Latin America infrastructure endless possibilites

Latin America infrastructure endless possibilites

waterIn the past decades, Latin America has spent less than 3 percent per year on water infrastructure, less than enough to continues to maintain adequately their current structures. It is with no surprises they have not been able to update neither build new infrastructures.

Leaders in the regions are understanding having an adequate infrastructure could be the key to raise Latin American to become one key player in a competitive market.  With the energy low prices in forecast it could attract potential companies to invest in those countries.

It was estimated Latin America markets should invest 6.2 percent of their GDP which is a about $320 billion dollars across the region to close the gap for the most urgent needs of infrastructure demands through 2020. $160 billion should be invested towards the maintenance of existing structures. The rest should be invested on developing new infrastructures across the region.

A study from economist Calderón and Servén estimated for every 1% of GDP spent on infrastructure, the economy would grow by 2.5% in Brazil, 1.8% in Argentina, and 1.3% in Mexico beginning within three years of the initial outlay.

Governments are looking at reinventing their public-private partnership(PPP) for their legal structures including private concessions to charm foreign infrastructure investors.

By changing their laws and leaning their regulations for PPPs, the region has experience success to attract investors. Columbia has successfully attracted infrastructure investment through PPPs, the government has made significant concession to minimized mitigation for the project to starts as soon as the financial closing is guaranteed.

For future investors it could be a profitable time to invest in the region as the PPP terms could be extremely favorable. You need to be able to pass the red tape, understand the regulations that are currently in place. Governments must be open to lean and change their regulations to attract foreign investors.

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