Worldwide inventory of infrastructure spending plans
Foreign Affairs and International Trade Canada surveys world government reactions to crisis.
Countries included in the inventory are ones which, as of mid-January, have announced or are expected to announce significant new spending related to infrastructure within the year. The information contained here has been gathered from our trade commissioner service abroad and other various sources such as official announcements, economic estimates and fiscal plans.
Countries not included in this inventory may still present infrastructure opportunities for Canadian firms and the Canadian trade commissioner service can provide information on any markets not included in this inventory.
• US: A two-year fiscal stimulus package of US$825 billion, and possibly as much as one trillion, is being developed by President Obama and Congress. The relative importance of the elements within the stimulus package is expected to change as it goes through the legislative process before an expected approval by Congress in the first half of February 2009.
While tax cuts for the middle class and transfers to states for social programs will be an important part of the package, it will also include substantial infrastructure spending.
The draft American Recovery and Reinvestment Act released on 15 January 2009 includes approximately US$180 billion for infrastructure over two years. Spending is focused on areas that will enhance US competitiveness in the future. Beyond roads and bridges (US$30 billion), the Act proposes investments in rail and transit (US$10 billion), health information technology (US$20 billion) and broadband for underserved areas (US$6 billion). It also includes projects aimed at 'greening' America such as smart electrical grids (US$11 billion) and energy efficiency of public buildings at the federal, state and local level as well as low-income family homes (US$53 billion).
Other investment areas include the construction, repair and upgrade of schools and hospitals (US$23 billion) and environmental projects such as flood control, sewage and water treatment systems (US$19 billion). The focus will be on projects that can be initiated within three to six months. Physical infrastructure funds are expected to be allocated by formula to states that will then be responsible to select the projects that will receive funding.
Obstacles such as Buy America (for transport projects), state procurement restrictions and possible Buy American provisions attached to the stimulus bill itself, especially related to steel products, could be limiting factors but there will still be significant opportunities for Canadian exporters, especially working as suppliers or sub-contractors to US companies.
Key sectors to watch for Canadian companies include green building products (especially those related to energy efficiency), transit, smart grid, broadband and health information technology.
• EU: The European Investment Bank will provide €6 billion (US$8 billion) worth of additional lending for energy, climate change and infrastructure, but most new infrastructure spending in the EU will be at the member state level. Under EU regulations, bidding for public procurement projects at any level of government must be open to all suppliers within the EU, in other words, Canadian firms with operations in the EU would qualify.
• France unveiled the details of a fiscal package worth €25.9 billion (US$34 billion, around 1.5 percent of GDP) in early December. The measures include bringing forward planned investment estimated at €10.5 billion: €4 billion of this amount will go to infrastructure (including expenditures on roads, highways, and hospitals), research and universities, defence and security. Another €4 billion will come from public sector enterprises for modernizing railways, energy and postal services, while the remaining €2.5 billion will go to local or municipal governments for various infrastructure-related projects.
• Germany: On November 7, Parliament passed measures to implement a 15-point economic stimulus package. The package adds €12 billion (US$16 billion) over two years (2009-2010) in fiscal stimulus to earlier measures worth €20 billion that were focussed on family and social policy tax relief. On January 12 the government passed a further package worth €50 billion (US$65 billion), with €17 billion to be devoted to public infrastructure projects such as roads, schools and hospitals. The following measures from November's €12 billion stimulus package are infrastructure related: 1) topping up the resources for an energy efficiency program by €3 billion for the period from 2009 to 2011; 2) raising state development bank KfW's infrastructure programs for local authorities by €3 billion; 3) establishing an innovation and investment program for transport with €1 billion in both 2009 and 2010; 4) €200 million for specific regional projects.
• UK: The government announced a £20 billion (US$30 billion) fiscal stimulus package in its pre-budget report in November (1.3 percent of GDP). While the centrepiece of this package is a temporary cut in the VAT, a portion of this package is to be spent on infrastructure. This includes £3 billion (US$4.5 billion) of capital spending to be brought forward from 2010/11,with multiple initiatives mainly aimed at transportation, schools, social housing, and environmental/energy efficiency initiatives. More recently, the government has suggested that spending will also be accelerating investments in network infrastructure and digital technology.
