The 2017 Emerging Trends in Infrastructure report from KPMG International spotlights 10 global trends, many of which underscore a drive for more responsible leadership, both from the public and private sectors, to improve approaches to funding, developing and operating infrastructure.
“Political agendas and social expectations are changing. Global, regional and national institutions are weakening. Power is shifting and technology is disrupting everything.” said James Stewart, KPMG’s Global Infrastructure Chairman and a partner with KPMG in the UK. “And infrastructure is at the center of this evolution.”
“The development and interaction of many of these trends could very well transform the way governments, business and users interact with and invest in infrastructure.” explained Stewart. “They may also help decision-makers and investors better understand the changes flowing through the sector and catalyze leadership on a global scale.”
Lori Rockhead, Senior Manager, KPMG Advisory noted, “Global trends have far-reaching implications for island jurisdictions”. Certainly, technological innovation, alternative energy developments, and a heightened focus on social and environmental impacts are among the trends island governments will want to pay close attention.
Key takeaways for the island regions include:
Technology, transportation and energy innovation
- The confluence between the technology, transportation and energy is creating an opportunity for island jurisdictions to capture efficiencies that were previously not possible due to scale. Emerging trends have far reaching implications for island nations. For instance, the falling cost of solar power generation and improved storage are good news for islands that have long struggled with high energy costs being a barrier to inward investment and competitiveness.
- Recent political changes will impact infrastructure markets globally and regionally.
- The focus placed on infrastructure by recent political changes in major infrastructure markets, such as the US, UK and Brazil, is likely to increase infrastructure spend in those jurisdictions. The short to medium term result is may lead to greater pressure on limited infrastructure expertise and infrastructure investment. Island jurisdictions may find it increasingly challenging to attract the specialist expertise needed to be an effective counter-party at the same time that governments will be at a disadvantage in terms of competing for infrastructure investment. A counter-balance is increased protectionism by large nations may free up global talent.
- Investors will rebalance their focus on social and environmental impacts, not just financial returns.
- Increasing emphasis on social and environmental impacts is good news for smaller jurisdictions as infrastructure investors are driven by their stakeholders to deliver infrastructure with greater mindfulness of the social and environmental consequences. This trend is likely to lead raise performance standards from which island jurisdictions can benefit.
- Greater willingness by Chinese State Owned Enterprises to enter competitive tenders.
- For the Caribbean island region, the Chinese Government’s encouragement of their State Owned Enterprises [SOEs] to compete in open market tenders, may help island governments to harness competitive pressure to improve deal terms without alienating SOEs who have long standing ties with island jurisdictions.
“As in past years, we are excited to release 2017 Emerging Trends in Infrastructure as our clients are keen to understand international trends and to capture opportunities which will help them to deliver infrastructure in island jurisdictions, whether they are in the public or private sector”, said Rockhead.
“The dynamic changes in the infrastructure market presents island governments will a chance to learn from other jurisdictions as well as lead in respect to certain aspects of infrastructure development.”
The full Foresight Emerging Trends 2017 report follows below [PDF here]: