Wednesday, April 16, 2014

Infrastructure – Key to Mining


This obvious trivial fact that infrastructure is a bottleneck to any mining activity. I mentioned earlier Laos – development of mining industry in Laos to a great extent depends on improvement of infrastructure. That requires, of course massive investments.

Here I would like to point to just released Bridging The Global Infrastructure Gap: views from the executive suite – a KPMG report that has interesting data.

In particular, more than 300 C-level executives and board members representing a cross-section of industries across 22 countries – believe that:

  • Only 14% of all senior executives believe that current infrastructure is ‘completely adequate’ in supporting their businesses. Interestingly, 38% of respondents in India and 36% in Russia cite infrastructure there as inadequate, while the comparable figure in China is only 5%
  • A full 90% of respondents say the quality and availability of infrastructure directly affects where they locate and expand their business operations.
  • 77% of business executives believe there will not be enough infrastructure investment to support the long-term growth of their organizations.
  • 80% of executives believe governments should partner with the private sector to finance major infrastructure projects.
  • Roads and power generation infrastructure are the most cited priorities by executives globally. Social services infrastructure is also cited globally, while water infrastructure was highlighted by respondents in China and India.

Here are some graphs from the report:

That all means that investor community should expect from the local governments good incentives for infrastructure projects. Attention-grabbing remarks were made by Vietnam Business news agency:

Vietnam’s Infrastructure Investment
Commenting on the global survey, Rupert Chamberlain, Head of KPMG's Financial Advisory Services practice in Viet Nam said "it’s clear from the survey that business leaders globally see quality infrastructure investment as a key to their business, and in an increasingly global business environment Viet Nam must respond to this to remain both regionally and globally competitive. The challenges Viet Nam has, whilst not unique, are in obtaining and allocating scarce capital, both at home and abroad, to improve the landscape for businesses, as well as meeting the social development needs of the country."
Lieven Jacquemyn, a Director in the Global Infrastructure and Projects Group at KPMG in Singapore, who has worked with development agencies and governments in the region on infrastructure financing initiatives, added: "investors we have spoken to who are active in the South East Asian Region have identified Viet Nam as a priority market, in part due to its stable political environment, which is necessary for long term project financing. Last year the Vietnamese Ministry for Planning and Investment undertook a number of encouraging steps towards creating a more transparent and positive environment for private sector infrastructure investment. Viet Nam is certainly a market to watch”

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