Good morning everyone. My name is Alex Wong with the World Economic Forum. I have the responsibility over our global strategic infrastructure initiative. So we're very pleased to have you join us and also this very distinguished panel to talk about what we're calling the life cycle approach. So for many of you who are in the room that means of course a full cycle of infrastructure not just the buying and the construction but the operations and maintenance and the funding model. This is part of a broader theme that we've been working on at the forum for the last three years. We've actually had an ongoing initiative related to fundamentally how to just get more infrastructure in the ground with all the gaps and all the needs that everyone's talked about. So we've had tracks of work that relate to what we call a knowledge series. So just collecting best practices and case studies on the entire life cycle of infrastructure development. We've got a specific track of work focusing on Africa to try to accelerate the implementation of PETA the program for infrastructure development Africa as well as several country round tables in Latin America and now looking at Asia. We've had a specific track related to infrastructure financing including a report related to a blueprint for policy makers on how to make the right policies to track long term investing. And finally we've been promoting the concept of the need for a knowledge and collaboration platform so there can be a sharing of information to match the supply and demand the creation of templates. So all these elements are things that many of you in this room and your companies have told us are critical to moving the agenda we're very pleased that those on the panel have been part of that journey as well and so we're very happy to have the chance to share some of those views and hear your thoughts and questions without further delay then I'm pleased to introduce our moderator and also the chair of our global strategic infrastructure initiative at the World Economic Forum Gordon Brown. Well thank you very much I'm delighted to be in Istanbul today to be at the World Economic Forum to see an audience interested in how we can progress infrastructure across this country and across the region and the world and to have such a great panel with us. You may have heard the Deputy Prime Minister for Economic and Finance Affairs talking a few minutes ago about Turkey's need for infrastructure and transport and energy in particular. We know there is a huge infrastructure funding gap about a trillion a year that needs to be bridged. We know also that in some of the most difficult parts of the world there is a shortage of electricity, water, sanitation but we know that every industrial country has needs for transport, energy and better means by which they protect the environment through infrastructure and I think we know also that the solution to this cannot lie with the public sector alone or the private sector alone it is going to be by developing and indeed making more sophisticated the partnerships between public and private sector. Now that's why we're very fortunate today to have a panel that represents this clear need to think about how we can unlock better relationships between public and private sector in the life cycle of delivering infrastructure from feasibility to project preparation to the construction and delivery to the management and maintenance of these projects. On my immediate left, Shuli Kilik is the head of the European Bank for Reconstruction and Development here in Turkey and as you will find out the European Bank is doing very innovative things particularly in project preparation in infrastructure so I'm very pleased she's going to be speaking in a few minutes. Next to her is Uwe Kruger who's the Chief Executive Officer of Atkins formally with Texas Pacific, a physicist who's got a great experience both in the engineering and in the finance side of developing infrastructure so we're very lucky to have him here. He's come straight from the other panel to be with us and we'll be speaking in a minute. We have Takashi Tutui who once was at Nomura, now is at the Lixel Group and they have been developing very sophisticated ways of improving the environment through better infrastructure and I'll ask him sometime about the waterless market, the waterless toilet which they've been developing and of course many energy saving measures that are central to the mission of this company and to the future of infrastructure and in a minute we will be joined and indeed we are joined completely on cue. Thank you very much by Bertrand Baderie Now Bertrand Baderie is the Chief Finance Officer of the World Bank he's been involved in developing their infrastructure initiative which I hope you'll say something about in a minute. He's involved in some of the major projects from Euro Tunnel which I know about from my experience of the United Kingdom which was refinanced and with Michelle and great work in Africa on infrastructure there particularly in relation to water and his role is to bring together many of the infrastructure initiatives that are happening around the world through his new position at the World Bank. Now before we start let's be clear in the last year there has been huge advances made in the way we think about and plan to deal with infrastructure in the future. We have as we will see in a minute the World Bank initiative with the Global Infrastructure Facility. We have the G20 meeting in November where they will approve in Australia a major initiative of all the G20 countries to expedite infrastructure projects and to build an expertise that can be transferred across the world. We have the BRIC Development Bank which has been formed specifically to deal with infrastructure needs amongst the BRIC countries and related countries. We have the Asian initiative by China an Asian facility which will be announced I believe at the APEC meeting in November. Again an attempt to focus resources on infrastructure in Asia and we had as I said EBRD and other initiatives in their particular regions to improve the way we bring public and private sectors together to deal with infrastructure. So this is an exciting time. There is great progress and we now need to see what that means for individual companies, individual countries and for particular infrastructure needs from energy and transport to the environment and so on. So without saying any more at this stage because you will be in a position to ask questions about how things are progressing. I think I'll start if I may with Shirley Killick to tell us what is happening in Turkey and in the surrounding countries that makes her confident that we are moving forward in developing a better life cycle for infrastructure projects. Shirley please and welcome. Well actually when I look at Turkey and the region I need to really put a big differentiation coming from the development stage and I mean when we look at the developed countries at the moment we are seeing a global infrastructure stock getting at the mature stage which means either they need to be renewed or replaced but of course developed countries considering that financing sources for replacement or renewing is still scarce. In the developed countries the consideration is more how can be the life cycle of the existing assets can be extended or still by using the existing infrastructure the current demand levels can be met while in the developing countries and including Turkey but I want to especially distinguish the Turkey from the rest of the region in that respect and I'll come there why I'm distinguishing from the fact that although the region when we look at all the countries in the Eastern Europe, Central Asia Turkey and Middle East and North Africa especially infrastructure is underdeveloped and I need to say that this is not yet there to meet the demand and to meet the requirements but when we look at Turkey Turkey compared with the other countries in the region is very developed from the approach point of view not from the stock point of view in Turkey when there is a project development by public one thing which really Turkey is doing great is they are studying all other examples of other countries who already implemented various different structures and solutions before coming up with the solution for Turkey in order to meet the high side of the infrastructure and within very constrained financing resources environment while in the other countries in the