Annex B - APEC Multi Year Plan on Infrastructure Development and Investment

1. We are committed to supporting growth in our region through infrastructure development and investment. Well-designed, sustainable, and resilient infrastructure enhances economic growth, boosts productivity, and provides significant positive flow-on effects including improved access to markets, job creation and economic growth across sectors.


2. In the APEC Growth Strategy launched in Yokohama in 2010 we stated that APEC can use its convening power to help create a platform to develop innovative solutions, and provide technical assistance and advisory services to help member economies to raise private and public financing for infrastructure-related projects. APEC can also provide an exchange of views on best practices in public-private partnerships in infrastructure development.


3. In 2012 in Vladivostok we acknowledged the critical importance of private sector investment in regional infrastructure development, and encouraged broader work in the format of public-private partnerships.  We also recognized the importance of adopting and maintaining laws, regulations and practices that facilitate investment, as well as efforts to improve the investment climate in the APEC region.


4. Delivering concrete outcomes in infrastructure development requires a multi-year commitment by APEC economies. This year we have developed the APEC  Multi-Year Plan on Infrastructure Development and Investment that will be implemented through the year 2013-2016.


5. The Multi-Year Plan provides a menu of actions and reforms that economies can decide to adopt according to their own circumstances. Collectively, economies will deliver the supportive institutional environment that is needed to maximize private sector involvement in infrastructure. Areas of cooperation will include:
   • Work to foster a business friendly environment for infrastructure investment and development, through a solid regulatory framework that minimizes uncertainty and maximizes transparency and predictability.
   • Work to develop or to refine existing integrated planning mechanisms.
   • Work to develop government capacity to identify and generate a pipeline of bankable infrastructure projects.
   • Work to develop or further improve financing and funding environment to encourage long term investors.


6. As a first step under the Multi-Year Plan, we welcome to establishment of a pilot Public Private Partnership (PPP) Centre in Indonesia with the capability to assess infrastructure projects to receive private finance and guide the successful execution of PPP projects.


7. We have also agreed to establish an APEC PPP Experts Advisory Panel. The Panel will assist with the establishment of the Indonesian PPP centre. By building up local institutions then joining them together into regional networks, APEC can help create a regional infrastructure market.


8. We also recognized the importance of planning with comprehensive and holistic considerations, such as taking into account long-lasting asset value, stability of long term cash flow and lifecycle cost.


9. We welcome the continued efforts of the ABAC’s Asia Pacific Infrastructure Partnership (APIP) and the development of the ABAC’s Enablers of Infrastructure Investment Checklist.


10. Under this Multi-Year Plan, we instruct Ministers and Officials to develop additional capacity building activities that will assist economies to promote sustainable and resilient infrastructure development and investment, and look forward to monitoring its implementation.

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APEC Multi-Year Plan on Infrastructure Development and Investment (MYPIDI)

1. APEC’s work on connectivity and infrastructure development is long standing. Increased work in the area is important to ensure that the Asia-Pacific remains resilient and fulfills its role as the engine of the world's economic growth. The work will also complement APEC’s core mandate to attaining the Bogor Goals of free and open trade and investment in the Asia-Pacific by 2020.


2. Well-designed, sustainable and resilient infrastructure development and investment can enhance economic growth and increase productivity, and provide significant positive flow-on effects including improved access to markets, job creation and manufacturing growth. Infrastructure investment is likely to have a significant impact on gross domestic product (GDP). The World Bank estimates that a 10% increase in infrastructure provision raises growth by 1% in the long-term. 


3. The APEC 2010 Leaders Growth Strategy acknowledged APEC’s role in facilitating growth through infrastructure development. It stated that APEC can use its convening power to help create a platform to develop innovative solutions, and provide technical assistance and advisory services to help member economies in need that have different abilities in raising private and public financing for infrastructure-related projects. APEC can also provide an exchange of views on best practices in public-private partnerships in infrastructure development.


4. In 2011 Finance Ministers also underlined that accelerating infrastructure investment and improving service delivery would contribute to boosting the recovery and is critical for sustaining economic growth in the Asia-Pacific region. Finance Ministers acknowledged the efforts underway in some economies to improve the environment for investment through public-private partnerships (PPP) and minimizing regulatory risk. They recognized that dialogue with market participants on infrastructure financing is critical to achieving the full benefit of private sector resources.


5. In Vladivostok in 2012 Leaders acknowledged the critical importance of private sector investment in regional infrastructure development and encouraged broader work in the format of public-private partnerships. Related to this, Leaders also recognized the importance of adopting and maintaining laws, regulations and practices that facilitate investment, as well as efforts to improve the investment climate in the APEC region.


6. The APEC 2013 Ministers Responsible for Trade instructed Senior Officials to develop a unifying, forward-looking, and ambitious APEC Framework on Connectivity in 2013 to deepen and broaden the region's connectivity around and across the Pacific Ocean and within APEC's archipelagic and continental regions. The development of physical infrastructure is recognized as a key pillar of the connectivity framework.  Addressing impediments to cross-border transport infrastructure development is also a key element of APEC’s work on Supply Chain Connectivity.


