Private sector key to infrastructure growth

Treasury Secretary John Fraser has cautioned the private sector to be wary of slowing growth in the Asia-Pacific region, while encouraging it to play a “pivotal role” in infrastructure investment, trade liberalisation and policy reform.

“Growth has started to slow in some of the major economies in this region”, said Fraser. “We can’t put all of our eggs in the ‘Asia-Pacific basket’”.

Fraser noted the volatility seen in China since it liberalised its capital accounts, as well as slowing growth in Indonesia, South Korea, Singapore, Malaysia, Thailand and Japan.

He highlighted Australia’s recently signed free trade agreements with China, Japan and South Korea, as well as APEC’s Asia Region Funds Passport trade initiative, designed to provide investors with a wider choice of investment products in the Asian region.

Since his address, APEC finance ministers have signed the Asia Region Funds Passport Statement of Understanding and participating securities regulators are expected to enter into a Memorandum of Cooperation by the end of 2015.

Infrastructure investment and the private sector

Fraser highlighted the need for private sector investment in national infrastructure and commented that the private sector will need to play a pivotal role in meeting Australia’s infrastructure needs over the long term.

He suggested that organisations such as Infrastructure Australia and the Northern Australia Infrastructure Facility will help pave the way for private sector investment in new and existing infrastructure assets, including through concessional loans.

Fraser also mentioned Australia’s role in the Global Infrastructure Hub, which was set up by the G20 to increase global investment in infrastructure and build links between private sector investment and public infrastructure projects.

Since his address, G20 finance ministers and central bank governors have endorsed the Global Infrastructure Hub’s business plan. This is likely to increase global infrastructure capacity and begin matching potential investors with suitable infrastructure projects.

AICD’s role in the recent National Reform Summit

The AICD has recently been involved in the National Reform Summit, which has supported the prioritisation of and investment in national infrastructure projects to stimulate growth and productivity.

“The recent AICD Director Sentiment Index has shown that 90 per cent of directors believe investment in national infrastructure is too low”, said Rob Elliott, executive director of the AICD Governance Leadership Centre.

“Addressing this infrastructure deficit is a key priority for company directors as well as the governance of the nation.”

A recent poll in The Boardroom Report  also found that creating a set pipeline of infrastructure projects is a top priority among directors in promoting a national infrastructure plan.

For more information visit the AICD Governance Leadership Centre.