you have a contractual mechanism to pay the Private sector to be involved others Are you know involved demand risk? the toll roads or port facilities or To telecommunications networks etc where the compensation comes from the use of that asset And that's very very much set by the demand for the use of that asset And those are the kinds of analyses that that do need to be undertaken In evaluating which projects to bring to market and which which not to and and frankly what what we found is that there are often Significant number of projects that people would like to bring to market which just are not not bankable That just can't be Effectively structured to engage the the private sector. There are There are tools out there investment frameworks that I mentioned that can help To evaluate that and feasibility studies would be the next step beyond that Not to advertise, but we did publish a paper on Transportation investment frameworks and how countries around the world are using those frameworks to prioritize projects and to allocate them for private financing or public public financing and what are the tools that they use to do that And i'd be happy to share that paper with others actually. Thank you. It's a great offer and what we'd like to do is link Provide a link to the paper from the css.org events page for this event So as you return home and get back to thinking about this again Click on the links the events page at css.org and you'll find a link to pwc's paper So please join me. This is an i've been an outstanding overview. Thank you, peter for your contribution And now let me invite the panelists to come forward and we'll begin the panel discussion Your knees are way better than mine All right, we'll we'll continue with our discussion which so far i've uh One of the one of the best parts about being at csis is how much i learn just running events here and the the kind of people That were able to to to invite and attract I'm always impressed with the with the content of Of their contributions, and I think that will continue on this panel We've heard a lot about sort of the the issues and and risks and opportunities associated with infrastructure in the age of pacific And are we brought together a group of experts to talk about Some of the solutions involved here so Beginning on my left your right Craig stephenson. Craig is the representative for the north american representative office of the asia development bank So he brings the views of the modal laterals Next we would hear from Alexia Latorta Who is deputy assistant secretary of development for development policy and debt at the u.s. Department of treasury We'll have a broader sort of Beyond apac a broader perspective on on the u.s. Government involvement and And other major government involvements in infrastructure finance and development Uh, she'll be she'll be followed by common con Common is the vice president of compact operations at the millennium challenge corporation And we'll have sort of an on-the-ground view of project development and project support And then finally we'll hear from larry greenwood larry is senior managing director of government relations For met life incorporated in japan But larry is a was a career diplomat in the united states a one-time board member of the intimate of the asia development bank and very knowledgeable about apac was ambassador and senior official For a u.s. Senior official for apac so we're delighted to have the panel And let me ask each panelist to make about five minutes of comments And then we'll open for a discussion with the audience Craig Thank you scott and csis for the opportunity for asian development bank to join you today I'm going to start with a few words about asia and then talk some more about southeast asia To begin asia's Rise as an economic force, you know over the past 50 years has been Nothing short of phenomenal Its influence in the global economy is increasing rapidly prompting many to say the 21st century belongs to asia The adb estimates that by 2050 asia's per capita income could rise sixfold and in Purchasing power parity To more than 40,000 dollars and an additional three billion asians could enjoy standards of living Similar to those in north america and europe today I know that you know may sound like a stretch to some of you, but It's possible As the global economy's center of gravity shifts towards asia the regia could account for For more than 50 percent of global output In 2050 Or 174 trillion dollars Up from the current 27 percent And half of global trade and investment This this promising outcome can only be achieved if asia sustains its present growth momentum And addresses intergenerational Policy institutional and governance challenges If asia's emergency Emerging and frontier markets are to avoid falling into a middle income trap They really need to create the foundations for the next phase of growth and that is they need to invest in infrastructure Southeast asias or asians development dilemmas one of relatively high levels of robust growth not yet translating into adequate and quality infrastructure The disparities between asian and ocd remain large In each of the key sectors roads railways phones electricity and clean water The asian region still has a fairly long way to go And although the region has learned some valuable even hard lessons After the asian financial crisis adb believes that that crisis has led to today's infrastructure crisis Southeast asia today has about 616 million people. There are 120 000 people moving into cities daily It's no surprise that southeast asia's infrastructure needs are large And an interesting stat here it it it took europe to get to the point where You know after the industrial revolution and all for half of the population there to move into cities It took the u.s. About 120 years and there are a lot of countries in asia today where that shift has occurred in less than 20 years So when you look at infrastructure and the ability of Governments and investors and others to kind of keep up with what's going on You know in the course of human history, we've never seen Urbanization of the kind that we're witnessing today so when you're stuck in traffic in jacarta and you're breathing dirty air and manila and And you kind of wonder why the canals are are are clogged up somewhere else It's it's not as you know because people aren't trying to take care of these problems. It's just they're monumental In 2010 adb estimated that asian needs 8.3 trillion dollars In southeast asia needs 1.1 trillion dollars in infrastructure investments through 2020 This translates to between 5 and 9 percent of annual GDP spending on roads railways ports urban development power telecom irrigation water supply sanitation and the like However, with the possible exception of vietnam No asian country has come close to what they need to spend Indonesia's economy as you