Canadian companies may be well placed to benefit from many of these initiatives, particularly in the transport sector and, potentially, in telecommunications.
• Spain: On November 27 Spanish PM Zapatero outlined the €11 billion (US$14 billion) "Investment Against the Crisis Plan" with eight key components of which the following four are infrastructure-related: 1) €8 billion for municipal public investment in urgent public works (effectively doubling the current budget for municipal infrastructure projects); 2) €600 million for "environmentally friendly" projects in energy conservation and municipal water management; 3) €400 million for improvements to police and military installations; 4) €30 million for the tourism sector.
• Italy: The government has announced a three-year fiscal stimulus package valued at €80 billion (US$114 billion, representing 5 percent of GDP). Infrastructure spending represents the largest portion of this package at €16.6 billion (US$23.7 billion), for immediate release. Northern Italy will receive €11.8 billion while the South will get some €4.8 billion of which €1.3 billion will be allocated to building a suspension bridge linking the island of Sicily to the mainland. Other infrastructure investments include: the national rail network (first phase of the high speed rail link Milan-Genoa); public transport (metros in Sicily and the third metro line in Rome); the MOSE of Venice (flood barriers); national highways; broad-band internet; school building modernisation; and renewable energies.
• Sweden unveiled an SEK8.3 billion (US$1 billion) economic stimulus package on December 5. The package includes a SEK1 billion (US$125 million) increase in spending on infrastructure for the period 2009-2011, in addition to the SEK10 billion (US$1.25 billion) already committed for 2009-2010. The funds are for the operation and maintenance of roads and railways.
• Switzerland: The government approved a stimulus package worth CHF900 million (US$750 million) in November. Infrastructure-related measures include flood protection installations and other protections from natural disasters, and energy efficiency programs (both public and private facilities). A second stimulus package worth CHF650 million (US$ 540 million) may be approved in March 2009. This package would be primarily directed towards job creation measures, as well as highway restoration and rolling stock for the Swiss Federal Railways.
• Romania: The government program for 2009-2012 foresees the construction of motorways and the rehabilitation of national roads estimated at a cost of €22.0 billion (US$30 billion).
• China: On November 9, Premier Wen Jiabao announced a wide ranging fiscal stimulus package of CNY4 trillion (US$600 billion) or 13.4 percent of estimated GDP in 2008. A large portion of this package will be in the form of infrastructure spending, estimated in the range of US$270 billion to US$470 billion.
There will be significant opportunities for Canadian exporters and service providers. Key sectors of opportunity will include: railways (safety technologies and management, and transport management and information systems); airports (airport management and training, air traffic control equipment and training, air services); electrical/nuclear power (super high voltage transmission technology, safety and technology training, power plant efficiency modeling systems, technologies for remote electrical power installations); and oil and gas (safety monitoring technology, modeling systems).
Recently approved expenditures include CNY167 billion to be spent on infrastructure in the Wenchuan Earthquake affected area (e.g. expressways, trunk roads, railway, civil aviation, telecom, power transmission, water resources), CNY93 billion to be spent on the West-to-East Natural Gas Transmission Project (Phase 2), and CNY95.5 billion on expanding the Yangjiang Nuclear Plant in Guangdong and the Qinshan Nuclear Plant in Zhejiang. Also, CNY17.4 billion will be spent on water conservancy projects and on new airports and expansion of existing airports.
• Taiwan: On January 2, Premier Liu announced a stimulus package to invest an additional TWD500 billion (US$16.6 billion) in public infrastructure over the next four years. The additional infrastructure funding will be directed in part to the "i-Taiwan" 12 Infrastructure Projects. The 12 projects (announced before the crisis and valued at US$133 billion over eight years) fall under four categories: transportation network, industrial development, urban and rural development, and environmental protection.
In January, Taiwan announced its decision to accede to the WTO Government Procurement Agreement, which will help to provide a level playing field for Canadian companies interested in the projects.
