Foreign investment to impact Australia’s infrastructure development.
The way Australia solves its infrastructure challenges will impact the level of foreign investment flowing into the country, according to The Trust Company, Australia’s only trustee with licenses to operate in Australia, New Zealand and Singapore.
Speaking at a recent symposium held by Infrastructure Partnerships Australia, The Trust Company’s General Manager – Corporate Clients, Andrew Cannane, said Australia remains an attractive investment destination for investors relative to other jurisdictions.
The rising trend in Australia of privatising public assets, and the increasing sophistication of global investors and pension funds, means demand for key infrastructure assets in Australia is on the rise.
“Australia has a pipeline of attractive and profitable infrastructure assets, that will ensure investment continues to flow in this area,” Mr Cannane said.
However, he believes a lack of clarity on policy decision-making may impede on the protection of infrastructure assets, and impact on their prospects.
Discriminatory changes in law have the potential to encroach on the business profile of an asset bought, particularly on large-scale infrastructure projects such as ports.
Mr Cannane says legislative changes such as doubling the MIT withholding tax rate or tinkering with the thin capitalisation rules have the potential to weaken asset values.
“Despite strong competition for the quality of assets that come up, if investors can’t predict what the government might do in the future that has the potential to drastically change the profile of the asset,” he said.
He said regulatory uncertainty was particularly unsettling for foreign investors looking to enter or deepen their interest in the Australian infrastructure sector.