know, it's on a roll in ala days, but But it's only spending two or three percent of GDP on infrastructure While we believe it should be spending at least twice as much The same applies for the philippines Thailand and malaysia My information is a bit dated but as of 2010 private sector commitments for Infrastructure projects had barely reached half of the 38 billion dollars for such commitments in 1997 And considering annual investments of about 110 billion dollars are required today The fact that only a fraction of this amount currently comes from the private sector presents a large fiscal challenge for the public sector The obvious solution is for policy makers to undertake investment climate reforms Which facilitate risk sharing between the public and private sectors That's easier said than done Asian countries possess significant domestic savings more than 700 billion dollars Most of which are being invested outside the region I was in Bangkok before coming to washington last year and I know that Thai banks between them held about 14 billion dollars in korean bonds That just didn't make any sense to me at the time Needs for infrastructure investment in southeast asia are large and growing The region's development dilemma if not its binding development constraint is its inability to channel these savings into bankable infrastructure projects Memories of the 97 asian financial crisis remained fresh in the minds of policy Policy makers and investors They're wary of risk and they don't want to be burned again Investors in particular are unwilling to commit major resources for large projects over the long term without lots of guarantees Which governments are reluctant to provide Unfortunately, this situation has persisted for 17 plus years now Under mining productivity growth the foundation for income improvement in the process Something has got to change The adb believes governments need to step up their game To fast-track infrastructure delivery and clear bottlenecks to create a pipeline Of transparent well-structured projects that allow for private investors and market mechanisms It's also necessary to address a range of policy institutional and regulatory Impediments as peter suggested earlier In addition countries need to resolve governance problems to establish Transparent procurement procedures and to put in place clearly designed viability gap funding mechanisms Multilateral institutions adb world bank Have a role to play in all of this So do the emerging players such as the asian infrastructure investment bank and the new development bank But between us we don't have sufficient resources to fill the infrastructure funding gap on our own We can however leverage our credit worthiness to mobilize asian capital for asian growth By for example guaranteeing infrastructure bonds issued by local entities in 2011 The asian economies together with adb under my former bosses larry greenwood's leadership Established an asian infrastructure fund with just under 500 million dollars in equity capital As a first step to mobilize the region's resources for its infrastructure development needs More recently we've established a dedicated office and recruited a highly skilled team to To promote public private partnerships We've also invested in public or i'm sorry in project preparation facilities Namely in indonesia the philippines and vietnam We did a few years ago and these investments are just beginning to pay off A lot more such steps are required if the region is to sustain its momentum for growth and development In closing i i i i want to say that I believe the asian infrastructure investment bank is part of the solution to infrastructure development needs in asia Uh, but uh, I I I believe even more strongly that what Governments in the region need to do is to mobilize much greater involvement by the private sector In the provision of infrastructure than we're seeing in these countries so far. Thank you Thank you craig alexio Great thanks very much to csis to scott and to the previous speakers and folks who asked questions for setting the stage and covering So much ground already to to be to be to be frank I think the case has been made very strongly about the centrality of infrastructure development Um to growth I think from christine lagal to president obama with the build america infrastructure initiative right here in the us To ministers from singapore to cameroon to nigeria have talked about How infrastructure done well is such a key enabler to growth to increasing the productivity of firms To jobs and also importantly I work on development to poverty reduction and meeting the basic needs of people I think peter you talked about schooling health care taking care of an aging population And so the case has been made so I won't belabor that but I think so the challenge then before us is really how do we find develop first I would say and finance Infrastructure in a way that's sustainable That's productive and that's viable and I think against this backdrop that peter also mentioned of huge demographic pressure in terms of global population growth Aging populations the youth in in sub-saharan africa And us treasury as part of the team usa that director zack Spoke about is very committed to working on these issues globally So I'll focus my remarks on sort of three brief chapters The first one is touch on how infrastructure is financed The second is to focus very much on the role of the multilateral development bank So you touched a bit on this craig already, but I'll elaborate on that and finally to share with you sort of us Treasuries priorities and strategies in this area So on the financing again the point has been made super clearly about how large the infrastructure financing gap is So we'll just sort of underscore that again and move to how is infrastructure being financed today So some of the numbers that we have from the world bank and others Sort of indicate that the bulk of financing for infrastructure really does come from Public domestic resources the global average about 60 to 75 percent of infrastructure is financed by public domestic resources About 20 to 30 percent by the private sector and perhaps surprisingly to some of you only about five to eight percent by official financial flows Of course, there's variations of these numbers in different parts of the world for example in sub-saharan africa the percentage of official Finance is a little higher at around um 13 to 15 percent um The third point I want to make around around the financing issue is just this And you ended on this greg the concept that the for the magnitudes of funding that we need the private sector Will have a huge role and that there is there are large pools of private capital available for infrastructure Given the right conditions and I think you use the exact same words peter But given the right conditions and I'll come back to you Um on on