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[ 2015-05-06 ]
Thai potential excites: HSBC
THAILAND REMAINS one of the most attractive investment destinations in the region in terms of infrastructure projects because of the growing requirements, the scale of the projects and the government's promotion of the Public-Private Partnership (PPP) model, a senior executive with the Hongkong and Shanghai Banking Corporation (HSBC) has said.
James Cameron, head of the bank's Project and Export Finance in Asia-Pacific, said investment in infrastructure in Thailand, Indonesia and India are all on HSBC's radar and the bank is looking for ways to get more involved with the private sector in the financing of these projects.
"HSBC has been looking at the infrastructure space very closely for a number of years now as we have identified it as a key opportunity for us. The main reason is that there is a significant requirement, and it is a consistent requirement, that we are seeing globally in term of countries requiring material volume of infrastructure to spend," Cameron said.
Cameron said the Asian Development Bank has estimated that US$8 trillion (Bt267.4 trillion) worth of investment will be needed for infrastructure in Asia from until 2020. Meanwhile, the HSBC has estimated that US$11 trillion would be required for urban infrastructure alone in Asia until 2030, which reflects the shift in demographic trend from rural to urban population. That requires further urban infrastructure such as power, utilities and transport.
"You are seeing a lot of that in Bangkok with the requirement for a new metro and the requirement for further infrastructures to allow the city to work effectively with the increase in the urban population," he said.
"The good news in Asia at the moment is that there is a very liquid banking sector that ready, willing and able to support the infrastructure growth but if the procurement of infrastructure reaches the level that people are anticipating then the traditional form of financing, despite it being a pretty liquid banking sector, is going to be stretched," he added.
Cameron revealed that HSBC is working on non-traditional forms of financing such as the mobilisation of the capital market and institutional investors into the financing of infrastructure in Asia, which they expect to become more relevant over time, especially as the regulatory impact starts hitting all banks in terms of the regulatory cost of providing long-term financing.
Cameron said the bank is keeping an eye on various projects in the region, including Indonesia's plan to build 35 gigawatt of power over the next five years, India's road, rail, and power projects and Thailand's $40 billionPPP scheme in metro and power projects.
"In terms of committing resources to a particular country, the private sector will look for an opportunity and see how much visibility is in the pipeline. If you can structure and look to mobilise a pipeline around a familiar and well-defined transaction process such as a PPP mechanism, then that makes the Thai infrastructure space very interesting," he added.
In terms of the political situation in Thailand, which might cause delays in infrastructure projects, Cameron said: "for us and for our international clients, we do not see that [Thailand's political situation] as being a material factor that is changing our current investment decision. It is obviously something that we are taking into account but it is in no way reducing our commitment to Thailand or our clients' interest in the country."
"HSBC has been looking at the infrastructure space very closely for a number of years now as we have identified it as a key opportunity for us. The main reason is that there is a significant requirement, and it is a consistent requirement, that we are seeing globally in term of countries requiring material volume of infrastructure to spend," Cameron said.
Cameron said the Asian Development Bank has estimated that US$8 trillion (Bt267.4 trillion) worth of investment will be needed for infrastructure in Asia from until 2020. Meanwhile, the HSBC has estimated that US$11 trillion would be required for urban infrastructure alone in Asia until 2030, which reflects the shift in demographic trend from rural to urban population. That requires further urban infrastructure such as power, utilities and transport.
"You are seeing a lot of that in Bangkok with the requirement for a new metro and the requirement for further infrastructures to allow the city to work effectively with the increase in the urban population," he said.
"The good news in Asia at the moment is that there is a very liquid banking sector that ready, willing and able to support the infrastructure growth but if the procurement of infrastructure reaches the level that people are anticipating then the traditional form of financing, despite it being a pretty liquid banking sector, is going to be stretched," he added.
Cameron revealed that HSBC is working on non-traditional forms of financing such as the mobilisation of the capital market and institutional investors into the financing of infrastructure in Asia, which they expect to become more relevant over time, especially as the regulatory impact starts hitting all banks in terms of the regulatory cost of providing long-term financing.
Cameron said the bank is keeping an eye on various projects in the region, including Indonesia's plan to build 35 gigawatt of power over the next five years, India's road, rail, and power projects and Thailand's $40 billionPPP scheme in metro and power projects.
"In terms of committing resources to a particular country, the private sector will look for an opportunity and see how much visibility is in the pipeline. If you can structure and look to mobilise a pipeline around a familiar and well-defined transaction process such as a PPP mechanism, then that makes the Thai infrastructure space very interesting," he added.
In terms of the political situation in Thailand, which might cause delays in infrastructure projects, Cameron said: "for us and for our international clients, we do not see that [Thailand's political situation] as being a material factor that is changing our current investment decision. It is obviously something that we are taking into account but it is in no way reducing our commitment to Thailand or our clients' interest in the country."
The Nation May 6, 2015 1:00 am
Author: Patrick Lusted