region we are seeing less sophisticated approaches and more simplified structures simply to meet the demand for the infrastructure just to give you an example in Turkey while there was probably not too many examples of this in Turkey the BOT structures have been first started back in early 1990s with the energy projects and we have seen the PPP structures in a BOT scheme in Turkey in order to meet the energy need of the country later this has been implemented in the airport sector as well in the last 10 to 20 years we are able to see this in order to meet the needs for the motorway and the tunnels and very recently in the healthcare sector and education sector while Turkey is coming up with these models what we are doing is taking various examples especially UK is a very good example from that point of view how this is done in that country why it is done that way and what is the difference of Turkey and how can we implement this in the Turkish market but whether this is enough I cannot say that it is enough just to give you the numbers in the world what I see is there is a 4 trillion per million global stock need and the 1 trillion gap 1 trillion dollar of gap which is not able to be met in Turkey we have 40 billion dollar of perennium need and unfortunately we are not even able to meet half of it and this is mainly because of the scarcity of the financing resources and the government has a lot of other priorities including the current account deficit issue and this is making the job of our Turkish government very difficult to prioritize the infrastructure that's why in Turkey we have seen the emergency of using the PPP structures in a much superior manner compared with the other countries simply with the fact that the public was not able to meet with its own resources I don't know maybe we can get into details later but if you wish I can thank you very much so you've set the challenge that Turkey's going to meet the different needs within the region and of course we'll talk later about the EBRD's specific proposals to move infrastructure forward I'm going to move thank you very much to Hubey Kruger because in the world of engineering this building integrated modeling has been developed a far more sophisticated way of planning through digital asset modeling meeting of infrastructure needs would you like to put that in the context of how you see the real challenges as we move forward Hubey? Sure thank you well first of all as we all know there's the fundamental challenge that we are facing not only here in the region and Eurasia but in general across the world that we have this unstoppable trend of urbanization that more and more people living in urban centers now and that poses this challenge to the engineering construction industry how do we create truly a holistic approach to infrastructure development an approach that takes kind of best efforts to make best use of the scarce financing and taxpayers money and if you look at best practices that have been realized over the last decade or so some projects stand out let me just take the Olympics in 2012 and the UK as an example a project where the supply chain construction engineering was able to deliver ahead of time and below budget that was allocated why is that the case? Because technology played a role and that was exactly what Gordon Brown was referring to if at the very beginning of a complex infrastructure project you start to build a digital model of the asset and that's what building information modeling in short BIM BIM is all about then with this digital model that you create you could build scenarios how to construct the asset no matter how complex it might be more cost efficient and faster and faster is almost as important or often more important than just the cost to construct it and think about then the true life cycle approach of it once you have this digital model of course you can simulate also what does it cost you to maintain and to operate this asset how can you optimize that truly thinking from cradle to crave from the very early design phase of an asset to the point in time where it is under full operation to give you an example after the Olympics where we put that in practice my own company Atkins is involved as the engineer of Riad Metro it is about a 12 billion US dollar program in connection with Samsung the Korean construction company in FCC of Spain and the design comes from Sahar Hadid the Iranian architect which probably most of you are still familiar with regard to the aquatic stadium which was a fantastic design during the Olympics now this is very complex engineering that you need to do ambitious engineering makes a statement with regard to public infrastructure but given its complexity it is very very important to do that cost efficiently so for this 12 billion dollar construction that is going to be in the ground in Saudi Arabia their full BIM BIM model is used and there are other areas in the world where kind of state of the art application of digital modeling really makes a difference and if you think about it there is no reason whatsoever that in the 21st century our industry should not be capable to deliver best value for the taxpayer and for private investors one of the reasons we are going to discuss I'm sure later on when Bertrand is talking about the global infrastructure initiative is that we need to create a more sustainable pipeline of bankable projects in infrastructure and one important probably the most important ingredient for it is that we do it cost efficiently and that we do it in a predictable way so that financing institutions have a clear site what it is going to cost what are the operational costs of the asset be it a metro station be it a mixed use entity be it a high speed train connecting Kuala Lumpur and Singapore so technology the digital technology digital modeling in short BIM building information modeling will be decisive and an important support to make that happen with that very exciting view of the future about how we can do things most cost effectively let's turn next to the environment and sustainability and Takashi Titoi your company is much involved in trying to make infrastructure projects more sustainable and tell us perhaps about some of the initiatives that you are taking in that area alright thank you very much Mr. Brown our company League of Two Group is involved in comprehensive housing and building related things from raw materials and actual products and you know affiliated services as well but of course you know our companies activities are limited but we have many collaborations with other general contractors and real estate companies and even foreign entities so I'd like to introduce a couple of actual cases just like Mr. Kruger mentioned about it and our successful cases is one is Shinkansen it's a Japanese railway and it privatized and then a lot of private ideas are mixed with public spending and we can create a very solid transportation system in Japan and the Japanese system is now going to be exported to other nations as well and maybe a success of this is a combination of public and private factors for example you know stations stations have a very high value and functionality and after the privatization Japanese railway companies try to make the station more valuable thing for the society and together with private business activities and because of this a huge amount of revenue additional revenue were created and then using this revenue railway companies put more capital investment for the future the typical example is linear motor, linear technology it's a much faster 500 kilometers per num and you know energy saving as well so if this is realized as a practical use Japanese government railway companies are planning to introduce that technology by 25 around them you know if this is possible we can save energy we can save time and we can make a much better communication structures and the second example is as you mentioned Olympic Games you know Tokyo is going to have an Olympic game and a Paralympic in 2020 so unfortunately we could win this right against Istanbul I think Istanbul will succeed the next opportunity but the point is now Japanese society are very excited and try to take advantage of this opportunity to make a more solid urban infrastructure so Haneda airport now try to have a more capacity and you know Japanese Tokyo especially is try to reorganize traffic system but at the same time as London Olympic suggested us very clearly we shouldn't use too much taxes or budget for this purpose so that we should include private money and private sponsorship to this activities as much as possible then how can we create a win-win situation between public and private probably say naming rights or branding and so forth when Los Angeles Olympic introduced that kind of concept I think we can fully utilize the private motivations to exercise their business activities in an effective manner for Olympic Games not wasting money or wasting taxes but we can create much more effective way of Olympic Games and Paralympic especially and the third example is unfortunately we had a big earthquake and our Tofuku region was destroyed 100% by tsunami and now in the process of reconstructions and in order to make this effective reconstructions again Japanese society to try to create a collaborations between public sector and private sectors this could be a not short-term profit for the private sectors but if we can increase the time span of business and contribution to the society and in return we can enjoy the business in the future then it's a workable system so we try to create more collaborative structure adjusting the time span of business ideas in order to make this very effective very excellent coordinator is necessary as Mr. Kruger mentioned someone should coordinate the total benefit of the project so not only short-term benefit but also long-term or could be intermediate so that kind of coordination idea is crucially important for us to consider PPP or PFI I think and as long as we can create more sophisticated ideas including financial structures including technology or including the coordinating power as a whole I think we can create much better infrastructure for the future examples of what can be done and I think people interested in Istanbul Olympics 2024 will take the advice that is being learned as Japan prepares for 2020 and we wish Istanbul well in its future applications to get the Olympics now for an overview there's nobody better to ask to give us this than Bertrand Badre as the chief finance officer at the World Bank he's been working on what's called the global infrastructure facility and rather than me trying to explain it I shall ask him to give us his overview of the challenges we face and what progress he thinks is being made in dealing with this life cycle of infrastructure Bertrand thank you very much for joining us interesting moment in time I mean for decades people have trillions of infrastructure which are expecting finance on the other hand we have trillions of money which is expected to be invested and nothing happened and year after year we write reports and notes etc and we say my god what are we going to do and the trends are not very exciting if you look at the past few years I mean private investment infrastructure has actually declined even if the international institutions like EBRD ourselves have stepped up we cannot match this so we have to consider things from a different perspective and I do believe that today and it might not last forever that's why we have to give a big push probably for the next two years the stars are aligned on the one hand after the global financial crisis we realize that infrastructure has become a major bottleneck in a number of emerging countries not that so much about those structural reforms etc but in a number of countries you can mention Brazil or India etc you have to address the infrastructure issue you have to mobilize money but more importantly you have to find projects I think this is the other side is that it's true that you have a lot of money which is searching for years of diversification with institutional investors whether there are pension funds life insurance, sovereign wealth funds, asset managers etc so we have to work with that in mind it really brings a different paradigm called for a different paradigm in financing infrastructure and that's where I've been trying with the World Bank Group to push for a new approach so it doesn't mean that we want to move away ourselves from infrastructure we are again increasing our direct effort but we really want to initiate a platform and what do I mean with a platform it's a place where you've built a critical mass of people working together to basically work on this new paradigm to finance infrastructure you will not have it's impossible longer term if you want to make this work to have the World Bank Paradigms, the EID Paradigms, the EBRD Paradigms the Asian Infrastructure Paradigms, the Briggs Bank Paradigms etc if you want to make the life of investors simple we have to work together we have to define together and I'm not so sure about the world's standards because I mean infrastructure by definition is not standard I mean you have as many differences but you can standardize certain aspects what is a force measure for instance etc so that's where we really have to put people together and work together to make sure that instead of discussing as I often say 1.5 trillion of infrastructure gap we move to 1.5 hundred projects we have to move to projects and it's very interesting when I discuss that it's always the same projects that come all over the world they circle around so we have to just create new projects work on new projects together and that's I think for me this is the most critical aspect so we have to work on the country by country on the prioritization of projects on the design of projects on the preparation of projects on the structuring of projects and I'm talking about private for big partnership projects I mean this is really the heart of the matter having in mind the idea that we bring them faster in a better condition in the hands of institutional investors and again this is critical that these people whether it's Aliens, BlackRock, GIC or whatever you name them they cannot afford to spend hundreds of bips in due diligence etc this is not in their business model it's as attractive as possible they must rely on this global infrastructure facility that the job has been done properly that the projects have been selected properly they have been designed properly that they have the blessing of the international community so that they can just piggyback on this and co-finance that's where you really attract serious private money and not just small tickets etc the truth is that we estimate you have 70 to 80 trillion of institutional investor money if it's just a few percentage point of this will be directed to infrastructure that would change a lot to date zero and if people talk about infrastructure they mean OECD infrastructure full stop and even within OECD as I told Gordon Brown this morning it's more the UK than Mexico for instance so we really have to make this a new asset class ultimately where every institutional investor feel comfortable to allocate 2% to 3% to 4% of its assets to this specific asset class I mean having in mind that they think it's been properly done, selected, prepared etc so that's really what we have in mind in terms of where do we stand today the board gave its blessing I went to the G20 in Kerns last week and the G20 now is very supportive of that we will start with a pilot at the end of this year it's initiated by the World Bank but it's not a World Bank platform it's a global platform where we want everybody to be around the table and really shift the needle a little bit so we start with a pilot of course we're not talking about billions and billions year one but at least we start so that I hope we can avoid to write another cycle of reports and concepts of why it doesn't work so let's try, let's adjust and let's move forward thank you very much thank you very much so we've had the overview we've had specifics about what's being achieved we've had a focus on Turkey itself and what can be done here I start the questioning before I put it to the audience by starting where we ended with Bertrand here you talked about thinking of a thousand projects rather than a 1.5 trillion gap you talked also about a pilot to move things forward as a public-private partnership what are the criteria that you can adopt for choosing your pilots that will command support both within the World Bank and within the international financial community how are you going to move to the next stage I think people will be interested to know please Bertrand first and then I'll come back to you I think we need to test different things so I think it's a mix of sectorial approach of geographic approach so we need to have and we think