The Indo-Pacific Economic Framework Singapore Ministerial: The Private Sector’s Role in the Initiative’s Durability

The Indo-Pacific Economic Framework (IPEF) lives, notching several milestones in Singapore on June 6 during an IPEF ministerial. The IPEF’s 14 members have created some momentum on three of the four pillars (supply chains, clean economy, and fair economy) that should spark interest from the private sector to play a role in ensuring the initiative’s durability, including in identifying commercially viable opportunities and helping to de-risk supply chains challenging markets. There are many questions on the durability of the framework, especially as former President Trump has threatened to “knock out” the IPEF should he win the U.S. presidential election. However, these recent efforts should incentivize the investors to support the codification of the IPEF, or at the very least, some aspects of it, regardless of who wins the U.S. election in November.

One new effort IPEF partners kicked off in Singapore was the IPEF Clean Economy Investor Forum, part matchmaking between investors and projects and part sharing of expertise and best practices in climate-related investments. The forum showcased $23 billion in sustainable infrastructure projects in IPEF member economies, $6 billion of which are reportedly shovel-ready, to investors and interested governments.

Additionally, member countries announced the IPEF Catalytic Capital Fund to support the expansion of a clean economy infrastructure project pipeline in the IPEF emerging and upper-middle income economies. Australia, Japan, Korea, and the United States drummed up an initial pot of $33 million in grant funding with a goal to generate up to $3.3 billion in private investment.

The cherry on top of these IPEF efforts was another announcement of an initiative, led by private equity firms KKR and Global Infrastructure Partners, to deploy $25 billion in infrastructure in the Indo-Pacific region. This investment will focus on energy and climate-related sectors and includes Singapore’s Temasek Holdings and GIC, Allied Climate Partners, BlackRock, and The Rockefeller Foundation as investors in the initiative.

These efforts address two critical issues that continue to undermine U.S. and partner and ally country initiatives around infrastructure: finding viable projects and mobilizing private sector capital. Development finance institutions, such as the U.S. International Development Finance Corporation or multilateral institutions such as the International Finance Corporation or Asian Development Bank (ADB), typically finance projects that are commercially feasible, meaning that they must be successful enough to pay back their loan. There has been a seeming dearth of projects that fit this bill or what would appear to be a long due diligence process that could eventually lead to financing, all issues that have contributed to an ongoing infrastructure gap.

While there may be a dearth of financially feasible projects, there is no shortage of work. The current global infrastructure gap that will be needed by 2040 totals $15 trillion; in 2017, the ADB estimated that $1.7 trillion was needed annually—more than double the level of investment the ADB advised in 2009—in infrastructure across Asia through 2030 if the region is to maintain economic growth, battle poverty, and mitigate climate risk. This year the ADB stated that $1 trillion was needed annually through 2030 on the energy transition alone.

The ministerial built on initial successes on its supply chains pillar. In February 2024, the Supply Chains Agreement came into force, and through this agreement, the IPEF partners are looking to create several new tools to enhance supply chain resilience, including facilitating business matching and mobilizing investments to strengthen supply chains and promoting labor rights and workforce development across IPEF supply chains. This agreement is also set to solidify cooperation on cybersecurity, data-driven approaches to supply chain vulnerability assessments, and tabletop exercises simulating supply chain disruptions. This will benefit businesses, governments, and consumers in having more confidence in the safety and reliability of supply chains.

The ministerial yielded several announcements on the fair economy pillar as well, with announcements on technical assistance and capacity building for action on fighting financial crimes, including money laundering and terrorism financing; promoting inclusivity in law enforcement on anti-corruption enforcement; and programs for government officials to develop and implement anti-corruption policies and measures, among other deliverables. Businesses often cite the lack of regulatory transparency and corruption as a major hindrance to investment in developing economies in the IPEF rubric and beyond. There are more steps to remediate these issues and build more investor confidence.

Doubts have been flying over the IPEF’s staying power, particularly as the trade pillar has faltered and a Trump win may level the IPEF wholesale. But there has been enough progress on the U.S. Department of Commerce–negotiated pillars—supply chains, clean economy, and fair economy—that could endure beyond the Biden administration as there are pieces of it that both benefit member countries and the private sector. The private sector has a role to play for several reasons, including that several aspects of the IPEF address key concerns in investing overseas and that its support could contribute to its staying power. It’s worth considering being as much an advocate as the member governments themselves.

Erin Murphy is a senior fellow with the Asia Program at the Center for Strategic and International Studies in Washington, D.C.