Infrastructure Opportunities in Latin America
There are countless opportunities for investment in infrastructure in Latin America. The Latin Trade’s Infrastructure Index, measuring conditions in transport, technology, electricity, and water, rose by 0.66% in 2015, indicating that the region is already seeing progress in infrastructure development. Over the next decade, the region has projected a pipeline of $1.5 trillion in infrastructure products in order to close the gap. These projects vary from transportation, logistics, water, urban development, and energy. LAC is also focused on improving sustainability and protecting against climate change, factors that will require further innovation and funding to make up for the already deteriorating infrastructure system. Now that infrastructure investment is on the rise as countries try to mend the gap and lay a foundation for future growth, profitable investment opportunities exist in practically every country in the region.
Chile is one of the strongest public-private partnership markets in LAC, making it an attractive and lucrative venue for investors, particularly in the energy and utilities sector. The Global Competitiveness Index 2016-2017 ranks Chile as the top performing country in LAC. Chile is also in the top five nations leading the world in private investment for infrastructure, focusing on renewable energy projects. One of the most anticipated projects is the construction of a $15 billion water pipeline, rated as the top infrastructure project in LAC according to LA Infrastructure’s “Strategic Top 100 2014 Report.” Chile has three infrastructure projects listed in the Strategic Top 100 2015 Report, including two highways and one airport. Chile’s robust mining sector will also require investment in new and sustainable infrastructure in order to keep up with their production levels. Chile’s impressive project pipeline and strong government support is expected to increase public infrastructure investment from 2.5% to 3.5% of GDP and lead to a boost in economic growth.
Despite concerns over U.S.-Mexican relations, investment in Mexico unlikely to stop. New investment in the country fell by nearly a third last year, opening significant opportunities in this sector. Mexico has successfully created conditions in which it is easier to open a business, register property, pay taxes, and obtain credit. The World Bank’s Ease of Doing Business Ranking puts Mexico above its Latin American peers and even as more desirable than China and India. One of the most significant projects is the expansion of Mexico City’s airport, estimated to cost about $4 billion. The construction of a Mexico City-Toluca passenger train is also highly anticipated and projected to save the country about $51 million annually on road and public transportation maintenance. Mexico also plans to hold onto its role as the second most visited tourist destination in the Americas by revamping beaches and other tourist attractions in the nation.
President Kuczynski has made revitalizing Peruvian infrastructure a cornerstone of his administration’s platform. His ambitious social program seeks to improve the country’s business environment, boost foreign investment and increase public spending with a goal of 5% GDP growth by 2018. Much of his prioritized investment projects will go towards mining and energy as well as water and sanitation facilities. Peru’s investment promotion agency, ProInversion, is going to be decentralized to increase efficiency. One of the most anticipated project is the development of Lima’s second subway line that would have 35 stations and transport about 660,000 passengers a day. The metro line is expected to be completed by 2019 and several international companies have already expressed interest in taking the reins on additional metro line projects in Arequipa and Trujillo.
Despite steady economic growth, Colombia has lagged behind in infrastructure development, ranking 113th out of 140 countries in the quality of its infrastructure according to the Global Competitiveness Report 2016-2017. However, the country has taken measures to improve its competitiveness ranking by creating a National System of Competitiveness that coordinates the government and the private sector on issues of economic development. President Santos has also taken serious steps to revamp the nation’s infrastructure, putting into place a $70 billion investment plan until 2035. The National Infrastructure Agency (ANI) has worked hard to streamline investment processes and assure investors that upcoming projects are secure and will keep to their schedules. Minister Abello Vives has specifically encouraged U.S. participation, stating, “We invite U.S. investors to come and see for themselves the opportunities for investment and progress we offer.”