about on the one end transportation transport and energy which are very critical but we need to go in kind of upper middle income emerging markets maybe Turkey or Brazil or this type of country as well also as to this developed country like in Africa so we need to have a mix of different things given the money we have at the bank if I may say we think about I would say four to ten projects in the next two years relatively big in size because that's where you want to make a difference and we want to engage with our partners to see what they have in the pipe so that we can really build something which really allows us to test different things thank you very much you want to respond to this please thank you Takashi so please allow me say I think we're all learning Japanese companies are now contributing to the construction of infrastructure in Turkey say both for us bridges or the tunnel for the subways and all is possible because Japanese private sectors have technology they have accumulated very excellent bridge and tunnel and railway technologies however it is impossible for them to access to the Turkish government and to try to negotiate that details but Japanese government in this case used official development assistance its loans by using this Japanese private companies can feel comfortable to make a big investment and big commitment and then Turkish society is also very happy to enjoy that kind of accumulated Japanese technology as much as possible then eventually we can create a new business opportunity there so that you know something you know catalytic functions on the public sector is quite important and by doing so I think Japan and Turkey relationship will be very much promoted in a big manner and then then as a successor of Olympic Games we can contribute effectively to the Istanbul Japanese loans a starting point for 2024 Uwe can you give me your reaction to Bertrand's view of the global infrastructure facility and what you see is both the possibilities and the challenges that this is going to meet I mean how do you mitigate the risks through this multinational national public private pilot idea World Economic Forum this initiative as such as you heard Bertrand describing I think what appeals most to me is that it is a very practical approach that not tries to boil the ocean but that really starts to with distinctive specific projects that are conducive to bring private and public money together most importantly in my view is exactly the approach that Bertrand was describing that the World Bank clearly with input from knowledgeable private engineering construction companies kind of pre-shapes these investment cases so makes it brings it in a position that pension funds and large-scale infrastructure funds can actually have a ready investment case in front of them and this is actually where most of the private public partnerships at the moment are falling short of exactly how it was described that those funds don't want to spend the money, don't have the expertise to prepare the project in such a way that investment committees can readily decide upon them so if we want to turn this kind of momentum again as a matter of fact private investment infrastructure was decreasing over the last couple of years if we want to turn that around that's exactly the approach that we need to take a concerted effort of the experts of the supply chain coming together helping the World Bank to form that and then we find projects that are conducive for these kind of partnerships it is also important clearly that we find projects of the right size if you think about the Black Rocks and the apex of this world these need to be projects in the kind of couple of hundred million if not billion range in order to make a difference to move the needle to merit the attention there and we need to find of course also the right political balance and it has to benefit both Central Asia, Africa South America and probably Eastern Europe in its infrastructure needs I'm absolutely convinced Gordon that this initiative will make a difference it will kind of set the tone how infrastructure developments between public and private interest can be done in the future and will set a precedence how we can really move forward in addressing this enormous infrastructure need given the urbanization challenge that we are facing. Thank you very much and let's break this down first of all the feasibility studies I think there's a general recognition that you are not going to expect the private sector to come in and finance these but that is something that the global infrastructure facility would be able to do in itself is that right Bertrand? The global infrastructure facility itself and that's the job of the various public actors whether they are the multilateral development banks, national development banks, government etc that's where the public money is most needed because this is where the risk is maximum and then the further downstream you go the further space you open to private sector and this is really the way we need to think about it nothing very original but we want to make it real and from the EBRD's point of view you've now got your own project preparation facility can you explain? Now we look at the region and Turkey actually one of the things which we I mean especially the countries that EBRDs involved one of the issues that we have come across is that first governments are in urgency of making infrastructure investments in countries that developing our fast growing countries with the immediate need of the infrastructure and having this emergency need of course governments were not able to spend enough money for the preparation and due diligence and feasibility studies and most importantly value for money analysis this was especially also true for Turkey and this on the other side with the lack of this kind of studies project preparation studies done if the projects are getting into the development stage in the long run this definitely causes a lot of problems with the efficiency of such infrastructure as well as the usage and maintenance of such infrastructure Having this in mind as EBRD we are trying to help the governmental authorities by allocating certain donor funds to help them first of all to get the access to expertise and those people who has the necessary background and who has the necessary experience in this kind of areas and to help the governmental authorities to come up with the right project development process making all necessary due diligence preparations before any projects gets into the development phase for example just to give you one example why this is so important in Turkey I want to give the example of Eurasia tunnel project it's a car tunnel double decor it's the cost is around 1.4 billion dollar you know Istanbul probably you had a little bit of time to see around and you see how the congestion in the traffic is despite the Istanbul municipality is using all necessary technological intelligences in order to divert the demand depending on where the congestion is or use all necessary structures for the tools or systems in order to speed up the traffic flow by having automated toll system, e-toe system in the bridges and so it is impossible to get rid of the congestion that's why the Minister of Transportation decided to come up with the tunnel project and I mean one of the biggest problem of Turkey is unfortunately because of the geographical also fortunately because it is one of the nicest of the world we have the Boswars which is the biggest bottle neck in Turkey for the traffic and having only bridges is not enough on the one side and secondly when you are building the bridges you are somehow destroying the green areas somehow impacting the environment which is also causing certain problems so from that angle Minister of Transportation saw that tunnel would be a very good way of probably creating alternative modes for the transportation but what they did is because it was such an emergency they didn't really do the necessary due diligence to make all the necessary boring and very sample boring only to determine which route would be the best and they determined like three alternative routes from north to south and without really making also enough preparation for the regulatory part they start the tender process but this later on causes problems because first because there is not enough due diligence done and not all the foreign investors are able to get into this kind of projects which is decreasing