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Can ‘spillover’ revenue attract private sector to infrastructure projects?

30 0 2
11.02.2019

The estimated cost of supplying the world – and its fastest growing region of Asia in particular – with infrastructure such as transport, energy and communications systems over the next couple of decades runs into trillions of dollars, and the gap between the finance needed and what is being spent at present likewise amounts to thousands of billions.

How is the gap to be closed if economic growth and social welfare are not to suffer? Policymakers have been wracking their brains for decades over this question and are still nowhere near a solution. In theory, there is enough money in private savings to close the gap, but in practice the risk-reward ratio is all wrong for a purely private sector solution.

Why is China’s Nantong dreaming big with infrastructure projects?

Some 25 years ago, it seemed that a solution had been found, in the shape of “public private partnership”, or PPP schemes, whereby the public sector (which provides the lion’s share of finance at present) would partner with the private sector. But actual results have fallen short of expectations.

Governments around the world are carrying record amounts of debt already, and despite the fact that total funds in private financial institutions are estimated at around US$100 trillion (more than the highest estimates of the global need for infrastructure spending), money is not eager to shift into infrastructure, where perceived risks are too high compared with rewards.

As someone who has long believed........

© South China Morning Post