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DEBT
FUTURE OF INFRASTRUCTURE
INFRASTRUCTURE INVESTOR
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ROUNDTABLE
TRENDS
Economies in the
region are already
faced with fiscal
constraints and
increased public debtto-GDP ratios could
result in a squeezing
out of infrastructure
spending
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INFRASTRUCTURE INVESTOR
Hans-Martin Aerts
FUTURE OF INFRASTRUCTURE
TRENDS
FUTURE OF INFRASTRUCTURE
are aware of that and they are considering the facilitation of strategies like
dollar tariffs which may pave the way
for dollar lending, he adds.
BANKABLE PROJECTS SCARCE
While governments acknowledge there
is a need for infrastructure investments
to meet rising demand, there is a scarcity
of bankable projects in the region. You
can count the real transactions on your
fingertips, Kwok says.
Aerts agrees. He says there is no lack
of private capital ready to be deployed in
Asian infrastructure and private players
would like to invest more. However, there
is a shortage of good deal flow. Poor project preparation and lack of coordination
seem to be the bottleneck to infrastructure development, he says.
In addition, factors such as regulatory risk and stiff bureaucracy have
been slowing down the implementation
of infrastructure development, he says,
adding that less bureaucracy and better
coordination across various authorities
will lead to more infrastructure projects
getting off the ground.
One of the markets that has been
disappointing in this regard is Indonesia. Investors say that while there have
been all sorts of enabling vehicles to
incentivise private ownership of assets
and private investments, the latter, particularly of foreign origin, have been limited. Nooy says that while the Indonesian
storyline is great, the execution is not
and is faced with many hurdles including
an enormous bureaucracy.
Moreover, pension funds are not willing to take development risk, although
what has changed is that some now are
willing to take construction risk. In
other words, they dont come in the
origination phase and the structuring
stage, but are willing to come in at the
financial close stage and are willing to
take construction risk, he says, adding
that they are available to invest in opportunities with no dividends or cash flows
Governments in
the region have
recognised these
constraints and
have committed to
structural reforms
to provide a better
infrastructure
investment framework
and this should crowdin private investment
Aerts
INFRASTRUCTURE INVESTOR
23
ROUNDTABLE
TRENDS
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INFRASTRUCTURE INVESTOR
FUTURE OF INFRASTRUCTURE