the investor appetite thanks to our entrepreneur Turkish sponsors they are able to somehow take certain risks so they team up with some international names which are very expert in building this kind of tunnel so to bring the technology they took certain risk to build the tunnel but because all the development of the project is done after the tender is finished until the project comes to construction stage another four year has to go and the construction just started last year what we are trying to do in this respect is trying to have the governmental bodies the authorities to instead of having the sponsor taking the risk, investor taking the risk to make all this necessary due diligence and preparations now we are trying to basically allocate certain donor funds to help them to get the right expertise right as advice to help them to develop this pretender preparations so that value for money analysis is done to see whether the PPP is the right structure or whether this should be still done by the public and the private only should do the construction and what is the risks involved if it is done by public or if it is done by private so to come up the very right structure and to eliminate most importantly the long period of time after the tender is completed until the project gets into construction and final operation to decrease this time period I mean for example right now our tunnel project will come to operation in two year time but the traffic is already in Istanbul so and in between we don't have too many alternative modes and the time loss in the meanwhile is increasing the problems in the market so with this kind of project development initiative we have we are trying to somehow support the authorities to implement exactly the right way of project development Marce, is that a case for build information modeling right at the beginning yes for sure and that's a typical situation that it really helps again building of the trans description how we want to change that with the initiative that we have this feasibility phase one where we really think with all kind of technology that we can put in with digital modeling with the financial modeling how can we shape the environment for this project in such a way that we speed up the realization phase that we find the right positioning for financing to come in so that we do the thinking in the very first phase of the project helped by EBRD or the World Bank funding because that's exactly the phase where private investors are not keen to take the risk and once that is done carefully and thoughtfully then you will see infrastructure projects will come ahead of time and they will come under budget as the supply chain has demonstrated many times before it's absolutely possible this is an example where the government to the lead wanted this particular infrastructure project you have got a series of pilots to choose almost at a global level how do you make that choice for example and my question to Shuri is is there any cash flow calculation for the future I mean by using the value of the tunnels well there has been of course some basic feasibility studies done but I mean when we look at Istanbul I mean of course I need to tell you that because it is really emergency need how detailed those feasibilities are done is question mark huge amount of value is associated with that tunnel and how can we realize that value for the future and full will be a coordinator of that that should be the question so my question is there any one coordinator to that issue I mean at the moment in Turkey we have ministries minister of transportation which is I don't think it's impossible official to do that job no I think we could have a completely separate seminar for maybe several days in length about this specific project about this specific project and it would be very interesting indeed my point is a concession we should separate the concession and so that we can even securitize it for the global investors can I come back to the essential question we started with about the global infrastructure facility Bertrand and he was a project chosen by the government obviously government having to push it forward now wanting private funds to come in to help it what about your choice of pilots is that going to come from governments is it going to come from the private sector is it going to come from the World Bank itself how are you going to get to an agreement about what are the most bankable and most cost effective projects that you would sponsor and how does that then affect the choice of projects in the future I think nobody can choose on its own it has to be the result of a dialogue you cannot force a government to do something a government cannot force you to find something which is meaningless and so on and so forth so I think it all starts with an eye in the eye discussion and again it's critical to be able to discuss a priority list I think the first step I've seen many governments which had a huge shopping list three of projects which you know hundreds of billions for the next 20 years and say where do you start so you really have to force people to say okay my priority are this one and this will give comfort to investors that if this is a priority there is I mean higher probabilities that they will respect their engagement et cetera so I think priority is the first discussion and it should involve everybody around the table and make sure that I mean priorities from a government can be driven by economical purpose but also sometimes by political expectations et cetera so you have to make sure that it does make sense that's for me a very important prerequisite the second prerequisite is also the whole ecosystem you mentioned the fact that I've been working on URTNL which was not a PPP technically it's a private partnership because one of your predecessors in the UK Madame Thatcher said not a public penny in that project so it was a technological success and a financial disaster and the opportunity gave me the opportunity to restructure it so a PPP is a very sophisticated thing it needs a lot of expertise and it's very often it's misunderstood by the people which enter into a PPP because they think it's just a financing tool it's just a way to kind of postpone the payment after they are re-elected so just start and we'll pay later and the truth is not that a PPP is about a risk sharing agreement you have to understand what type of risk you want to share, how you want to share them et cetera that's critical and you just end up invent that you have expertise, you have to discuss with people, if not there are plenty of oral stories I mean they have been in the UK, they have been in France, they have been everywhere in the world and we all know that so the idea is also to avoid this by being able to learn from the lessons from the past and build this I mean based on all this experience accumulated for me this is critical so coming to your point on the pilot it's a mix of as I say from a macro perspective choose the right geographies and sectors to be kind of representative but as well to operate in a receptive ecosystem where the government is very well aware that he needs to prioritize, that he needs to basically work hand in hand with financiers and that is okay to have a private sector involved, it's not always easy as you know because when you put private sector in the loop, I mean the taxpayers say oh my god you gave them too much money et cetera and vice versa the private sector is very suspicious of the public sector and they want to steal money out of them so we have to have a mature discussion which is very difficult to establish. Thank you very much, I'm very grateful for what you did on the Euro tunnel because I think it was President Mitterrand who said that we had high speed travel from Paris to Calais and then you had a chance to cross the channel and then you had a chance to have a leisurely look at the English countryside because the trains were so slow once you got across to England so we have a lot to do on transport infrastructure in Britain now Ubi what do you think about this idea of the pilots, how they're selected because this is obviously going to be critical to their success. It is absolutely critical I think all the criteria have been mentioned before it is about an adult serious conversation about the specific priorities governments have in the high valued projects it's about projects where we can predict for example as my colleague said traffic flows