Asia-Pacific dominant driver in global infrastructure investment attractiveness

Australia, Singapore and China are driving momentum and interest for infrastructure investment in the Asia-Pacific, according to the new CMS Infrastructure Index, which ranks infrastructure investment attractiveness according to six key criteria.Australia, Singapore and China are driving momentum and interest for infrastructure investment in the Asia-Pacific, according to the CMS Infrastructure Index: A New Direction, which ranks infrastructure investment attractiveness according to six key criteria.

The report ranks 40 jurisdictions, with four of the top 20 spots for investment attractiveness were secured by Asia-Pacific, with robust economic growth across the region, ambitious renewables plans, and the world’s largest infrastructure project – China’s Belt & Road – set to reshape the continent’s landscape over the next decade.

The index is based on six main indicators:

  • _Economic status, which takes into account trade as a percentage of GDP, credit rating and interest rates, comprising 30% of the overall score.
  • _Sustainability and innovation, taking into account environmental performance, innovation and quality and consolidation of infrastructure, comprising 12.5% of the overall score.
  • _Tax environment, taking into account corporate tax rate, resource drain and tax complexity, comprising 5% of the overall score.
  • _Political stability, taking into account the effectiveness of governance and rule of law, and regulatory stability, comprising 22.5% of the overall score.
  • _Ease of doing business, which takes into account transparency and doing business, comprising 10% of the overall score.
  • _Private participation, which takes into account government support, gross fixed capital formation and private investment, comprising 20% of the overall score.

The Netherlands claimed top spot overall, despite a prolonged period with no government at all, after seeing the highest GDP growth since 2007, expected to reach 3.3% in 2017. The country’s success was in part down to its transparent and efficient procurement process, and its healthy multi-billion euro pipeline in road and water Public-Private-Partnerships (PPPs).

Other countries in the top five included Canada, Germany, UK and Australia

“From China’s Belt and Road to the UK’s Brexit bump in the road, politics and policy remain central to shaping infrastructure investment flows globally,” CMS partner and Co-head of Infrastructure & Project Finance in the UK, Kristy Duane said.

“If governments are to attract the apparent wave of private capital available, they should look to countries like the Netherlands and Canada for inspiration where transparency and a clear strategic vision for infrastructure shapes the agenda.

“The CMS Infrastructure Index charts interesting shifts in the attractiveness of 40 countries across the globe and also highlights changes occurring in the infrastructure asset class bringing a new wave of innovation to a market long dependent on standardised PPPs for much of its deal flow. The quest for deals has already prompted the industry to explore less mature sectors such as energy storage, broadband, smart meters, as well as student accommodation and rolling stock. It is fascinating to see which countries are leading the way.”

The report also highlights potential new emerging asset classes including 4G, charging stations, car parks and the likely impact technology, which is already revolutionising infrastructure. One example is the rise of smart roads and smart cities, thanks to the interaction of road sensors, fibre optic networks, interconnected self-driving vehicles and inductive charging roads, laying the foundations for a new generation of self-charging and self-driving electric vehicles. Cities like Dubai and Singapore are already making strides to lead the next wave of digital innovation.

CMS commissioned the Index, in conjunction with Inspiratia, to evaluate past trends and to serve as an indicator as to which jurisdictions would be most attractive for future investment and activity.

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