• Hong Kong and Macau SARs: While no new infrastructure spending has been announced, projects are being accelerated to create jobs. The Hong Kong government confirmed in its February budget 10 major infrastructure projects, including: rail projects in Hong Kong and with the neighbouring mainland Chinese province (subway lines, express rail links, links between regional airports), a HK-Macau-Mainland bridge (some 30 km long), the construction of a massive cultural district for HK, the transformation of HK's former airport into a large cruise ships terminal. In Macau the MSAR government is planning to build a 27 km light rail transit system. The proposed system would cost MOP4.2 billion (roughly US$500 million).
• Singapore: In response to the economic slowdown, the government is considering restarting infrastructure projects that were frozen in the summer. While more details will be available soon, it is expected that the value of unfrozen projects would be in to the range of US$3.2 billion.
• South Korea: A fiscal stimulus package of US$11 billion was announced in early November. Of this package, US$8.7 billion is new spending (the rest is tax cuts). Ninety percent of the new spending will be channelled to provincial and local governments for investment in infrastructure and other construction.
Two-thirds of the funds are to be disbursed in the first half of 2009. The projects will include new recreational developments along the country's four major rivers, investment in the shipping sector and ports, and improvements to the land transportation system, including expansion of a high-speed rail service and significant investment in roads and motorways.
In the area of green energy, US$2.3 billion has been allocated over four years for developing green technologies, including projects related to solar power generation, wind power, hydrogen fuel cells, Integrated Gasification Combined Cycle technologies and carbon capture and storage.
• Japan: Since August, the government has announced a series of increasingly ambitious fiscal stimulus packages. The cumulative size of the various packages is now approaching a substantial ¥12 trillion (about $130 billion), equivalent to about 2.3 percent of GDP.
Although these packages do not include explicit infrastructure support measures, tax incentives aimed at energy efficiency retrofits and better energy conservation will indirectly boost spending on infrastructure and thus present an opportunity for Canadian firms (especially in wood/lumber building products and energy-efficient products). However, the budget put forward in December does contain modest new infrastructure measures.
These include reinforcement of school buildings against earthquakes (¥78 billion) and protection against flooding (¥38 billion). Despite this modest spending, the Budget continues the government's longer-term strategy, in place since 2001/02, of decreasing budgets for public works. The draft budget proposes a decrease in total public works expenditures of 5.2 percent in the coming fiscal year.
• Kazakhstan: The government approved a US$10 billion rescue package for the economy on November 25. While a large portion will go towards stability of the financial system and real-estate market, US$1 billion is planned for "implementing breakthrough innovation, infrastructure and industrial projects".
• India: The government has released two fiscal packages so far (December 7 and January 3) with an infrastructure focus. The announced funding is expected to support a Public-Private-Partnership (PPP) program of US$20 billion in the highway sector and port and power projects. In the December 7 announcement, India Infrastructure Finance Company Limited (a government-owned special-purpose enterprise) was authorized to raise US$2.1 billion by March 2009 to support financing of around 60 highway projects through PPP. On January 3, IIFCL was authorized to raise an additional US$6.25 billion in tax-free bonds for refinancing bank loans to infrastructure projects. Non-bank finance companies dedicated to infrastructure financing have also been allowed to raise funds from multilateral or regional institutions and are to be provided with additional liquidity of up to US$5.15 billion.
• Malaysia: The government announced a US$2 billion stimulus package on November 4. Of the amount, US$600 million has been allocated to low-and medium-cost housing; US$140 million to upgrade, repair and maintain police stations and army camps; and US$170 million for public and basic infrastructure project maintenance.
• Indonesia: The government will spend IDR100 trillion (US$9.2 billion) on national infrastructure projects in 2009 and the tendering process has already begun. Included in the proposed spending are allocations for communication and transport infrastructure. Specific expenditures include IDR10.3 trillion to develop rural infrastructure and IDR8 trillion for the construction and development of ports and shipping.
• Vietnam: The central government has announced a US$6 billion economic stimulus package, but specific details have yet to be outlined, as the plan is awaiting final approval. The Ministry of Planning and Investment has hinted that infrastructure projects will receive up to 50 percent of the stimulus package (under-developed infrastructure is one of the key challenges to Vietnam's continued economic growth).