carefully having a clear investment case in hand so having almost carved out 3-4 picture perfect cases where we can make the point that this scheme that the trans advocating really works and that as an industry we can put our weight behind it. I want to make one more point Gordon coming back to the life cycle question that's the headline of this session. I want to make you aware of the fact that it is not only transport or energy infrastructure that we can look at almost from a meoptic point of view what is important when we talk about infrastructure the developed and the developing world is that we have a future proofing kind of sense of it so designing something today needs to be done in light of the fact that this infrastructure is still functioning 30-50 years from now so anticipating the demand it is extremely important to think ahead in that sense and there are great examples of infrastructure architecture in the world where that has been done even 50-100 years ago and where we can learn from and it is about getting many things right it's about the transport, energy, water, waste and even the social infrastructure and urban centers that have to come together in this future proofing sense. We have done a study with the DFID and the University College of London looking at 130 urban centers in Asia and in Africa and we put criteria in place how this kind of future proofing holistic approach can work encourage you to go on the web page take a look and now this is not only theoretical the government of Nigeria, government of India have asked us to put this in place this kind of all-encompassing approach to infrastructure and master plan development and that I believe as we talk about pilot projects we need to embed them in a concept that is a master plan concept of the urban environment in which these initiatives are going to flourish and demonstrate that it really works. Thank you very much now I'm going to ask for questions from the audience and then ask the panel to address some of your comments first of all here I think, yeah first and then second. Thank you very much, if I may I'm more of a bank international. My question is to Mr. Kruger about the digital modeling concept that you brought how applicable and reliable do you think it would be to the emerging market countries because what makes emerging market countries is the coexistence of flexibilities and inefficiencies and just to give you an example the barrier report that you use coming here was finished ahead of time and I can give you many other examples like that but at the same time I can give you many examples where very able advisors gave advisors certain projects and we have seen many significant cost overruns in many projects. I think one issue in the emerging market countries is not so much about forecasting the cost and putting that in a model format about the availability of the resources especially for countries like Turkey where the energy shocks, currency shocks they actually affect the prices especially for locally consumed infrastructure activities so how do you think that it can be made possible for countries like this? So the idea is you can design out some of the inefficiencies but there are currency, energy, other reasons why cost overruns happen. First of all to put your mind at rest Gordon and I can quote a number of projects in the UK and elsewhere in the developed world where it went wrong terribly for a very same reason so this is not a characteristics I think between developing and developed it's about getting it right in the first place. These external effects that you're describing are important but can be considered in the same kind of modeling. I give you an example for that in Doha the EMEA has decided to commission what you call the central planning office where now the private industry is asked to coordinate the infrastructure development of the country in the run up to the soccer championships and one of the kind of external factors that all of a sudden came to light is that with all the construction activity when it peaks there's not enough harbour capacity to get the construction material in so besides looking at just one transportation project all of a sudden you need to consider the external aspect of getting transport capacity for harbour for the harbour dimension for construction material in so the energy aspects that you're describing are other ones that are these exogene effects that have to be considered. Now look I'm not telling you that everything will be fine and done just to have a digital model of your asset but once you start scenario planning on the basis of an asset model then of course it's much easier in those scenarios to consider the external effects as well and having what if scenario connected to it and that also helps you then to delineate coming back to Bertrand's initiative to delineate which projects are most likely to succeed in a PPP environment where you can minimize the uncertainty where you can price the risk be internally or externally so I'm pretty sure that it will help. Did you want to come in Takashi on this as well? Of course my idea is private sectors is based on you know profitability however you know recently important concept is creating shared value how to create the shared value with society or the public that sort of thing so that not only short term profitability but also shared value could be a quite important factor for private sector enterprises so that if the holistic digital modeling is more effectively designed and could be run for decision making then we can consider a lot of external factors even external factors that create wider creating shared value that makes project possible I think the wider options will be prepared. Thank you very much. Thank you. Hi, Geofford Allen, Zurich Insurance about four years ago I chaired the West's Global Agenda Council on investment management and insurance I'd like to think we were the creators of the work you've done Bertrand I'm not sure you were but it was a specific request One of the issues that both the investment management and the life insurance industry have is that they need long term securities and those just haven't been available so infrastructure was an area where we specifically wanted to look at it. There were two sets of risk issues you're dealing with many of the structural issues. How quickly we can move from project finance to securitization is going to be a key part I think of your pilots the big issue that we have is and you just made the same mistake you mentioned two, three companies. The reality is securitization to work has to be spread over many many companies and getting efficient distribution for the securitization on these is going to be critical. The other thing that's necessary for securitization which doesn't help in the emerging market is rule of law. The modeling you're talking about is what we wanted to see as general insurers for a long long time and the better that gets the more we as an industry can deal with ensuring project delay project design errors and we can also deal with some of the political risk issues that we want to get tight. I guess the exhortation is you're doing everything we want to hear but you've got to get really tight about the last pieces before it works. You will be pleased to hear that our Swiss Rees CEO colleague is part of this initiative as well. So we really took all the work that you guys did in the past and faced it into this initiative. I just want to also ask for your understanding that I think what we are after here is nonetheless a pragmatic approach. Of course from a securitization point of view you would like to have a vast portfolio that you can invest in let us get a starting point. And that has to do with a lot of practicalities that we need to put in place and that's where we frankly are in this initiative at the moment. I'm pretty sure as we can demonstrate together that this works in three or four projects we can easily have a snowball effect where we get kind of a vicious circle of investment interest demonstrating that it works shared risk, shared creation of value and then we have a momentum going that I think can be very successful. Thank you. Bertrand would you like to comment on the securitization point? What you did with the Global Agenda Council was part of the alignment of stars which I mentioned. I mean things have evolved over the past few years and now is the time where basically things can or cannot work actually. But at least