Backing infrastructure investment in the Indo-Pacific: the trilateral Australia-Japan-United States partnership

Australia, Japan and the United States have agreed to establish an investment fund to deliver infrastructure projects in the Indo-Pacific region.

On 12 November 2018, the governments of Australia, Japan and the United States signed a memorandum of understanding (MOU), agreeing to establish an infrastructure fund to provide support for infrastructure projects in the Indo-Pacific region. The MOU intends to mobilise and support the deployment of private sector investment capital to deliver major new infrastructure projects, enhance digital connectivity and energy infrastructure, and achieve common development goals in the Indo-Pacific.

Monetary commitment still unclear

The goal is for collaboration between the three countries to lead to open, prosperous and secure progress in the region without increasing the amount of unsustainable local debt. While the amount that each government will contribute is yet to be finalised, the United States has indicated that it will invest approximately USD$113 million as part of its Indo-Pacific strategy.

How the trilateral partnership will operate

The main focus for the trilateral partnership is to work with local governments, investors and infrastructure companies to identify infrastructure projects for financing and development - and deliver projects that adhere to international standards and principles for development. In doing this, the trilateral partnership also aims to:

• enhance and prioritise foreign investment in the private infrastructure sector;
• contribute to the long-term economic growth trajectory of the Indo-Pacific region;
• improve the quality of infrastructure development in the Indo-Pacific region;
• encourage meaningful collaboration between the governments of Australia, Japan and the United States; and
• allow the governments of Australia, Japan and the United States to retain an interest in the infrastructure that will be developed in the Indo-Pacific region.

Benefits for Australian businesses from the push for more infrastructure

The infrastructure investment fund will create significant opportunities for Australian businesses and the Australian economy through:

• mobilising investment throughout the Indo-Pacific area by creating a new framework of co-ordinating foreign investment projects through private-sector funding;
• creating local and foreign employment opportunities; and
• producing significant opportunities for Australian developers, financiers, project managers, and all levels of government agencies to contribute to the delivery of infrastructure in the Indo-Pacific region.