Today, I would like to share with you a piece of good news: With preparatory work entering the final stage, the HKMA’s Infrastructure Financing Facilitation Office (IFFO) will be officially launched next Monday (4 July).
Let me recap briefly. IFFO, being a platform spearheaded by the HKMA, aims to bring together the relevant stakeholders for infrastructure financing, including multilateral development banks, investors, commercial banks and infrastructure project developers. The platform will promote and facilitate investment and financing in infrastructure projects in the countries along the Belt-and-Road (B&R) routes.
The B&R region is largely made up of emerging market economies which have a huge demand for infrastructure projects and promise great potential for investment and financing. While geographically these projects may be somewhat remote from Hong Kong, their investment and financing can be conducted here. Hong Kong, with its diversified financing channels including the stock market, the debt market, bank lending and private-equity, as well as the necessary risk management professionals, has the capacity and capability of meeting the B&R’s needs for infrastructure investment and financing. We believe infrastructure financing can act as a new impetus to Hong Kong’s economic growth, promoting the development of financial intermediation and related professional services, and creating more high value-added jobs. By capitalising on this opportunity, we can create mutual benefits for all stakeholders.
Over the past few months, my colleagues have been proactively reaching out to major stakeholders and inviting them to join the IFFO as partners, and the response has been most encouraging. To date some 40 heavyweight public and private organisations from overseas, the Mainland and Hong Kong have joined IFFO. I am very pleased with the support and the confidence they have shown in the HKMA and IFFO.
The IFFO partners broadly fall into two categories – capital providers and infrastructure project operators. The capital providers include multilateral development banks and policy banks, such as the International Finance Corporation under the World Bank, the Asian Development Bank, the China Development Bank, and the Export-Import Bank of China. With years of experience in promoting infrastructure investment in developing countries, these organisations and banks have a proven record of improving real economy and social welfare through infrastructure projects.
In addition, among the capital providers are investors that focus on medium- to long-term development, such as the Silk Road Fund and the China-Africa Development Fund. Some large international institutional investors seeking long-term stable returns, including well-known pension and retirement funds, have also become IFFO partners.
The second category of partners includes companies with the necessary technologies or operational capacity in the development and management of infrastructure projects, such as Hong Kong’s CLP Group, MTR Corporation, and the China Three Gorges Corporation. Indeed, these companies have long been involved in the investment and development of overseas infrastructure projects, and may share with other IFFO partners their valuable “field” experience.
The first major event following the inauguration of IFFO will be a large-scale and high-level conference. The conference is co-organised by the Boao Forum for Asia and the HKMA, and will be held in Hong Kong next Tuesday (5 July). The conference carries the theme of “Stimulating Growth in the Real Economy: the Role of Finance” and will explore how infrastructure financing can promote economic development, in addition to discussing monetary policy, capital flows, and financial co-operation in Asia. “Infrastructure Financing – The Business Perspective” is one of the topics for the conference. The participants will discuss the incentives for investors to allocate capital to infrastructure projects in emerging economies, ways of sourcing and identifying sustainable and long-term infrastructure projects in the B&R region, and strategies for balancing the risks and return profile from equity and debt’s perspectives. We hope this event can enhance various stakeholders’ understanding of these important topics.
Following the official launch of IFFO next week, we will keep the public posted on IFFO's latest work and progress.
Hong Kong Monetary Authority
28 June 2016