TAGAYTAY CITY (Mabuhay) – Asia-Pacific business leaders are pushing for alternative ways of financing long-term infrastructure investments in the region, including tapping the capital markets.
Dr. Julius Caesar Parrenas, a member of the APEC Business Advisory Council (ABAC), said APEC member economies do not have enough financing particularly for long-term infrastructure projects.
“Most regions really depend on the banking sector; banks get very short term, medium term funds…They need insurance companies, the pension funds to really develop and to invest in infrastructures,” he said in a press briefing on the sidelines of APEC meetings here.
Parrenas thus underscored the importance of the development of the capital markets.
He noted that the region is still very much dependent on the banking sector as a source of financing, while more advanced markets have more diversity.
“You have the bond market, the debt market and then you have the equity market. So that if there is a crisis in one of them, then the others can step in to provide the financing and keep the economy going,” he added.
Parrenas said that institutional investors like insurance companies and pension funds park their money in the capital markets in order to invest in the long-term projects like infrastructure.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said the bond market in the Philippines has started to grow.
Guinigundo said that while loans provided by the banks are still huge, the funding from the bond and securities markets is also growing.
“It is up for the proponent to securitize their exposure in the infrastructure projects. There is nothing that will prevent them from going into the bond market and source their funds,” he added.