the right conditions in a second I do want to say that we do need a bit of nuance when we talk about however the opportunities of private sector financing Because they flow differently these flows flow differently to different parts of the world and to different sectors So, um, I know we're focusing on on asia, but I'll give another africa example So if you look at foreign direct investment in sub-saharan africa about 86 percent goes to The ict sector very popular. The willingness to pay is there wastewater management Sanitation issues not a lot of interest So we have to be much more nuanced about the opportunities of the private sector and where the public good infrastructure financing is really needed So to my second chapter now, which is focusing on the role of the multilateral development banks And sort of would argue that there are four main and critical roles for the multilateral development Banks to play in this field the first one and many This has been discussed already is really creating the enabling environment the right conditions This is about providing the policy advice the technical assistance to address policies that are distortionary to address subsidies that are misplaced to Remove legal regulatory and financial sector constraints to greater investment, especially long-term finance It's about the reforms needed to strengthen the key institutions for infrastructure, whether it's public utilities or regulatory institutions various countries And it's also about being creative about the kinds of financing tools that are needed including very importantly risk management mechanisms So the goal here is really to create the conditions to unleash the private sector financing The second role for the mdbs is very much to be able to continue to mobilize Domestic resources that place it an important role And so that's really about Providing the policy advice and the technical assistance to deepen the domestic tax base of the countries that we're working in That involves strengthening public financial management. It's about developing local bond markets that actually work And and and here it's really about helping countries Uh free up the resources to make their own investments in their infrastructure futures The third role and I was thrilled to hear director zack make this point to hear peter make this point is about optimizing planning Preparation and thinking about downstream maintenance and this is both at the project level But also in this point was made very importantly at the sort of country level So this idea of having a country think smartly and the demand question I think that was raised from the gentleman who teaches a course on project finance was excellent It's about the upfront thinking about what is my right mix? What is my infrastructure portfolio as a country? That gets me both the economic value from certain projects and the development impact that I need Not just my ideal my dream, but what is actually feasible? What would be viable and how do we develop those national infrastructure plans the national vision that peter Described so much more upfront planning work on this And thinking about the sustainable Operation and maintenance so that the investment today Last and doesn't have to become a new requirement for new investment too quickly I think the climate issue here is important. So climate proofing these investments I think is also something that we should Think about the last point on financing is the mdbs do have a role Although what they can contribute is tiny compared to the other sources of funding In providing catalytic funding funding for priority projects to reduce the risk For demonstration effect so that others can come in including the private sector So I'll close now on sort of very quickly sharing some of us Treasuries priorities in this space. The first one is really Working with the multi development banks to focus more on this upstream planning work that I think is so critical And so we support the world bank with its global infrastructure facility That is focusing on creating the pipeline of bankable projects well structured projects We also support the in the asian development bank the asia Pacific project preparation facility that has very similar goals Second thing that we're doing is really because financing is still important Especially in terms of catalytic financing is enhancing the lending capacity Of these multi development banks. We support reforms at the asian development bank at the world Bank that will boost the lending capacity these institutions by up to 40 to 50 percent Now not all of that will be for infrastructure financing But a lot of it a lot of it will be And then the third is that there's sort of this public good aspects to to to infrastructure Financing and so we're really engaging internationally with apek With the g20 to focus on the know-how the knowledge the data And the best practices that are needed to really make progress and meet the the future needs and this includes everything in apek from Supporting national countries that want to create ppp centers The g20 has launched the g20 global Infrastructure initiative that is going to help increase the availability of data on the performance of projects For example a big problem for investment. They just don't have there's no track record No knowledge to to understand what the opportunities and the risks are Creating a consolidated pipeline of projects And there are many more examples So in conclusion i'll say preparation preparation preparation Can't be overstated and then I just want to echo what previous speakers have said about We're looking for quality infrastructure. We're not just looking for infrastructure. We're looking for sustainable infrastructure And so I was thrilled to see the optimal conditions that peter presented and I think the issues of Of transparency good governance the issues of managing environmental and social risks the issues of debt sustainability that we haven't touched on As much and procurement which we've touched on a lot are absolutely critical as well Thank you. Thank you alexa Cameron Thank you scott. Thank you everyone For staying engaged I think a lot has been Said about the need for infrastructure let me just Organize my thoughts into two segments first Before joining the administration coming to mcc I spent about nine years so to speak in the trenches in east asia working on Preparing ppp's and advising governments So I like to make about four comments on what what are the solutions since this is supposed to be A panel on solutions So let me make four comments on that and then I'll talk to you about mcc And what we are doing and how we are engaged in asia pacific So to start with You know in the old, uh, I think during the clinton administration or before the clinton campaign There was this thing about the economy stupid and I'd like to just repeat that to say it's