Infrastructure: ICBC – strengthening our resilience (NZ Herald)

Infrastructure is one of Industrial and Commercial Bank of China (ICBC) Group’s strategic sectors.

Karen Hou, ICBC NZ’s chief executive, says this focus extends to New Zealand, and has been an area that she and her team care deeply about.

“When you consider infrastructure, it is about delivering long-term projects,” she says. “It is not about short-term profit or short-term achievements, but instead requires a long-term vision.”

She notes that infrastructure not only helps to build the economy but also helps with the country’s resilience.

Hou says while Covid-19 demonstrated that New Zealand can be very resilient, other recent events — including the International Convention Centre fire and the damaged Auckland Harbour Bridge — show that resilience in infrastructure is an area that needs bolstering.

“We are operating here in New Zealand because we are committed to providing the long-term support required to strengthen the resilience of the country’s infrastructure,” says Hou.

“We are interested in all aspects of infrastructure — bridges, railways, motorways, water, power, schools, hospitals, ports, airports, aged care — these are all important areas of infrastructure that will provide fundamental support to the country and help the economy.”

Boosted capacity for funding
In May this year, the Reserve Bank announced it had granted ICBC a licence to operate directly as a branch in New Zealand.

While ICBC NZ will continue to operate in New Zealand as a subsidiary, Hou says the branch licence allows the bank to make a stronger contribution to New Zealand by bringing the consolidated Group balance sheet into play to support local projects. “With this licence, we have a greater capacity for lending in New Zealand — especially into infrastructure and green projects,” she says.

ICBC NZ has been active in New Zealand for over seven years now, and has already been involved in several of New Zealand’s major infrastructure projects.

One of the first projects ICBC NZ became involved in was Transmission Gully. ICBC NZ, along with ICBC Sydney Branch, provided around NZ$100m in the banking syndication to fund the public-private partnership project.

The 27km four-lane project will provide safer, quicker, less congested and more reliable route, bypassing many existing bottle-necks and the more hazardous stretches of the existing SH1, and connecting Wellington to the growing economic centres of Kapiti and the Manawatu and subsequently the wider North Island.

ICBC NZ, along with ICBC Asia, has also recently provided funding to assist Napier Port with their capital investment programme, which includes the development of the new 6 Wharf. “We have been able to leverage the wider ICBC Group’s global resources for this project which provides more funding capacity to our client,” says Hou.

In the 10 years prior to Covid-19, Napier Port has experienced a 50 per cent increase in containers, 94 per cent increase in cruise ships and 64 per cent more bulk cargo.
The new 350-metre-long wharf, for which construction commenced earlier this year, will be a crucial piece of infrastructure for Hawke’s Bay. It will future-proof the port, allowing it to handle larger ships and improve operational performance.

International experience
ICBC NZ has been a long-time supporter of the Infrastructure NZ symposium and is again a sponsor for today’s conference. Now in its fourth year of sponsorship, ICBC says this long-term support reflects its commitment to New Zealand’s infrastructure industry as a whole.

ICBC NZ helped co-ordinate Infrastructure NZ’s delegation to Singapore, Hong Kong, Beijing and Shanghai last year, which included sessions on the national, regional and city governance, their economy and infrastructure funding and financing, masterplan of these mega cities and transport system, and how these countries and areas look at prioritising their investment planning.

Hou says some of the experiences from international practice for New Zealand include the public-private partnership models, alternative construction methods and new funding mechanisms.

Modular construction is an area that quickly gained momentum in international practice and is something New Zealand should consider. In modular construction, the components of a project is done away from the construction site, and then delivered for assembly.

This can include buildings, ships and other key pieces of infrastructure. The use of this method can dramatically increase the speed and lower the cost of large-scale infrastructure projects.

Another example is infrastructure leasing, which is a funding mechanism ICBC uses with operators across Europe, Asia and China, and Hou says is something that could be considered for the delivery of some New Zealand infrastructure assets. This type of funding is often used for aircraft or maritime vessels. “There is a leasing financial team within ICBC Group in China that specifically works on this funding model,” says Hou.

Outlook for the Future
Hou says the Covid-19 pandemic has seen New Zealand raise its profile and position in the world due to its adept management.

“New Zealand has proven to be one of the most successful countries to manage the pandemic, which sets the country up well for future investment — because people want to invest in countries that can demonstrate they are resilient,” she says.

Hou hopes that the opportunity the recovery presents will help New Zealand with its economy, and ultimately ensure its infrastructure is as resilient as it can be.