emerging trends in infrastructure 2015
TRANSCRIPT
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Infrastructure is a story of evolution… Drives social and
economic development
Enables us to renew our public services
and physical surroundings
Allows societies, economies,
companies and individuals to live to
their full potential
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We continuously track and report on the tides and trends driving the world’s infrastructure markets.
Here are the top 10 emerging trends we are seeing in infrastructure for 2015.
4© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Governments are taking action to unclog the pipeline
Trend 1
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Trend 1
This is a continuation of a trend we identified in2014, but this year the focus has shifted from
awareness to action.
The move towards greater government interventionindicates that the public discourse is shifting away
frommerely admiring the problem of infrastructure delivery
totaking action to solve it.
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Political and regulatory risks rise up the agenda
Trend 2
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Political risk is threatening to impact global infrastructure investment. Market reforms
and government intervention in financing
infrastructure assets are the basis of political platforms and electioneering.
The challenge is separating political rhetoric from the cold, hard needs of society.
Trend 2
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Market reforms: status quo is not fit for purpose
Trend 3
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Trend 3
Governments and regulators need to take a long-termview of their infrastructure needs, growth projections
and demographic forecasts to ensure future demand is met.
Market reform is nothing new. What is new is the breadth and scale and the willingness of governments
to use market reform to respond to infrastructure demand.
10© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The shifting role of multilaterals and development banks
Trend 4
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Trend 4Governments that offer subsidized lending should
consider directing their subsidies through other channels.
Over the coming year, expect to see the establishment of new development banks (most notably the formation
of the US$100 billion Asian Infrastructure Investment Bank, led by China).
12© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Big complexities start to impede big projects
Trend 5
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Trend 5With a large number of megaprojects announced in the
past few years, there are concerns that the complexity of these projects may be overwhelming and render them
undeliverable.
Some projects struggle to secure appropriate financing. Others are frequently tied up in red tape and approvals.
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Striking the balance between necessity and opportunity
Trend 6
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While political risk and uncertainty have always been present, it has now directly impacting global
infrastructure investment.
More countries are developing national infrastructure plans aimed at ‘depoliticizing’ infrastructure decision-
making, creating a long-term vision and improving the investment climate.
Trend 6
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Striving for better asset performance
Trend 7
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Governments are keen on asset privatization as
future investment can be moved off the public books and because returns from asset sales can
be put back into developing new infrastructure.
It is clear that deal flow may always be restricted in situations where privatization or
restructuring of government assets remains a politically-charged topic.
Trend 7
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Resource scarcity drives investment
Trend 8
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The development of new and more efficient infrastructure will be key to reducing the impact of
resource scarcity.
But the removal of existing subsidies on water and energy would help drive conservation and better align
costs and revenues to the asset life-cycle.
The number of major projects that – seemingly – are focused more on securing key resources than filling an urgent need is rising dramatically.
Trend 8
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Infrastructure players go global
Trend 9
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While more global organizations competing for tenders in mature and emerging markets is a positive
development, providers must take the time to seriously consider the risks and opportunities in the
markets in which they hope to operate.
The long-awaited shift of investors towards the emerging markets has finally taken hold. As with any
new market opportunity, service providers are bound to follow.
Trend 9
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Cities sharpen their focus on urban mobility
Trend 10
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City growth was identified as a trend in both 2013 and 2014. Today, the focus has evolved towards
urban mobility and economic inclusion.
Over the coming year, expect to see more urban mobility projects announced in almost every market
(particularly in those going into an election cycle).
Urban mobility is critical. Not only does it allows for a freer flow of goods, capital and people within cities, it
provides a means for the world’s urban poor to access jobs, social services and education.
Trend 10
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