Infrastructure sector has been an unsung hero in this pandemic. Despite the complete disruption to how our economies operate, the core infrastructure like power, water, communications and most transport systems has kept the economy operational. True to its word, infrastructure has literally kept the lights (and internet!) on.

The global cost of COVID-19 is estimated between US$5.8-8.8 trillion by the Asian Development Bank (ADB). Given the fiscal strain put on government finances by the economic stimulus packages and healthcare costs, the ability to drive infrastructure project investments stands diminished. Infrastructure sector has strong economic growth correlation and substantial multiplier effect. According to the Economic Policy Institute, US$100 spent on infrastructure boosts private-sector output by a median of US$13 and an average of US$17 in the long run. Furthermore, each US$100 billion in infrastructure spending would boost job growth by about 1 million full time equivalents. Hence, it is imperative to prioritise infrastructure project investments as economies prepare for a post-pandemic world.

Governments should consider leveraging shovel-ready projects – projects ready to be offered to market based on completed feasibility studies – to fast track economic recovery. Need is to prioritise infrastructure projects pipeline with support from multilateral organisations. Recently, ASEAN in collaboration with the World Bank published a list of priority projects under the Master Plan on ASEAN Connectivity 2025. This list of projects, which needs to meet certain pre-conditions to attract robust investments, covering transport, energy, and information and communication technology sectors, contributes to improving the movement of people, services, and goods, and promoting innovations among the ASEAN member states.

In addition, countries like Indonesia have embarked on an asset recycling program under the Limited Concession Scheme. This offers brownfield existing operating infrastructure projects to private sector under a long-term concession to own and operate. This will unlock government capital while offering a robust pipeline of commercially viable operating projects. The capital raised can be deployed to develop other green field infrastructure projects, while the successful track record of working with private sector will ensure further confidence in delivering future projects.

While multilaterals are working with governments to ensure capacity development in the public sector, the project financing challenge remains critical. Need is to increase use of innovative and alternate finance solutions including blended finance, sustainable innovation funds, and green bonds to unlock capital for the right projects.

Investors can also influence the type of projects that are re-prioritised through robust ESG criteria. Large asset managers like Blackrock have put sustainable investing and ESG evaluation as top criteria to select projects for institutional financing.

Two critical options can help drive the agenda of prioritising infrastructure projects pipeline. First is tapping alternate sources of financing including local capital markets, joint ventures with state-owned enterprises and leveraging local bank financing. Second is for multilateral agencies to pre-fund part of the debt of identified priority projects. This concept of staple financing – 20-25% of the debt pre-funded ahead of market launch – would be a huge stamp of confidence on project’s commercial viability and ESG credentials. This, in turn, can facilitate innovation in financing and technology, thereby offering cost effectiveness to the government.

With the advent of technologies like Internet of Things and Robotics Process Automation for better decision-making and operational optimisations, as well as data analytics, advanced metering infrastructure for load planning, predictive maintenance, etc, the infrastructure of tomorrow will be smart. The emerging markets will be the biggest beneficiary of this technological innovation for efficient service delivery given the low cost and absence of legacy systems. Old infrastructure (power plants, water projects) can be upgraded with best in class technology while at the same time creating smart urban infrastructure projects in areas of governance, citizen centric services, buildings, land management, environment, amongst others.

One example is ADB supported digital land registry deployment in Fiji – digitising physical land records – thus making the system secured, reducing the processing time for land transactions by 90% and bringing high degree of transparency, robust governance and increased private sector investments. Such projects, once successfully implemented at one place, can be easily be replicated in other similar markets thereby laying a strong foundation for smart digital urban economy.

Technology can also help mitigate the cost and time overrun risks common in complex infrastructure projects. Tools like Power BI and Tableau offer efficient ways to install a “single version of truth” that can be monitored on a real time basis, thus ensuring proactive and timely interventions. Leveraging technology for reducing “cost to service” and efficient delivery of projects will go a long way in sustaining a viable ecosystem of projects.

Infrastructure projects can deliver long term economic benefits. Through financially sustainable business case, optimal risk mitigation, technology-led innovation and robust project management, prioritised projects can deliver immediate economic spinoffs. Collaboration, connectivity, and creativity will ensure that infrastructure not only keeps the lights on, but paves the way for sustainable and resilient national economies.