Prudential’s Group Chief Executive Mike Wells highlights the importance and benefits of long-term infrastructure investment in Asia. The article was first written as a contribution to an Asia House publication marking the 50th anniversary of the formation of ASEAN (Association of Southeast Asian Nations).
Fifty years ago, when the ASEAN Declaration was signed, Prudential had just a handful of modest branch offices in the region, which catered mainly for the expat community. However, my predecessors were far-sighted enough to see the enormous potential of this region and now, after decades of steady investment, we have the privilege to serve nearly 15 million customers in 14 markets in Asia. And today we continue to look for new ways of meeting customers’ needs and explore new markets in the region.
Our purpose at Prudential is to help people plan for the big moments in their lives and to ease the financial risks they face. Specifically in Asia, we do two important things for our customers: we give them the chance to save to meet their long-term goals and we protect their family finances from ill-health and other misfortunes. In doing so, we pool our customers’ assets and reinvest them for the long term, often in local industry and in the bonds and other financial instruments that enable the construction of local infrastructure.
This gives us a strong alignment with the wider needs of communities. We can only prosper as a business when we are successful both in satisfying the financial needs of our customers and in supporting the sustainable growth of the economies where we operate. It is this partnership between the private sector and governments in driving improvements in the physical economy that I would like to focus on here.
Since I began visiting Asia nearly 30 years ago – first before I joined Prudential, then as a junior executive at the group, then a member of our plc board and, for the past 18 months, as Group Chief Executive, I have witnessed first-hand the remarkable pace of change in the region. Leaps forward that took the United States and the United Kingdom perhaps a century to achieve have happened in just my own working lifetime.
It is easy for first-time Western visitors to major Asian cities to be beguiled by the designer malls, the riot of neon branding in the night sky and the ubiquity of the latest smartphones. But what underpin these visible signs of prosperity are investments in infrastructure. I am thinking here of the container ports that enable local business owners to find new export markets, the rail networks that help commuters waste less time in stationary traffic and the mobile broadband networks that enable Asians to connect to the world and each other.
Sometimes, even now, the most dramatic of improvements in quality of life can come from quite prosaic developments: like when a remote village first connects to the power grid, enabling eager pupils, who previously had to put down their pens at sunset, to continue studying after dark, so allowing them to pursue their dream of going to university.
Maintaining this pace of progress I know is not easy. It requires government ministers and their officials making the right calls on many hundreds of nuanced decisions each year about how to allocate scarce resources. Furthermore there remains a large gap between what is needed and the funds available for investment. Some international financing can also be frustratingly fickle, washing in and out of the region in pursuit of short-term arbitrage opportunities.
The message that I want to convey here to policymakers throughout the region is this: you are not on your own. There are private-sector businesses, like ours, that not only can invest in infrastructure but actively want to and need to invest in infrastructure in Asia. And we are in it for the long haul.
Over the last year, for example, our Asian asset management arm, Eastspring, has been working with the IFC, a member of the World Bank Group, on a new debt fund with a mandate to invest in emerging market infrastructure loans. Initiatives like this can help ease the burden on governments, allowing them to target areas private finance cannot reach. I know that we have still barely scratched the surface of what we can do in Asia.
In the UK, where we have been operating for 169 years, Prudential has built up £50 billion of investments in the physical economy, with projects as diverse as biomass power stations, rural broadband, children’s hospitals and affordable housing. Over time, working with governments to develop the local capital markets and structure project financing, there is no reason why Prudential’s investments in Asia cannot grow to many multiples of this UK total.
The infrastructure investments made today will be delivering for decades to come. I hope that when future authors are asked to contribute their thoughts to a 100th-anniversary publication, they will be able to look back on this era as one where governments, companies and other organisations came together to tackle the infrastructure challenge with a shared purpose and vision, delivering lasting benefit to the nations and citizens of Asia.