about the project stupid It really is about the projects. It is really Not about finding more money and more money. Uh, I heard Lee speech which I agree with and I think the comment that peter made Yes, there They are very few funds in the market right now raising money for asia pacific But that's because they are already funds that can't find deals. So why would you raise more funds? Yes, there's less capital flowing into east asia But you know, you look at other fdi going into east asia in other sectors There's no problem there and there's a lot of Inter asia Fdi That is really booming. So our job as practitioners is to make our sector attractive enough Which is can we make infrastructure attractive destination for private capital? And the fact is we have thus far failed to do it Let me keep going with that second point A lot of people have talked Preparation planning. So let me tease out some of the implications Just to add more flavor and make it a bit more controversial. So when we talk about infrastructure planning There's a very fundamental step that a government has to take which is to say Project project. Which way should I finance you? Should I use private capital? Should I use public budget and there are inherent conflicts in there? Every public works ministry would rather have a lot of public budget And I'd rather have all the control over the project so they can finance it as a public project They don't want the project to be sent over as a ppp. In fact, the good projects they'd rather keep and show good progress and you know sort of Set aside the bad ones the questionable ones which are very ambitious and say yeah, let's try to do this one as a ppp boss Same conflict exists in the multilaterals and the development donor community You know you you are providing a loan. What would you rather provide the loan for you'd rather provide the loan for a project? You can visualize that has clear economic value So there is a conflict there and if you look now At the advice that the governments are receiving you'll be hard-pressed to find a focus in this area Which country? Is it where we really have put serious Covenants conditions that the government put in place a system for identifying projects upfront And when you talk to private sector, which I have you know, we do a lot of us every day You talk to them and they will tell you a number of the projects which they would have loved to have invested in are encumbered With one type of money or the other coming from The donor community coming from the public budget and so on. So this is a key area when we talk about solutions Let's focus on the problems that require solutions And let's focus on bad solutions that might be out there third area sector policies matter There was a time when the project finance community back in the 70s 80s you could go to various countries certainly in the middle east sign a contract an agreement To do project finance and it was you know backed by King so on and so on and you didn't have to worry about it. You have an agreement. You have your set of lawyers. It will be You know respected Nowadays with urbanization we with decentralization with democracy taking hold of the world You can't do that. It has to be a policy. There has to be a broad-based discussion around the Nation people have to believe in the concept and they have to understand the value So it's not just one agreement That means there has to be a much deeper engagement And that's why you see one or two deals happening, but they're not replicated They don't go far enough. They don't Create a storm of other transactions like that because people spend so much time getting the one deal done And not get the policies right and don't have change of laws and change of public opinions around them Last point we talk a lot about this elusive concept of capacity So People say well, you know country X really doesn't have the capacity to do PPPs And we need to provide them technical assistance and so on all true But we need to go down two or three layers into the as they say layers of the onion to really figure out what the issues are capacity for what Capacity to be able to do what it's very important We seem to in this very theoretical Sense expect every agency in a developing country To have the capacity to do project finance. That's not true even in this country You can go to you know port authority of new york. They probably put out more commercial paper than any entity in the world They don't have in-house expertise to do that They have expertise to manage advisors and they have a budget structure to hire professionals people like peter Who go out and actually structure these deals? That's the solution solution is not to just somehow imagine All these agencies in developing countries to have project finance experts and be able to pay them. It's not going to happen. So Those are the four key things. I'm happy to discuss more in the q&a session. Let me just tell you about mcc quickly Mcc is a Development agency of the United States government We invest about a billion dollars a year. All of it is appropriated by the congress We are extremely selective in how we pick our partner countries So first level of risk is where you land And then the second level risk is where you invest So we have a very quantitative process for how we select our investments So we build a model economic model for our country to identify constraints to economic growth Excuse me, and then that defines where we will invest in that particular country We give grants very big Grants average size of our grant is $350 million. We don't pretend to be a bank. We don't pretend to be a guarantee agency We find the grants are the most flexible instrument to work with private sector We don't have an irr because we make grants But we have economic rate of return as our driver And we have our own threshold that we must pass for each investment Every investment i am that mcc makes has to be quantifiable through an irr model We have a threshold of 10 percent irr, which actually those of you have done irr's know it's quite quite high and I can trace back We've invested roughly about 10 billion dollars over the last 10 years of our existence And we can trace our irr back to 174 beneficiaries. So that's how we build the model So we know exactly who we have benefited and we know exactly what the Return on that investment is We when we give these grants we give the countries exactly five years to use the money So whatever money is not used within the five years goes back to the treasury You will be amazed to know how many projects miraculously get done because of this deadline And then last thing we don't invest directly We invest through a special purpose vehicle, which is a public entity that we ask the government to set up And that's where we drop all our fiduciary controls financial management how they do procurement and so on And