ASEAN needs significant infrastructure investments in the years ahead but the need will outstrip government finance capabilities. a cash-rich insurance agency may be able to provide funding for some of the gaps

“The ASEAN Life Insurance industry manages assets of US$438 billion and this will increase substantially as premiums grow in the years to come. However, they are estimated to distribute only 2% for infrastructure. If the community commits to increase the share of assets being allocated to infrastructure, this will make a significant contribution to the ASEAN infrastructure financing gap,” said Evelina F. Pietruschka, Secretary-General of AIC.

However, a significant infrastructure financing gap has appeared. It is estimated that ASEAN will have a $1.153 trillion infrastructure gap according to 2016 data from HSBC. Only Singaporewho have a $27 surplus, while others such as Malaysia will have $42 million infrastructure gap; Thailand, $86 million; Vietnam, $160 million; Philippines, $171 million; and Indonesia will have a $721 million infrastructure.

As the largest ASEAN market, Indonesia chases over US$150 billion, out of US$327 billion pipeline by 2019, to help develop public works and infrastructure.“ That’s an enormous number for the government to fund. They need to focus more directly on public-private partnership (PPPs), through long-term institutional investors, such as insurance,” added Evelina.

These efforts also highlighted that blended finance schemes, or the merging of public and private funds to facilitate private capital for the public sector, is a promising solution to Indonesia’sinfrastructure deficit. “We need to develop a regulation to accommodate blended financing for infrastructure, as only 25 percent of Indonesia’s infrastructure funding comes from the government,” said Evelina.