Infrastructure Finance

The current level of infrastructure spending is far below the desired level globally as well as across different regions of the world, and the financing gap is widening day by day. In particular, the increasing demand for infrastructure financing in emerging markets and large developing countries necessitate radical changes in the sources, instruments and forms of financing infrastructure assets. Along with financing requirements of conventional infrastructure (physical as well as social), the achievement of Sustainable Development Goals (SDGs) would require additional investment in basic economic and social infrastructure such as water, sanitation, electricity, roads, etc. While traditional sources e.g. bank loans, syndicated loans, loans by the
multilateral development banks, etc continue to remain the major sources of infrastructure financing, the scope for greater participation of private investors has expanded in recent years. In terms of innovative instruments, bonds, equity and other capital market instruments involving both debt and equity features are emerging as preferred asset classes for infrastructure investments. Efficient pooling of investments by institutional investors and public-private partnerships can possibly widen the choice of financing and enhance optimum utilization of global savings.

The latest book in Queen’s University’s State of the Federation series explores “Canadian Federalism and Infrastructure”.  In chapter 11, Michael Fenn proposes prudent leveraging public assets to finance new public infrastructure – what to do, and what to avoid.

Infrastructure is the life line of Indian economy and plays a vital role in economic development. India needs INR 31 trillion to be spent on infrastructure development over the next five years. There are many regulatory, macroeconomic and institutional hurdles in financing infrastructure given its special characteristics, such as, long gestation period, huge initial capital outlays and exposure to policy, procedural and political uncertainties. Policy makers have taken various policy initiatives for providing alternative source of funding and opening up newer and innovative channels of financing. Traditional bank financing mechanisms has failed in coping up with financing risk resulting into NPA assets, which opens the door for product innovations to mitigate risk and expand the sources of financing for infrastructure projects. A greater variety of financial instruments backed by government policies for infrastructure finance would help to make infrastructure more attractive for a broader base of investors and allow them a better risk diversification. The paper provides an analysis of existing financing sources for infrastructure projects and discusses ongoing policy reforms by Government, Reserve Bank of India, and product innovations by stakeholders like financial Institutions, private developers and credit rating agencies such as-infrastructure investment trust, infrastructure debt funds, NIIT etc. which is enhancing flow of credit to infrastructure sector in India.

As many developed country practise, the function of the infrastructure is to connect the each region of Malaysia holistically and infrastructure is an investment network projects such as transportation water and sewerage, power, communication and irrigations system. Hence, a billions allocations of government income reserved for the sake of the infrastructure development. Towards a successful infrastructure development, a joint venture approach has been promotes by 2016 in one of the government thrust in Construction Industry Transformation Plan which encourage the internationalisation among contractors. However, there is depletion in information on the actual practise of the infrastructure joint venture projects in Malaysia. Therefore, this study attempt to explore the real application of the joint venture in Malaysian infrastructure projects. Using the questionnaire survey, a set of survey question distributed to the targeted respondents. The survey contained three section which the sections are respondent details, organizations background and project capital in infrastructure joint venture project. The results recorded and analyse using SPSS software. The contractors stated that they have implemented the joint venture practice with mostly the client with the usual construction period of the infrastructure project are more than 5 years. Other than that, the study indicates that there are problems in the joint venture project in the perspective of the project capital and the railway infrastructure should be given a highlights in future study due to its high significant in term of cost and technical issues.

The study analyses the disruption created by shared mobility in the funding of transport infrastructure. While recognizing the benefits of shared mobility in terms of reduction of private car use, the study identifies that there might be short term negative effects on the revenues of long distance railway and coach operators. It also points out other potential risks, which include capturing the revenues through commissions charged by platforms mediating mass-transit services (Mobility as a Service), freeriding and lower tax contributions. The study makes recommendations to reduce these risks.

Increasingly, governments are experimenting with ways to provide public goods by involving the private sector in the planning, financing, building and operating of a range of services, facilities, infrastructure, etc. In the geographical literature on neoliberalism this entanglement of the state and markets has been loosely conceptualized as a process of marketization. This concept describes the insertion of markets or market forces into the state and public sector. In this paper we unpack this concept by highlighting the need to think about a range of marketization processes at play across a range of geographies.

As already mentioned in Chap. 2 of this book, the development of major transportation infrastructure and location development (i.e. residential areas, industrial estates, office and retail parks) increasingly takes place in an integrated way. An integrated approach may not only contribute to a better, more sustainable spatial outcome of the development process (from the society’s point of view), but it might also be more efficient, although the increased complexity may have an unintended counter effect on efficiency as well (Van der Krabben et al. 2007). Moreover, in financial terms, the integrated approach also provides new opportunities. Traditionally, the public investments in transportation infrastructure are based on tax revenues. Usually, the according budgets available for transportation infrastructure development are limited and – almost by definition – not sufficient to develop all desired infrastructure. In looking for alternative funding for transportation infrastructure development, governments should try to find a way that allows for efficient economic performance, financial justice, and social facility. When transportation infrastructure and location development are combined, value capturing methods may, to a certain extent, offer an opportunity to achieve those goals (Banister and Berechman 2000; Batt 2001). Here, we define value capturing as a process by which all or a portion of increments in land value, that resulted from the installation of special public improvements or any other actions attributed to the ‘public effort’, are recouped by the public sector and used for public purposes (Smolka 2000; Smith and Gihring 2006). In Chap. 3, Debrezion et al. paid attention to the issue of value capturing especially on how to calculate the increment in property values caused by the infrastructure development, or to be specific a train station. However, there are still questions about whether value capturing might be a feasible method to finance infrastructure development projects and also about the explanation of decision-making process with respect to the implementation of value capturing methods.

Long Term Development Plan
Targets
To achieve a per capita income equivalent to amiddle income country by 2025
Provision of basic infrastructure:
o 100% of electrification ratio
o 100% of access to clean water
o 100% of access to socia lhousing for low incomec ommunities
Initiating to adopt nuclear as an alternative source of energy

9.300 Indonesian long-term development plan has set a target to secure Indonesia’s position as a middle-income country by reaching a GDP per capita of US$14,500 by the year 2025

Infrastructure consists of the following: Transport, Telecommunication (Information and Communication Technology ICT), Water supply and sanitation, Energy etc… This topic reviews the linkages between infrastructure and economic development. The main component is that economic growth arises from investment in infrastructure. Policy makers use infrastructure as a tool to realize economic benefits. The quality of infrastructure and the level of investment in physical infrastructure has a direct correlation with the level of economic growth. Intensive investment in physical infrastructure translates to higher economic benefits e.g. application of modern technology in manufacturing industry leads to increased productivity of goods and services.