we have to use that window for opportunity. I do believe you are right from moving to a project finance which is a case by case approach to a securitization is a kind of ultimate goal. This being said I want to be realistic. I mean securitizing infrastructure assets will take ages because I mean they are what they are. I mean it's not the kind of subprime real estate market from the US. So we have to probably move to an intermediary step which is a pooling of assets which is kind of pre-securitization stage and this is really what we have in mind to make sure that people like you, life insurance etc can invest in a pool of assets while trusting the International Committee for selecting, prioritizing, designing properly so that you don't have to incur the due diligence cost, the legal cost etc but can rely on people which have done majority of the work which can provide high quality standards. I mean people are obsessed with reputational risk within the World Bank and others. But I can tell you by experience I've been in the private sector of Hawaii. Reputational risk is true for everybody on earth. I don't think Zurich would like to be involved in child labor or environmental disaster etc. So you have to make people understand that this is a case for everybody. It's not just the public people. So I think you have to trust the platform whatever its name that we select appropriately with the right standards and second that we also can provide dispute resolution mechanism. This is not your job. You don't want to be involved in negotiating the subway contract etc. This is our job. So that's where you want to rely on earth etc. So I think there is really a win-win proposal and that's where we want to go. It will take a little bit of time, a securitization for me the ultimate goal but there are interesting intermediary steps behind. So thank you very much and happy to continue to engage with you and your colleagues. Can I just add our thanks for what you did originally. Do you want to come back on these two points made by Uwe and Bertrand? With capital allocation limits restrict the ability to deal with the early financing. So you're going to have to have a lot of players in there whether you want to or not. And that's the reality of the regulatory environment that we operate in. Understood. Any other questions now for the panel? Yes, thank you. Yes, thank you. If it's the Minister of Economic Development of the United States. I would like to congratulate the panel because for the first time we have seen that there is actually a movement up until several years we have talked a lot about the importance of the infrastructures that everyone knows but very little about the modalities that we are going to move forward on the financing of these infrastructures. It's a pleasure to listen to what the World Bank actually says about the most important problem for us which is the real question of what are the projects that we can finance. Are these projects properly prepared? Are they actually at the level of their profitability and their contribution to global economic growth of the projects that need to be done? What I would like to say is that there is today for Africa in particular the main problem of integration which is more and more important is to create a certain number of integrated projects at the regional level. This you can say so you have to find the mechanisms by which you can invest in multi-country programs it is clear that we need both highway, but also energy, roadways, etc. so there needs to be discussions around the priority program priority development that needs to be introduced to private partners. This is an important challenge that needs to be discussed with structures like the World Bank. There is of course also at the level of the Bretton Woods institutions the need to coordinate their actions because if at the level of the World Bank the awareness that needs to be made of very large investments, the debate on the funding is also done in conditions that are sometimes in contradiction with the goals fixed elsewhere. So this point should also be coordinated at the level of the two structures of the six centuries. The third point is the question of the financing of these infrastructures. I will keep the question of security, of titration also because it is not normal that countries that have very important mineral resources and that it is necessary to expect these resources to be fully operational before being able to use the resources even if the infrastructures we need condition their operation. So there is this paradigm that is convenient for us to think that it is important to engage the dialogue. The first one is of the most important is the regional approach. It is true that today all the system is structured for discussion with the government, not at the regional level. So we try to move in that direction. I do understand, especially in Africa for infrastructure significant infrastructure, have a multi-country dimension. And one of the projects which I visited last July was in Mauritania. Mauritania has natural gas ahead of New Akshott. It has been here for 10 years, but finally we have been able to mobilize the African Development Bank, the various arms of the World Bank, not only to work on the exploitation of the gas, but transformation from gas to electricity and also by providing appropriate guarantee to be able to export that electricity to Mali and to Senegal. So that's really the type of thing we should develop more. This has been thought as an original approach. I think we need to do more. It's not obvious, but this is one of the priorities that I've set up from financial perspectives of the group going forward. And Africa is a typical case where we need to do more if you have ideas. I'm very happy to work with you on that. The second point was the coordination within the Bretton Woods institution between the IMF and the World Bank especially when on the one hand IMF might say, well, you are not supposed to borrow that much. On the other hand, we try to push for more investment finance by that basically. So here again, it's a day-to-day dialogue. It's not easy, but we are working more and more hand-in-hand on this infrastructure facility. I had a number of conversations with David Lipton with the number two of the IMF. On this, and he shared our perspective that there is a bigger picture that we did not discuss in this room, which is basically a massive change in the financial landscape in the world. Banks will retreat from long-term. They will retreat from complex stuff. They will retreat from balance sheet, and they will move to short-term, off-balance sheet, simple stuff. Everybody say, oh my god, good news. We have plenty of institutional investors which will just step in and replace the bank. The truth is that it will not happen overnight like this. You need to help this happen. And I think this is a joint objective that we share with the IMF. How can we help this transition to happen without too much damage? The risk is that you exit from that at a suboptimal level. That's a big risk. Infrastructure is really one of the issues where you can have a big damage. Where the banks retreat, we are unable to make the institutional investors step in, and then we are just below. That is for me one of my major concerns. Third point was on the capacity to value natural resources. On top of that, especially in Africa, natural resources are often linked with infrastructure. Railroad, a port, energy, et cetera. I think this is also an area where we should be able to, we are working and pushing my team to work on that. How can we securitize so that we can front-load resources that might come in 10 or 15 years from now when the exploitation is up and running to use them right now? And final point, which for me is also extremely important, and we did not mention it today, is also domestic savings. Ultimately, the key to finance infrastructure is the capacity to mobilize domestic savings. I mean, natural resources, which can translate into the question of sovereign wealth funds, for instance. Pension funds, as you do in Turkey, et cetera. This is critical because this is the best way to address the currency mismatch. If you don't have domestic savings, you have an issue. If you look at the way Europe and America financed infrastructure in the 19th and 20th century, it was by mobilizing sometimes a little bit in a harsh manner to force people to bring their savings to infrastructure. But this