Malaysia is a remarkable country by many metrics, highlighted by the Growth Commission as one of the world’s fastest growing economies. It has transformed itself from a low-income, agriculture-oriented economy, to a modern, trade-oriented one that is on the cusp of reaching high-income status within the next few years. To most economists, especially those looking from the outside, Malaysia appears to be doing very well. Growth is strong, at 5.9% last year and projected at 5.4% this year. Inflation is low, at just 1.8% in May 2018, and incomes are high, approaching the magic US$12,055 threshold that marks an exit from the middle-income status that so many see as a trap.
As an urban dweller in Beijing, a rapidly modernizing city, my daily life would look like a science-fiction movie for people from just a few decades ago. I use my mobile phone to buy groceries, pay for meals, take photos, access the subway, and find my way to unknown places.
The task of preparing a viable, feasible, and sustainable infrastructure project can be a daunting one filled with many challenges. Throw in the need to incorporate an element of connectivity and the challenges only multiply in number and complexity. Indeed, during the annual meeting of the Global Infrastructure Connectivity Alliance (GICA), held in January 2018 at the OECD headquarters in Paris, GICA members identified several of these challenges, including the need to share best practices, ensure robust project preparation, and address the financing gap.
While multilateral development banks (MDBs) and international financial institutions (IFIs)—including GICA members Asian Infrastructure Investment Bank (AIIB), Eurasian Development Bank (EDB), Asian Development Bank (ADB), and the World Bank Group (WBG)—have the experience and financial or analytical tools to help, actually finding or accessing these resources can be difficult.
Is there a way to bridge this knowledge gap?
Bapak Kris manages a pellet production factory, located just outside Boyolali City in Central Java. Since its founding, he has started considering the domestic market- despite the fact that the produced pellets have mainly been for export- as the global markets have begun to cool down. When Bapak Kris learned that the Indonesia Clean Stove Initiative (CSI) had launched its Results-Based Financing (RBF) pilot in the Province, he registered and participated in the pilot.
He combined his knowledge of the local pellet market with the pilot program incentives to expand his distribution network and test new pellet-based clean stoves. With each stove sold, the company provided the consumer 1 kg of wood pellets free of charge. With the experience of participating in the RBF pilot, Pak Kris sees the potential of the clean cooking market. He plans to continue selling clean stoves and hopes to set up his own pellet factory.