7. In February 2013 SOM and Officials of the Finance Minister’s Process agreed to develop a multi-year plan that aims to assist economies to execute infrastructure projects, by identifying (i) impediments faced by economies in the region, and (ii) ways to address the impediments including by adding value to ongoing work.


8. The Multi-Year Plan identifies four workstreams that will help guide future APEC work in infrastructure development and investment. In the process, the Multi-Year Plan would create common regional understanding and in turn help stakeholders in making decisions when carrying forward infrastructure projects. The workstreams, defined in Annex 1 of the Multi-Year Plan are as follows:
   • Workstream 1:       Fostering a business friendly environment for infrastructure development and investment, through a solid regulatory framework, that minimizes uncertainty and maximizes transparency and predictability.
   
   
   • Workstream 2:        Development and Refinement of an Integrated planning system mechanisms
   
   
   • Workstream 3:       Development of government capacity to identify and generate a pipeline of bankable infrastructure projects
   
   
   • Workstream 4:       Development or further improvement of financing and funding environment to encourage long term investors


9. This joint SOM-FMP initiative reflects the importance of a coordinated APEC approach which will harness expertise across APEC fora. Further development of work to take place under the Multi-Year Plan will be discussed in relevant sub-fora and finalised by SOM1 and FCBD 2014.


10. Given the long-term nature of the work involved, the multi-year plan will span an initial period of 2013-2016.


11. The Multi-Year Plan is informed by the work undertaken by APEC in 2013, including a Dialogue on Infrastructure Development and Investment, a Symposium on Connectivity, an FMP Workshop on Project Readiness to Increase Infrastructure Investment, and an FMP Workshop on Infrastructure Financing, as well as work undertaken by regional and global fora such as the ASEAN and the G-20. The APEC Secretariat conducted a mapping exercise to identify current and previous APEC work in this area. Input was also received from relevant APEC fora, APEC member economies, the private sector and development banks.


12. The Multi-Year Plan builds on work already undertaken to improve the investment climate in APEC economies, enhance regulatory frameworks and support economies as they design, prioritize and implement infrastructure projects.


13. In addition, the Multi-Year Plan will support efforts underway through the APEC Supply Chain Connectivity Initiative endorsed by Leaders in 2009. Of the eight identified chokepoints in regional supply chains, Chokepoint no. 2 outlines that “inefficient or inadequate transport infrastructure and a lack of cross border physical linkages e.g. roads, bridges” act as impediments to a seamless supply chain in the Asia-Pacific region.  Addressing the other Chokepoints under APEC’s Supply Chain Connectivity Initiative through targeted and focused capacity building will also facilitate the development of transport infrastructure.


14. APEC cooperation on infrastructure development and investment will take advantage of regional expertise, experience and funding sources, including from multilateral and regional development banks, and the private sector. The Asia-Pacific Infrastructure Partnership (APIP) and ABAC’s PPP checklist are particularly relevant.


15. Under the SOM process, the SCE will coordinate the work under the multi-year plan by engaging relevant APEC channels, namely EC, IEG, SFOM, and related Working Groups.


16. Significant APEC past work relevant to the 4 workstreams, including ongoing work identified in the mapping exercise is set out in Annex 2.


17. Suggestions for possible new APEC initiatives to take forward this work are contained in Annex 3.

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Workstream 1:    Fostering a business friendly environment for infrastructure development and investment, through a solid regulatory framework, that minimizes uncertainty and maximizes transparency and predictability.

Workstream 2:    Development and Refinement of an Integrated planning system mechanisms

Workstream 3:    Development of government capacity to identify and generate a pipeline of bankable infrastructure projects

Workstream 4:    Development or further improvement of financing and funding environment to encourage long term investors

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APEC Publication:

1. Meeting APEC’s post crisis infrastructure challenge: Towards commonality in PPP infrastructure markets (2009)
2. Breaking the PPP Logjam (2010)
3. Filling the Infrastructure Gaps in the APEC’s Developing Economies (2011)

APEC MULTI-YEAR PLAN ON INFRASTRUCTURE INVESTMENT AND DEVELOPMENT POSSIBLE WORK STREAMS

Businesses will increase their participation in infrastructure projects if they feel confident that solid regulatory frameworks are in place to support their investment decisions.  Governments can foster a business friendly environment by taking actions to ensure that their regulatory systems deliver transparency and certainty to business, and are responsive to their needs. While integration of gender considerations in infrastructure projects can also contribute to empower women to participate actively in the economy.