is the way to work. So for me, international investment is a way to bridge the gap. But ultimately, we should work on building local markets. So we have been a little bit too long. Thank you for raising these issues about the changing sources of finance. And then I think there's a question here. I think the point you were making about what is the best set of criteria for identifying projects for this program. Rest assured that we would really like to look at cross-border kind of opportunities in multimodal transport, for example, or in energy for that matter. So I think please feel encouraged also to coordinate on your side and to come up with suggestions that we were more than happy to recognize and to look into. I think you find some of the big African projects that have been highlighted by the World Economic Forum in the report are cross-border projects where you need to have coordination between the countries on regulatory and other matters. And that really is a priority if they're going to get off the ground. There was a question here. Am I right? Am I wrong? Yes, I'm right. There is a very big gap between the demand of funds for investment and what actually is available. But to my understanding that there are a lot of funds from China. And that is why many development countries, they go to China and it doesn't take much time to realize their projects. So my question, especially to the World Bank is, is China involved in this, in the sense that involved in bridging the gap between the demand and what is available? Do you have any plans to involve the Chinese? Thank you very much. And that's the global infrastructure facility and also generally I think Bertrand, can I start with you here? On the positive side, I think it's great that China is mobilizing money for development and investment. So we should not deny that. On the other hand, they are also in the learning process. The way other countries have been in the learning process. I don't think France or the UK or the US have always been exemplary in the way they lend money to some countries. So we have to work with them. I mean, you mentioned your introduction to the Briggs Bank or the Asian Infrastructure Investment Bank. They are covering what it means to create a new bank. What type of standards do you apply? How do you work with others, etc. So I think we have to help them. They are under learning curve. Let me give you one example. It was very interesting last year. I'm sorry to invite you into the World Bank Kitchen. We have our concessional arm, which is called AIDA, where every three years we have a replenishment exercise by which we ask our members to contribute money that is used to do grants or concessional exercises for the least developed country. And China is moving from a place where ten years ago they said, we are very poor. There is no way we're going to give money to others to a place where they start to become one of the big contributors. So we have to help them move in that direction. We have to help them discover what being multilateral means. It's not just being just multilateral. It's the natural temptation of every country to move in that direction. The way they also support the financing reform of the World Bank. And they told me, we will support them even if we have a number of critics and we know these critics. We are a responsible shareholder of the institution. So we want this to move forward. So this is where we have to engage with them very proactively and very constructively. And I think it's moving in the right direction. It's not perfect. It cannot be perfect. It will take time. But I think we are moving in that direction. Thank you very much. Any other questions? And then I'll ask each panelist to sum up their thoughts for the day. Any other points that people wish to raise? Okay. Would you like to sum up where you think the discussion has taken us? Sure. Thank you. When I look at it, of course, all this discussion, what I'm seeing being a person also living in this region, we still need to somehow approach developed countries versus developing countries even for the same strategies from different angles. Because there are some particularities of developing countries which is very different than the developed countries, which comes from the different stage of technology development or different stage of infrastructure development, emergency needs and priorities and so on. So what I get is the outcome of this. There are very good models which are already developed but while we are implementing this to developing countries, we need to approach more tailor-made to answer the specific needs of those countries in order to get the best result out of those strategies. Thank you very much and thank you for your contribution. My best wishes in all the projects you're doing here including the tunnel. We find us the tunnel. Very encouraging. I have to say I think we seem to be in violent agreement that something needs to be done that moves us forward in combining the need on the one hand side on infrastructure which is tremendous both in the developed and developing world and financing opportunities that we had. I think the devil is in the detail as always and that needs us to prepare that well and hence my plethora for doing it in a pragmatic way step by step with his pilots that we were indicating and second keeping inside the technology will help us to better predict both the risk spectrum of projects and the share value that we can create over a full life cycle so we are in a better state today in addressing those projects and in attracting finance for it with a long-term perspective. Thank you very much and Takashi, you haven't explained the waterless market yet. Thank you, Mr. Brown. Well, our group LIXO is not directly related to infrastructure but we have noticed today that we are a member of the global society and we have a technology, say water saving technology or heat insulating technology and we are involved in infrastructure, a part of infrastructure like buildings, housings or bridges, tunnels and so forth so that having the sharing value with society we try to exercise as much as possible so that we can maximize our social value and as one example Mr. Brown kindly suggested is we have a proposing to Kenyan government that the waterless toilet and there we can improve their sanitary wear situation substantially and also we can save water usage and if this is really approved by the Kenyan government authority then we can try to contribute in a wide scale to install that waterless toilet there and also even for the future we can utilize that technology to the public places, say schools or possibly in the forest and so forth so that we can preserve the environmental conditions so in this way although we are not directly involved in social infrastructure but we try to try to consider what is the best way to contribute to it so we learned a lot today thank you very much thank you very much and Bertrand a lot of the discussion has been about the global infrastructure facility and the follow up to that where do you see things going then over the next year and two years the discussion where today is a confirmation of what I say in the introduction is the fact that we have the stars aligned and this might not last forever so I really want us collectively it's not just us it's everybody in this panel everybody in this room to use that we know for opportunity because in two or three years when let's say the US treasury interest rates will be back to four or five percent the arbitration will be a little bit different so we better move fast we better start to have people diversifying the assets etc now because the discussion will be more difficult so I really wish that we move into action and the sooner the better and I think we have a lot of critical mass in this room to do that so I'm very confident we can make it work can I thank on your behalf all the panelists for their contribution today I think it moves forward to the G20 meeting that is going to take place in Australia in November the global agenda councils that the World Economic Forum is calling together in Dubai in that month as well and then forward to Davos where I think we can have an even more advanced discussion of some of these ideas that have been floated here today and brought before you so I want to thank the panelists and thank you as an audience for being part of a discussion about how we can change things for the future thank you all very much