The White House believes that foreign investment will play a key role in fulfilling President Trump’s promise to upgrade the nation’s roads, bridges, airports and other public works.
The President’s $1 trillion infrastructure package relies heavily on private sector investment. The outline of the plan, released in May, allocates $200 billion in federal funding over the next decade, primarily as an incentive to spur investment for the remaining $800 billion. Investments are expected to come from states, localities and private-sector entities — including foreign investors.
“Working with foreign investors is going to be a critical part of any plan we put forward,” said Treasury Secretary Steven Mnuchin, speaking at the SelectUSA Investment Summit. “Public-private partnerships are crucial to ensuring that the American taxpayer does not bear the full cost of any proposed program.”
Various incentives have been proposed to encourage private-sector involvement: the administration is seeking regulatory reform to shorten project delivery times and has also endorsed an idea known as asset recycling, which entails selling off public assets to the private sector and using the proceeds to pay for other transportation projects. “The reform program we have put forward is going to make the U.S. an even more attractive place to do business,” said Mnuchin, speaking directly to foreign investors at the summit.
Lots of countries build their roads and bridges with money from overseas — including Australia, Canada, and European nations. Although this practice has generally been less common in the U.S., overseas money is already invested in American infrastructure: the Chicago Skyway, the Dulles Greenway in Virginia and State Highway 130 in Texas are just a few examples.
Tom Carr of data research firm Prequin says the question is not whether the U.S. could or should attract foreign money for infrastructure. “It’s whether we’re going to see a real explosion going forward,” he said. Carr said private investors are actively looking for projects in North America and, according to Prequin, there is $71 billion of private money, worldwide, lined up and waiting to be invested.
Earlier this year, Japan said it plans to invest $150 billion in public and private funds over the next 10 years in the U.S. and Saudi Arabia recently made a tentative pledge to invest $20 billion in a new infrastructure fund managed by private investment firm The Blackstone Group. Last year, China invested $46B in the U.S., triple the amount seen in 2015. Commerce Secretary Wilbur Ross is encouraging more investment from China. He recently promised Chinese investors that, “the playing field will be totally level.”
Opinions differ on the merits of leveraging foreign investments for homegrown projects. Oregon Democrat Peter DeFazio, of the House Transportation and Infrastructure Committee, doesn’t want overseas interests to influence decisions about U.S. roads and bridges. DeFazio would rather raise the gas tax than allow investors to raise tolls and fees. Attorney John Schmidt has negotiated billions of dollars in infrastructure deals in Chicago, Texas and Indiana, all of which included foreign investors. He said the U.S. definitely benefits from foreign infrastructure investment, since the projects get built, and are built with American workers.
Source: The Hill
