The White House describes B3W as "an affirmative initiative for meeting tremendous infrastructure needs of low- and middle-income countries". The US feels the need to include "affirmative" in the descriptor to draw a clear distinction with China's major infrastructure program, the Belt and Road Initiative.

China's Belt and Road Initiative has been criticised for predatory lending practices but, without a strong alternative, it continues to attract the interest of developing countries.

Over the past decade, China has commenced more than 100 infrastructure projects spanning from Europe to the Pacific. Many investments appear to serve Beijing's strategic interests over genuine development need, with some projects dubbed "white elephants". Developing countries are becoming increasingly savvy to the potential dangers of Chinese loans, and are seeking infrastructure financing alternatives - so B3W is a welcome initiative.

The only problem is, G7 countries have not announced any additional funding commitment for B3W.

Instead, B3W is heavily dependent on private-sector capital, which G7 countries want to focus on infrastructure projects in the areas of climate, health and health security, digital technology, and gender equity and equality. So far, however, G7 countries - including the US and Japan, and separately Australia - have a poor track-record of securing private-sector partnerships for infrastructure projects in developing countries.

Launched in 2018, the Australia-US-Japan "Trilateral Partnership for Infrastructure Investment in the Indo-Pacific" is being delivered by DFAT and its US and Japanese counterparts. Like B3W, the Trilateral Partnership emphasises quality infrastructure, transparency, debt sustainability, and environmental and social safeguards. And, like B3W, it relies on private-sector investors.

To date, though, the Trilateral Partnership and its existing incentives have failed to attract corporate partners. Only one - fully state-funded - trilateral infrastructure project has been greenlit: an undersea fibre-optic cable connecting Palau with south-east Asia and the mainland United States.

If B3W is going to succeed, it must learn from the Trilateral Partnership's challenges and change the private sector's value proposition.

There is significant untapped potential in partnering with private firms to deliver infrastructure to developing countries in the Indo-Pacific. In Australia, for instance, sovereign wealth funds and superannuation companies have huge financial reserves that could be invested in long-term development projects in our region. In April this year, the Future Fund was reported to have hit a record $179 billion in cash and equity. Rather than work with governments to build critical infrastructure in the Pacific or south-east Asia, private companies are deterred by several real and perceived obstacles.

First off, there are multiple perceived risks in conducting business in the developing world. Businesses worry about political and social instability and corruption, and the long-term impact on project profitability. After these hurdles, high scoping costs that can become sunk assets and limited data regarding investment opportunities also act as deterrents - reliable data from remote, rural provinces of Thailand, for instance, can be difficult to come by.

Beyond risk, there just isn't enough direct interaction between governments and the private sector. Western governments often wait for infrastructure investors to come to them, while industry expects government to reach out with commercial opportunities. With both sides expecting the other to make the first move, too often no moves are made, resulting in a lose-lose situation.

So, how can this situation be improved? G7 countries and Australia, as part of the Trilateral Partnership, need to engage business on its terms and lower the risk.

READ MORE:

One step could be to create an entity separate from government, independently operated by finance experts and program managers. This would remove some of the challenges business experiences working directly with government, and would also put commercial interests at the forefront of the initiative, rather than government policy. This initiative could take the form of a program office hosted within a tried-and-true multinational development bank.

For instance, an "Indo-Pacific Infrastructure Program" could be created within the Asian Development Bank, thereby reducing some of the overheads associated with establishing a stand-alone entity.

While a "program" within a multinational development bank might not sound like much, there is already an abundance of development agencies in place to foster public-private infrastructure partnerships. What they fail to do that the Indo-Pacific Infrastructure Program could improve upon is provide a brokerage service - that is, successfully match companies with development opportunities governments want to back.

As part of effective brokerage, the Indo-Pacific Infrastructure Program would collect and aggregate data and conduct mapping exercises to scope overlapping interest between the public and private sectors. It would also assess individual projects and work with business to tailor specific incentives to offset the risk - not provide blanket incentives, like some governments currently offer. Inducements could include commissioning new field data, striking corporate partnerships with local enterprise, or targeted loans and grants.

G7 countries and Australia all have the right idea in seeking to provide critical infrastructure to our region and the wider world. However, developing countries won't have much of a choice if B3W and the Trilateral Partnership can't get the private sector on board. To date, there hasn't been a gold-standard model for creating public-private partnerships: a new brokerage program within the ADB could help grease the wheel.