Asean insurers urged to fund critical infra devt

Asean Insurance Council secretary general Evelina Pietruschka

KUALA LUMPUR: Insurers in Asean have been urged to to take an active role in driving local and regional economic growth by funding critical infrastructure developments through the private-public partnership concept.

Globally, insurance companies are estimated to hold just 2% of assets under management in infrastructure investments, the Asean Insurance Council (AIC) said. 

Yet with insurance premiums in Asean growing at an average annual rate of 13% between 2004-2014, three times the global average, the potential to channel investments to viable infrastructure projects offers a rewarding opportunity.

AIC urged industry stakeholders throughout Southeast Asia to take up this role. 

It pointed out Asean’s infrastructure development will require as much as US$3.1 trillion in investment by 2030. Malaysia comes in fourth highest after Thailand, with a total of US$30bil of expected annual infrastructure spending. 

AIC secretary general Evelina Pietruschka said the Asian Development Bank (ADB) believes that the Asean insurance industry can play a key role in meeting that need. 

“The ADB estimates that Asean requires up to US$60bil additional investment annually to bridge the current infrastructure investment gap. That’s a huge figure for governments to fund alone. 

“Asean’s insurance industry is perfectly positioned to help meet this need through innovative public-private partnership in infrastructure investment,” she said. 

 Pietruschka said the AIC believes “we can shape the future of our nations and region” by funding investments in key infrastructure developments that contribute to the realisation of the Sustainable Development Goals (SDG).

According to Bloomberg Market InteligenceResearch, Malaysia offers one of the best returns at low risks for investments among the emerging economies in the Asia-Pacific region’s fast-growing infrastructure sector. 

With a population of over 630 million, increasing urbanisation and an affluent middle class, government will need to partner with businesses to deliver on the critical infrastructure projects in the transport, healthcare, energy, food and education sectors. 

 Pietruschka pointed out the Singapore-Kuala Lumpur high speed railway project. 

It is one of the projects that helped boost Malaysia’s industry rewards score to 68.6 out of 100, the third highest among Asean members. 

The project will generate enhanced stimulus and growth effects, and at the same time drive other sectors such as education, jobs, wages and wealth. 

Despite substantial progress in recent decades, ADB estimates the region is still home to over 400 million people who have no or limited access to electricity, 300 million who lack safe drinking water and almost a billion people without basic sanitation facilities.