Washington, D.C., July 1, 2014 - The Institute of International Finance today released a top 10 list of impediments to long-term infrastructure financing and investment, accompanied by potential solutions. The list was developed by the IIF's Council for Asset and Investment Management, representing investors with nearly $20 trillion in assets under management.
"The G20 has made the promotion of infrastructure investment one of its top priorities for 2014, and institutional investors have been strong supporters of this effort," said Hung Tran, executive managing director at the IIF. "Identifying these impediments and providing practical suggestions for solutions will aid policymakers in developing policy frameworks that promote infrastructure investment."
The top 10 impediments identified by the IIF include:
- Underdeveloped infrastructure asset class.
- Lack of transparency and information flow.
- Mismatch between available infrastructure investment options and investors' risk profile.
- Policy uncertainty (including concerns about investor/creditor rights).
- Banking sector adjustments (both regulatory and industry developments).
- Lack of alignment between long-term investors' risk profile and policy measures designed to encourage investment.
- High capital charges on infrastructure investment.
- Short-term focus of institutional investors, prompted in part by certain regulatory policies and initiatives
- Lack of standardization in debt instruments.
- Underdeveloped capital markets.
Key recommendations include:
- Build a transparent and tradable infrastructure market, with a spectrum of investment vehicles comprising a defined asset class.
- Increase access to information on infrastructure investments to facilitate data collection and promote harmonization and standardization.
- Provide a supportive regulatory framework that avoids disincentives to long-term investment.
The IIF's Council of Asset and Investment Management (CAIM) analyzes and addresses issues and challenges for long-term investment and asset allocation decisions arising from both market dynamics and regulatory reforms. CAIM provides the long-term investment community with a structured forum to discuss current market challenges and their implications. CAIM members comprise four broad categories of long-term investors - the insurance sector, pension funds, sovereign wealth funds and asset management/investment firms.
The Institute of International Finance is the global association for the financial industry, with close to 500 members from 70 countries. Its mission is to support the financial industry in the prudent management of risks; to develop sound industry practices; and to advocate for regulatory, financial and economic policies that are in the broad interests of its members and foster global financial stability and sustainable economic growth. Within its membership IIF counts leading global banks, insurers, pension funds, asset managers and sovereign wealth funds, as well as leading law firms and consultancies. For more information visit www.iif.com.