we have a very very proactive Management structure to to ensure that the money is used the way it's you it should be used in east asia just in closing we Are quite active and we will be we our board just met We have new investments coming up in east asia So I can tell you we'll be preparing new investments in well, indonesia. We are currently engaged PPPs in renewable energy in particular We're engaged in filipines and we'll be preparing a new compact in the filipines in mongolia And then we're also expanding into south asia Africa you all probably know mcc has a very very robust pipeline of investments Also eastern europe and latin america Let me just give you an example of how we operate we we leverage a lot of private capital with our grants So there are two three different forms that can take one would be example from amman jordan where we are part of a big ppp program so Mcc grants go in to support the public b if you will the government Investment in the ppp scheme the government put some mcc help them with the rest and then The the rest of the financing is raised by the private entities We just signed a transaction in gana over the Summer during the africa leader summit where we are investing half a billion dollars in gana in the energy sector And that allows about four billion dollars of private investment to come in so Private investment is coming in on the generation side Mcc investment is on building the network to give economies a scale And then in the process through our engagement We are fixing the off-taker and making it more bankable. So that's the kind of model we use We can also use mcc grants for viability gap financing and other Or project preparation. So i'll stop here. Happy to answer questions during the q&a session Thank you kamen and thank you for the conference bumper sticker. It's the project stupid So appreciate Larry Let me start where where kamen also started, which is that clearly there is an institution. There's an infrastructure gap in By official financing like the multilaterals and mcc and then the rest private sector And and so when you look at that those numbers clearly you're not going to see major increases In the government side, although as craig said you we we are pushing and well I should say the adb is pushing and world bank are pushing some governments to increase the percentage of The budget that they're paying that they're spending on infrastructure But there's on average in asia. You're not going to see a major increase in the percentage of Of budget money that goes into infrastructure You're not going to see a major increases unless treasury says changes its position in mdb funding for infrastructure. Sorry No, i'm sorry. That that was unfair. Um, but but even if But but it's it's already very small. You're not going to see major increases in that. Um, uh, congress, thank you And um So obviously the increase is going to come from the private sector side. So where's where's the private sector? money going to be coming from And what I want to talk about is the role that institutional investors can play in that in that area Because when you look at the numbers, uh We saw peter's numbers on for example sovereign wealth funds tens of billions maybe a hundred billion dollars But if you add it all up The infrastructure funds again, uh as carmen said there's only so much out there because they're looking for bankable projects But when you look at institutional investors, it's 50 trillion dollars of assets under management worldwide My own company is almost a trillion bucks. Just one one company. It's a small modest company. Um, the uh, so Now obviously not all that's going to go into infrastructure But if you but as s and p did a study looking at if if institutional investors and it's not just insurers It's also pension funds worldwide increase the the percentage of Of their allocation to of their portfolio to infrastructure from the current about little over 1 percent to 4 percent Which is not a major lift Essentially the the financing gap that that is the the difference between what governments are expected to put in In assumptions about what banks will do and I'll talk a little about that Is filled so you the money clarity is there the question is how do you get more of institutional investor money into infrastructure And it's it's it makes perfect sense to do that and this I'll go to because because Currently the major funding or a lot of the funding for infrastructure And this is the case in adb when I was there in terms of co-financing comes from banks from the private sector But banks don't make a lot of sense to be funding 20 20 year assets It they're they're obviously funded by short term deposits It doesn't make sense for them to be going out looking for 20 year assets For insurance companies, we sell 20 year liabilities We sell we sell we sell life insurance policies that we have to pay off when somebody dies and we're and and And so it could be a 20 could be a 30 year Promise that we have to then fulfill We're we're we're desperately begging for 20 year Assets we want them so the banks don't shouldn't be carrying so many But we want them but why are so why aren't we getting and we can't get enough we can't find the the long term Assets on the on the market. There's not enough bonds in the market on the corporate So we are looking for infrastructure infrastructure is a natural fit for institutional investors So we have a working group under the overall apic umbrellas called the asia pacific financial forum We have a work stream on on how insurance companies and pensions can do more in the infrastructure space The ship of that work stream is sitting right here mac okubo and from nisei insurance He should be actually the one up here talking. He's a lot more entertaining than i am as well And Doug Barnett also is from our working group also here in the audience. And so we are looking at how What are the constraints and impediments to more institutional investment in infrastructure? Again, this is not we're not the only ones working on this the IIF has a work stream on this OECD has been working on it for a while We're looking at it specifically with with asia in mind And we have come up with constraints in three areas One is i'll just go over them very briefly one is regulation and Accounting practices so as everyone knows there is a lot of global regulatory changes happening now They're they're just now coming to the non-bank side of these these discussions and how Capital in particular capital standards are going to be applied to to non banks to insurance companies both both Average size as well as the very systemically important ones Is going to be very important about it It's going to affect very much our ability to fund long-term To to buy long-term assets and carry them The and there's some other accounting regulatory issues that are also important the risk weighting