Analysis

EC Harris global infrastructure report

GCC region the world’s most attractive place to invest in port infrastructure, finds EC Harris study

Overview

  • Overall, investors looking for a reliable return on the funds they invest in transport infrastructure projects will continue to focus on more developed economies despite the huge investment plans being proposed in many non-OECD countries
  • The GCC region was ranked the seventh most attractive place across the globe in which to invest in transport infrastructure programmes
  • The GCC region was judged to be the most attractive region overall for investment in ports – this is largely due to the important role they play in helping to supply oil to the global economy
  • Whilst huge programmes of work are also planned in both the rail and highways sectors, a lack of cross-border agreements within the GCC has emerged as a deterrent for some investor groups who remain concerned that they are still investing in individual countries rather than the region as a whole
  • Planned changes to the EU Carbon Trading Scheme, which would see airlines taxed on their carbon emissions, could offer GCC countries an opportunity to establish themselves as a strategic stop-off point for airlines flying in to Europe from long-haul destinations

Analysis

Investors looking for the greatest return on the funds they invest in port infrastructure should look no further than the GCC region.

However, in the other transport sectors the lack of cross-border agreements between each member state could see investors focus their attention elsewhere.

The ‘Investment in Transport Infrastructure’ study ranked 17 locations across the globe on the relative attractiveness of their transport sector to potential investors.

The criteria used to judge each country covered a broad range of factors typically considered by various investor groups including the political and economic stability in each market, the government incentives and policies on offer, and the private finance funding channels already in place to support inward investment.

When ranked according to the size of the planned investment programmes to help improve transport infrastructure, the GCC region was in sixth place. In the final league table, which ranked each location in terms of the overall attractiveness of their transport sector, the region was in seventh position with the on-going political instability emerging as one factor that continued to concern some potential investors.

 

GCC region best placed to attract inward private investment in port infrastructure

Whilst the region was in seventh place overall, it was judged to be the best place across the globe in which to invest in port infrastructure, finishing well ahead of other countries including China, India, Brazil and the US.

Need for greater co-operation and links between individual GCC countries

Whilst huge programmes of work are also planned in both the rail and highways sectors, a lack of cross-border agreements has emerged as a deterrent for some investor groups who remain concerned that they are still investing in individual countries rather than the region as a whole.

Proposed EU legislation could help boost GCC aviation industry

The research also revealed that planned changes to the EU Carbon Trading Scheme, which would see airlines taxed on their carbon emissions, could offer GCC countries an opportunity to establish themselves as a strategic stop-off point for airlines flying in to Europe from long-haul destinations.

By choosing to stop off before they enter the EU fly zone, airlines could minimize their carbon emissions and the subsequent charge facing them. This could significantly increase the volume of air traffic passing through the Middle East, which would in turn help to deliver substantial economic benefits to the region.

The research also indicated that across the globe, environmental pressure to reduce carbon emissions was leading to greater investment in rail and port infrastructure projects.

A clear example of this was evident in China where almost 70% of their transport budget was earmarked for investment in rail projects.

In Western Europe, the Spanish government has stated their belief that by the end of 2013, the number of people using high-speed rail will equal the number who take domestic flights.

About the Research

EC Harris looked at 17 different nations from across the globe and ranked their attractiveness based on key determining factors including political and economic stability, government incentives and policies, expected FDI growth and the ease of entering and doing business in that market. Each country was assessed across the four main transportation sectors – aviation, rail, highways and ports – and their overall ranking was then calculated based on the sum of these four figures.

 

Ranking Attractiveness of Overall Transport Sector to Investors Ranking Size of Investment Programme
1 Germany 1 India
2 US 2 China
3 France 3 Russia
4 China 4 US
5 Chile 5 Mexico
6 Canada 6 GCC
7 GCC 7 Brazil
8 Brazil 8 Germany
9 UK 9 UK
10 Iberia 10 France
11 Poland 11 Canada
12 India 12 Poland
13 Mexico 13 Chile
14 Russia 14 Iberia
15 Romania 15 Romania
16 Argentina 16 Argentina
17 Venezuela 17 Venezuela
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