Infrastructure Index: Asia-Pacific – is China’s Belt and Road an investment bonanza?

Creating an attractive environment for investors in infrastructure is no easy task. Politics and policy can make or break private participation and the flow of investment. Something that has never been clearer than in the CMS Infrastructure Index that ranks 40 jurisdictions in order of infrastructure investment attractiveness.

This supplement to the Infrastructure Index examines the opportunities in Asia-Pacific.

Asia-Pacific contains some of the fastest growing economies in the world, and each jurisdiction is focused on creating a pipeline of opportunities for the development of infrastructure in ports, roads, rail and energy.

Australia ranks highest in the region, positioned fifth. This is thanks to the sheer size of its robust economy, ambitious renewables generation plans and leading financial services firms that are able to provide large sums of private capital to fund the pipeline of infrastructure projects.

Singapore ranks sixth overall. It’s favourable tax environment and political stability make it extremely attractive to investors. There is a pipeline of infrastructure projects underway including an airport (Changi Terminal 5), a shipping megaport (Tuas Mega Port), a high-speed rail (KL-Singapore HSR project) as well as the likes of 4G and fibre optic networks to create a country that is at the forefront of building smart cities.

Opportunities in the likes of India are plenty, subject to the government providing some certainty to the private sector capital that is waiting to invest.

The infrastructure gap in many of Asia-Pacific’s developing nations is rapidly being filled by the promise of China’s grand Belt and Road Initiative and deep pockets. Whilst China ranks 20th in the Index, it’s Belt and Road Initiative expects to have close to a trillion dollars being invested worldwide. Aimed at stimulating economic growth across Asia and beyond, the Initiative will build infrastructure to connect countries across Asia and further afield. Notwithstanding this, the Index highlights the importance of government stability and political certainty to ensure the successful close of infrastructure projects. The fragile political environment of some of the countries involved in the Belt and Road Initiative may pose a risk to its success.