that's placed on long-term infrastructure bonds for example Solvency too in europe has placed a very high risk weighting on that that's going to be That's going to be it makes it makes it more difficult for european insurers to to fund infrastructure Accounting i won't go into the details, but basically Accounting that that results in lots of volatility in our balance sheets will make it very difficult for us to fund long-term assets And then we look at a series the next bucket of Issues has to do with with the things we've been talking about today, so i won't go over it, but basically market we call it market aspects governance project preparation Some of the ones that maybe are a little bit different and special to us are We need financial instruments in which to in which to invest that have credit ratings That we're extremely low risk Investors so we need to we need to have the financial instruments that will Would facilitate our our investment Securitization for example would be you know Securitization has become a bad word We needed to we need frankly to come back because that's the best way to to allocate risk and and Basically divide up the out divide up the financing Between for example insurance companies and banks because so it doesn't make sense for banks to be in for the first five years Because five-year maturity for a bank makes a lot of sense And that's where the high the high risk is and the high returns are we're interested in low risk long returns And so we're interested in more brownfield types of opportunities So taking from five to 20 years So there's ways to package those maybe through securitization So we're looking at those kinds of issues and then we're looking at market operational issues Credit rating A lot of developing countries don't have proper credit credit rating bureaus We don't have a lot of experience in in in infrastructure So, you know that those kinds of things we're looking at as well So we've we've listed those impediments up there in the interim report of apff to the to the ministries Of the aback to the ministers the finance of finance in apex last november. Was it mac? I think it was november And um and you can find it online if you're interested in our in our list and xh is the uh place to look So thank you very much. I'll stop there Thank you. Let me open it to questions now. You've been doing a great job of waiting for the microphone and introducing yourself Uh this round because we have uh four panelists if there's a question to a specific panelist Please let them know otherwise. We'll uh, we'll make it make them jump balls. So uh questions or Yes, sir. Yes, ma'am. I'm sorry I Thank you very interesting. I'm ellen frost from the east west center and national defense university Mr. Khan you mentioned that when you talk to private sector representatives They say that projects that they would otherwise like to invest in are encumbered I wonder if you could elaborate. Are they talking about what? Some of us think of a sound financial practices the kind of conditions ensuring Open procurement transparency and so on or are they talking about Encumberances that you think yourself are excessive. This is the conditionality issue. I'd love some comments. Thank you Yeah So encumberances can be can take many forms. So thank you for the question What I was talking about was very simple Meaning of the word encumberance, which is there's a project. There's a road which could have been a toll road Which could have been structured as a toll road where there is quite a bit of traffic for variety of economic reasons That road instead of being structured as a toll road is structured as a public highway That's what I mean So when you know if I'm uh investor who is building a book of business of buying toll road assets around the world I look at this country and I said I would love to you know, this country is growing at a very good pace I would love to ride this Curve I would have loved to have parked some money here and bought cash flows from this country But the best road that I could have imagined where I would have felt comfortable taken to my investment committee and gotten an approval Is now being structured as a public road And it's got some donor helping the government to do feasibility study and so on and so forth So I don't have a chance of getting involved in this project at all and the government is feeling very comfortable They'll get a loan from xyz and build this road So that's what I mean by encumberance. And so as we sit here and talk about what these governments ought to do It's also important for us to reflect on what are we doing In terms of advising and there are different parts of our organization One wants to push the private sector. The other is Engaged on a public sector and and and there's need for Some collaboration and understanding and clearing the market within these institutions is what I was trying to say questions Thank you. My name is daisuke garashi from the japanese newspaper asa hishinbon I have a question for alexia and craig about the china's asian infrastructure bank I know that there are many people who are skeptical You know about the bank in the u.s. government But I also heard that there are some people who are seeing a potential of the new banks So I just want to ask you how you see the potential or you know of this a a b Is it going to be a competitor for adb or you know, is there anything possible to work with them If they have a good government decent governance And transparency. Thank you for the question You know, I think we've just spent this entire panel talking about how large the channel the challenge is in front of us So I think facing this challenge We welcome, you know, any actor that has a role in in in responding to the challenge Now as everybody has underscored As we respond to the challenge, we want to make sure that we're building on lessons learned of how to respond Well and how to build infrastructure. Well, so I think actors that come in That are applying the lessons learned around the issues that everyone's been talking about whether it's procurement, whether it's debt sustainability Whether it's sort of good environmental management, whether it's the governance and transparency issues that have been discussed If those lessons are implemented and applied, I think we need everybody That that that we can to help us address this challenge, including some of the more Recent new actors coming to the scene that you were referring to Um The adb's position is that a i b is understandable given the region's huge financing needs And provided that a i b adheres to the same safeguards as the adb and other multilateral banks and development partners On environment and resettlement and procurement and governance, etc Then um, yeah, the more finance here is out there for infrastructure in the region the better Um Let me sort of Spin this a