The ASEAN Insurance Council (AIC), a regional platform for the insurance industry, has issued a major call-to-action to insurers to help accelerate infrastructure investment.
Following the call, leading insurance companies, WanaArtha Life, AIA, Allianz Life, and Taspen signed a strategic agreement to invest $224m in an Indonesian state-controlled toll road operator, Jasa Marga, through PT Mandiri Manajemen Investasi.
The call was made in conjunction with the IMF-World Bank Group (WBG) 2018 Annual Meetings in Bali last month, where AIC had a speaker at a infrastructure financing discussion.
"The ASEAN Life Insurance industry manages assets of US$438bn and this will increase substantially as premiums grow in the years to come. However, they are estimated to distribute only 2% (of this) to infrastructure. If the community commits to increase the share of assets allocated to infrastructure, this will make a significant contribution to the ASEAN infrastructure financing gap," said Ms Evelina F. Pietruschka, secretary general of AIC.
ASEAN countries are now very aggressively promoting infrastructure to support ASEAN connectivity. However, a significant infrastructure financing gap has appeared. It is estimated that ASEAN will have a $1.153trn infrastructure gap according to 2016 data from HSBC. Only Singapore has a surplus which stands at $27m; while other ASEAN members such as Malaysia will have a $42m infrastructure gap; Thailand, $86m; Vietnam, $160m; Philippines, $171m; and Indonesia, $72m.
As the largest ASEAN market, Indonesia chases over $150bn, out of $327bn in the 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 Ms Evelina.