• Cambodia: The government has approved US$2.49 billion in spending for the period 2009-2011 on infrastructure projects, which include roads, bridges, schools, irrigation systems and hydroelectric dams, funded by the government and international donors.
• Australia: On December 12 the government announced an A$4.7 billion (US$3.1 billion) infrastructure program. The program will be financed with A$2.5 billion of new money and A$2.2 billion of previous commitments. The package covers three years but is frontloaded with most of the spending happening in the next two years. It includes A$1.2 billion to be spent on railway construction by the Australian Rail Track Corporation — the largest rail spending package in the nation's history. The package will also bring forward A$711 million in road funding and another A$1.6 billion will fund construction projects on the nation's university and TAFE college campuses. A second larger package is expected early in 2009.
Middle East and Africa
• Israel: In November, the Finance Ministry announced its economic stimulus package, worth ILS21.7 billion (US$5.5 billion). Of this amount ILS10 billion (US$2.5 billion) is designated for infrastructure projects such as roads, railways, water and sewage, including: northern road 79 (ILS1.2 billion), mass transit for Haifa and Krayot (ILS300 million), railways from Rehovot to the south (ILS300 million), sewage infrastructure (ILS40 million) and water projects (ILS150 million).
• Egypt: The government announced in mid-December a EGP15 billion (US$2.7 billion) stimulus package including public investments in infrastructure projects all over the country, especially in Upper Egypt. One third of the infrastructure funds will be directed at new water and sewage projects.
• Algeria: A new infrastructure and public works five year plan (2009-2013) is to be announced before April. This plan is expected to be around US$150 billion, and will mainly be spent on infrastructure projects (roads, ports, public utilities), as well as the construction, transportation and water works sectors.
• South Africa: The 2008 budget committed the government to spend a cumulative US$60 billion over the next three years on infrastructure. A large portion of this spending will go to power generation, with the revamping of power-stations and two new coal fired power plants. US$8 billion will go to transportation, including the improvement of rail infrastructure, expanding harbors and ports and the construction of a liquid fuels pipeline.
• Mexico: Planned spending on the National Infrastructure Development Program will total MXN2.5 trillion (about US$200 billion) over the next five years and includes spending for roads (MXN287 billion), railroads (MXN49 billion), airports (MXN59 billion), hydro-agriculture and flood control (MXN48 billion), ports (MXN71 billion), drinkable water and drainage (MXN154 billion), telecommunications (MXN283 billion), refining, gas and petrochemical (MXN379 billion), electricity (MXN380 billion) and hydrocarbons production (MXN822 billion).
• Argentina: On December 15, the Argentine Ministry of Public Works launched a ARS71 billion (US$20.7 billion) public works plan. The plan will focus on two broad areas: 60 percent of resources will be allocated to road infrastructure projects and social improvements, while the remaining 40 percent will be dedicated to improving and expanding the power, natural gas and public transport sectors.
• Brazil: While no new infrastructure spending has been announced under Brazil's fiscal stimulus package, the government has committed itself to maintaining funding levels for the "Program of growth acceleration" (PAC) which came into effect over the past two years. PAC consists of BRL503.9 billion (US$212.6 billion) for projects focused in three areas: 1) logistics (railways, roads, ports, airports and seaways); 2) energy (electric generation and grids, oil and gas, renewable energies); and, 3) social infrastructure (sanitation, housing, urban transportation, access to electricity and potable water).
• Chile: The Chilean government announced on January 5 an additional investment of US$4 billion in 2009 as part of an anti-crisis package. Of this amount, the government will invest US$700 million in infrastructure projects in addition to the funds already included in the budget. The new projects include improving the country's road network, schools and stadiums, as well as new hospitals construction. Other hydraulic (irrigation systems, water canals and reservoirs), port, airport and general architectural initiatives will also be considered.
• Peru: On December 8 a package was announced that included increased spending on social works and infrastructure of US$3.3 billion. The infrastructure related portion of the package will include spending on ports, highways, airports, agro-industrial projects, energy transmission and production, renewable energies as well as a variety of projects in health, sanitation, education and construction.
Links and sources
Worldwide inventory of infrastructure spending plans, by Foreign Affairs and International Trade Canada, January 21 2009
Posted: January 24, 2009
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