different way my own personal experience Working with a i b secretary general jen li kun Another one of my former bosses And larry's actually you should ask this to larry not to me, but um I was um First of all, I'll make this real fast I went to him with a couple colleagues to uh talk about A regional road project before it went to the board just to you know brief him on what issues The board was raising in private which they would were likely to raise during the board discussion And he flipped through the document and he said I don't see Plans in here for dealing with hiv aids and human trafficking and drug trafficking And you know, this is 10 years ago and we kind of looked at him like you know what And and and he said He had visited this area. He knew it. Well, you know, these were concerns and how are we going to mitigate mitigate these these these things from occurring And we said well, we'll deal with it and he said that's not good enough And he kind of slammed the document down on his desk and said go back and tell your boss Not larry but My other boss uh that he doesn't want to see another Regional anything unless it addresses these three issues. Now. This is before adb had safeguards in these areas So, you know, everyone's giving a i b a bit of a bum rap I think saying that are they going to adhere to our safeguards Well, my experience working with the head of a i b is that he was thinking about these safeguards even before we were Another quick story is that uh, I traveled with him in tajikistan Across some road. It was in really bad shape. He said somebody should do something Three weeks later. We drove across the same road and there was a chinese construction crew out there working on it And in three weeks the chinese government had approved 903 million dollars for tajikistan And mobilized a construction crew to get out there and start repairing this road And and that was impressive now. I think a i b is compared to the advantage in all of this and then it'll be quiet Is that they're fast, you know, I think that's one of the Most important motivations for establishing a i b is that they'll be fast and in a region that's struggling with Catching up, you know with infrastructure requirements It's you know adb and world bank. We have our role the governments have their own private investors and so forth You know financing is not really a problem Developing projects is a problem, but somebody's got to get this stuff done quickly And maybe it won't be the way we do it But it needs to be done quickly if you're a leader of one of these countries you want it done quickly And I think that's where a i b is going to step in No super quickly I just want to I just want to uh be on the record to say that treasury And people don't sometimes like it. We're equal opportunity naggers Meaning we ask the same questions to everybody when the world bank was creating the global infrastructure facility That I just mentioned we said will your standards will your safeguards will your golden standards also apply? So I just want to be clear that we're We treat no one is particularly special. We treat everybody the same way all these issues Staying with the the nagging theme As somebody who is uh, who worked with apac to set up apip and various other initiatives with asean My nag is uh, slightly different. I I think that all the discussion with These institutions has been all about safeguards. Will they have the standards? Will they not have the standards and I want to raise a separate nag which is From the private sector community The question is not that everybody knows there's so much money needed to build the infrastructure the question is simply Is this new institution or any other existing institution? Are they going to clear the lane for private capital to flow into infrastructure? Or are they going to create more obstacles? And create more problems. That's the that's the fundamental question if you want Asia to meet the promise of the kind of infrastructure that's required to sustain that growth which the whole world needs from asia Then we need to make sure that these lanes are being opened and not Closed or made more difficult And that's a question. Nobody seems to be asking about this new institution or existing institutions enough. I know adb board had made a very very Strong statement two years ago and adb has been moving down that path to become a Supporter of private capital. I know world bank is doing and I think this is the question that any new institution coming up Needs to answer as well Yeah, I think that's a really important point But and I almost make it a bit more positive in the sense that the question is how can The mdb's leverage their relatively small role in terms of total financing eight, you know 8% of whatever it is And bring in this much larger amount of private sector money And so and because we in the private sector actually we we have a huge incentive to have the mdb's involved in a project Even if it's only 5% because since the mdb's are the governments, you know, that's a great way of Mitigating political risk for us and political risk is a major major problem So, you know having having the mdb there is great, but we don't need you to be big in it We just in fact that we just need you to be there to provide that comfort So, you know and and frankly Cameron has already mentioned it the incentive systems in the government He mentioned this incentive systems in frankly the mdb's are also the same way It's a pain in the neck to do private sector co-financing. It's just it's for the project manager He doesn't get any any more rewards from doing it and and he gets a lot more work And so we also have to find ways within within our the institutions To give them the incentive to do more of this work with the private sector Yeah, the interesting that you the notion of catalyst as as the multilateral says catalyst For my my chemistry days catalyst speed up reactions Okay, that's the purpose of them and speed is the issue in asia all of you everybody in the room is traveled asia And when you watch what's going on there, it's all about speed. So I think This is a very interesting component that I wanted to draw out. Uh, yes, sir Thank you. Uh, that'll be uh, rather uh comments, but uh, uh, the following the uh, lullies comments Who you are and who you represent? Yes. Uh, my name is makoto kubo. Uh, nippon life insurance company and based in new york And I must we're serving as a shelter of the apff insurance and retirement and mark stream Together with the colleague and aback So and then uh, today I learned that there was the explosion of the water pipe here And some of you might be affected. This is why you need insurance But this is not But this is not why I'm here today because the we are working on a long-term project so and then the uh Among the different Mondays of the work stream one of the mandate is how to promote long-term investments including infrastructure investments as lally mentioned Maybe the insurance company and pension fund have a long-term vision And also a very important thing is that we can have money Received from the customers. We can keep it for a long time So we don't need any cash until we pay. It's tend to be maybe 30 years 40 years So we don't need to have the profits today. We don't care what is the current market current price We would like to have a growth for a long time When we have to pay to the customers in 30 years 40 years Don't you think that this kind of growth opportunities would be ideal investments for us But this is only Possible if the regulation would allow us to do if the bank-centric regulations are copied for insurance company We need to seek liquidity instead of long-term growth And if the short-term economic based regime require us For example to to have all at all time at a good position at any given moment So we need to care today or tomorrow instead of 30 years or 40 years ahead when actually we need the money So that would be the constraints for us to invest in long-term investments Including infrastructure investment. This is one issue and another one is about the Insurance companies are expected by the society to cover some sort of longevity solution As you probably know that people don't die very easily nowadays We have disasters everywhere And we we work too much And also we have a lot of problems and agonies, but still our life expectancy is becoming longer and longer Mysterious, no? Maybe we may be too busy to die too many projects to work on But in that case the insurance company are very good candidates to cover this because we have a mortality risk exposure So we can offset between the mortality risk and longevity risk But it is only possible if we are successful Promoting the long-term investment including infrastructure So we want to have win-win-win situation to make our dream come true And I think this is can this can be done Lastly, I'm a japanese, but don't look at me like an alien Because I live in new york and I pay tax in the states and very happy that my money is used to support region So u.s. Government. Thank you very much As I mentioned, mr. Roku bo is much more entertaining than I am so thanks for that mac Is there a final question before we wrap up today? Yes, sir um Just to stir the pot a little bit once upon a time larry made a speech and said The battle for climate change will be won or lost in asia and we've talked about infrastructure and we've talked about the huge investments But these are the investments that are going to be on the ground for the next 40 50 years Nobody's talked about The path of these investments are we going to make them more green are they going to be more Uh Climate friendly we talked about roads and the needs for road investments. You also talked about however public transportation And other things Um, and and I think perhaps I'd like to ask the panel and perhaps you also what your thoughts are on on how we can also move that That investment needs to uh to consider Sustainability climate change these considerations. Thank you so jump all I mean, I'll just I mean, I I speak very quickly. Um, so you may have missed it But I actually did mention climate when I spoke and climate proofing investments. So I think You know since this is the closing question, too We are looking for sustainable infrastructure that will have The most longevity possible so that we don't have to keep on reinvesting and not addressing what it means to build um The kind of infrastructure that will Be permanent and sustainable Given the new challenges that climate, you know places on on our countries and and your right that asia Is is particularly vulnerable there. I think does not make sense. Will it cost more? This is not my area of expertise Um, but my sense is that in some cases absolutely And so this issue of viability and this issue of You know our projects viable what is going to be the cash flow for projects is already a challenge Even before you factor in the climate issues So I think as we work on how to structure deals as we work on the right financing mix for different kinds of projects We have to build this this in upfront And I do think that as we experiment with how to do this again if you look at the different financing flows I think there is scope in terms of experimenting and innovative Innovating in terms of how I do this there is scope for mdb financing To try out different options that then later on can be scaled up by by the private sector And then my last word will be that the goals of clearing the lanes for the private sector The issues of viability and the issues are of sustainability to me are completely intertwined and when they're positioned as Opposites, I think that's a really false debate. How to intertwine them smartly effectively Flexibly and with speed is hard to do but that's where the debate should be I would just add two comments One, I think the clean environment issue is something that you need you need to address at two levels We tend to always talk about it at the project level. Is this a clean project? This is not a clean project and the real solution is at a higher level, which is what is the Living environment that we are planning for the future Excuse me. So this would be more in line with what kind of cities do we want in the future? And then you figure out whether how many roads you will need or what kind of What kind of infrastructure that would involve that kind of concept of living There's not enough discussion going on in asia about that. There's much more You know the asians are talking about the new cities and and and so on But anytime that the engagement happens from the west, it's more about the project level And what are what standards are you using? Is this going to be clean or not? And so I think there's a disconnect there that needs to be resolved The second thing is all things asia, you know If people can make money through that There's likely to be a higher uptake on the concept and so you see that you know the All of the solar technology the panels I mean that there's a big market there and there's an uptake in asia as well because it's homegrown technology People are making money from it. It makes economic sense. Therefore it also makes social sense and I think as long as we Continue to have this dialogue which has a disconnect that Some technology is being forced on asia, which is not really a source of economic growth for asia. You will continue to have this Disconnect which really there shouldn't be when we talk about the three Tears of bottom line and so on. So I think there's a lot of work to be done there and it is More soft stuff than hard stuff Thank you and uh first thanks to all of you for investing your mornings with us I hope it was beneficial and please join me in thanking our panel