Latin America: Pension funds a good alternative to finance infrastructure, water projects

Pension funds provide a good alternative to financing infrastructure development projects while strengthening local economies, K&M Engineering CEO Michael Kappaz said at the second CG/LA Global Infrastructure Leadership Forum. [The Forum was held in Washington, DC from December 10-12, 2009].

Kappaz mentioned Chile and Colombia as examples of mature economies with strong pension fund models that are investing in infrastructure, which also promotes the countries’ economic and social development.

[...] Latin American countries invest an average 2.5% of GDP in infrastructure, compared to the 30% invested by China, said [Enrique] García [president of the Andean Development Corporation (CAF)], stressing the need to at least double the region’s infrastructure investments.

[...] Other indispensible initiatives are water and sanitation projects, which help reduce poverty and health spending while promoting further development, infrastructure investment analyst [CG/LA president Norman Anderson] said. At the same time, these types of projects provide long-term solutions, the analyst added.

Source: Eva Medalla, Business News Americas [subscription site], 11 Dec 2008

In Peru, private pension fund administrators (AFPs) could invest up to 6bn soles (US$1.91bn) immediately in infrastructure projects if the bureaucracy surrounding large initiatives speeds up, according to pension fund association president Pedro Flecha. [...] Processes such as the expropriation of land to be handed over to the private sector can take up to six years, which impedes the start of a project, said Flecha.

[A recent] study [had been completed] to identify existing barriers to the development of infrastructure projects, paper El Peruano reported.

[...] President Alan García said the state agency for the promotion of private investment ProInversión needs to halve the time involved in bidding processes. García also asked congress to carry out an evaluation and restructuring of the bureaucratic procedures that delay public works, in an effort to speed up investments to combat the international financial crisis.

Source: Business News Americas [subscription site], 11 Dec 2008