Areas in which APEC could engage in targeted and meaningful work:

• Good Regulatory Practices
  • Meeting Leaders’ and Ministers’ 2011 [and 2013] instructions on strengthening the implementation of Good Regulatory Practices, including:
    • Ensuring internal coordination of regulatory work;
    • Assessing the impact of regulations; and
    • Conducting public consultations. 
  • Strengthening the implementation of Good Regulatory Practices described in the APEC-OECD Checklist on Regulatory Reform.
  • Structural Reform
    • Continuing efforts to improve the ease of doing business, particularly by reducing administrative burdens and simplifying regulation
  • Development and implementation of policies that enforce predictability and equal treatment of  private sector in the market (including in relation to state owned enterprises)
  • PPP regulatory coherence and cooperation for more conducive/business friendly investment climate
  • Legal and regulatory framework that fosters an appropriate risk allocation between the public and private sector
• Contract Issues: Enforcement , Dispute Settlement and Legal Certainty
  • Sharing good practices on enforcement of contracts – strengthening of contract enforcement regimes
  • Assisting economies to establish clear and effective mechanisms for solving disputes
  • Importance of contractual guarantees regarding  changes of law.
• Property rights frameworks/Land acquisition,
  • Assist economies to develop and implement good practices regarding land acquistion and environment impact assessment,  including community consultation.
• Government Procurement Process
  • Adopting a predictable and transparent tendering process that promotes the best procurement for value
  • Encouraging to maintain a one-stop website for access to information on government procurement
• Business and Investment Climate
  • Encouraging transparency in tax regimes, preferential loans, and construction permits
  • Encouraging transparency in construction services
  • Developing a network of regional investment protection agreement
  • Supporting anti-corruption measures
• Ensuring Institutional Readiness for APEC economies through Surveys

Businesses will feel more confident making long term infrastructure investment decisions if they are convinced that government decisions are being guided by a well coordinated and integrated planning mechanism.  Governments can develop (or refine existing) integrated planning mechanisms in a way that demonstrates serious commitment to the longer term infrastructure needs of their economies, and giving priority to projects that contributes the most to economic growth and productivity.

Also, well-designed, sustainable and resilient infrastructure development and investment can enhance economic growth and increase productivity, and provide significant positive flow-on effects including improved access to markets, job creation and manufacturing growth.

Areas in which APEC could engage in targeted and meaningful work:

• Strengthening infrastructure planning capacity, by assisting economies:
  • To develop or refine forward-looking domestic infrastructure plans.
  • To identify well-designed, sustainable, and resilient projects that generate greatest net public benefits that also fit into broader infrastructure plans and are coherent with medium-term expenditure frameworks.

There is an emerging international consensus that coordination and clear allocation of responsibility at a domestic level, and project preparation and selection are the keys to successful infrastructure development.  Also, well-designed, sustainable and resilient infrastructure projects can attract private investment by securing long-lasting asset value and stability of long-term revenue stream.

Governments can leverage increased private sector involvement in infrastructure by developing domestic capacity to generate a pipeline of bankable infrastructure projects that can accommodate private sector investors.

Areas in which APEC could engage in targeted and meaningful work:

• Strengthening PPP project preparation through the creation of a dedicated PPP Center in interested economies:
  • To help turn projects into bankable projects
  • To develop strategies to communicate the public infrastructure projects available for investment to the private sector.


• Convene APEC PPP Experts Panel to guide a Pilot PPP Centre


• Discuss mechanisms and share good practices on directing appropriate government  support to high net public benefit projects,
  • Including through "dedicated domestic-level funds" to support strongly economic and sound infrastructure projects with private sector investment that can also help to build up a credible pipeline of bankable projects.


• Develop a mechanism and capacity to prioritize infrastructure projects to help government to prioritize between competing projects on a consistent cost-benefit basis.


• Increasing sectoral expertise to ensure the right pricing of projects


• Improving governments’ expertise in planning infrastructure projects with comprehensive and holistic consideration
  • To secure long-lasting asset value and stability of long-term cash flow of infrastructure projects.
  • To improve bidding process of infrastructure projects that incorporate not only a purchase price but also key elements such as lifecycle cost including performance and durability, environmental impacts, safety and maintainability.
  • To reduce risk to infrastructure investments by incorporating disaster risk reduction, including structural and non-structural measures, into infrastructure planning and development.

Well functioning financial markets can facilitate the participation of long term investors in infrastructure through provision of appropriate financial products.  To achieve this, governments should put in place clear and consistent financial regulatory frameworks and maintain strong financial supervision – while reducing unnecessary legal and regulatory impediments to the smooth functioning of these markets.

Areas in which APEC could engage in targeted and meaningful capacity building are:

• Strengthening of financial regulatory, monitoring and supervision capacity


• Ensuring that financing mechanism and instruments (such as local currency financial markets, including bond markets, for infrastructure projects) are in place to direct to bankable PPP project proposals.


• Providing support for long-term local currency-denominated financing


• Create capacity to develop a wide range of financial vehicles and infrastructure investment models that can efficiently promote capital markets development for infrastructure financing and foster the participation of  institutional investors, such as pension funds, insurers and sovereign wealth funds, to take a longer term view on investment opportunities.

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