Connect with us

Investment

The Infrastructure Stimulus – What Is Wrong With Private Investment? – Forbes

Published

on


“He Who Stops Being Better Stops Being Good,” Oliver Cromwell

Infrastructure projects – airports, water, transit, waterways, highways, tunnels – are endlessly fascinating. As project people like to say “if you’ve seen one project, you’ve seen one project.” This bespoke-ness makes scale and speed difficult. Right now as we urgently push toward three critical objectives, a vibrant economic recovery for our country, long-term personal safety for ourselves and our families, and enhancement of the U.S.’s global leadership position, we have a big challenge – we must have an investment model that is infinitely more robust than the one we have now.

It’s not just the money. JFK Terminal 1 is nothing like the Cadiz Water Conveyance Project, which in turn has nothing to do with the Baltimore to Washington MagLev project – much less with the Dallas/Houston High Speed Rail project in Texas. But these public works all have one thing in common – their ownership is creative, addressing our country’s infrastructure deficit outside of the normal public finance channels. Robust private investment in our infrastructure, adding energy and creativity to the current public model (now and for the next 3-5 years operating at a 30% deficit) will save the day, and bring new solutions, discipline and genius to the design, construction and operation of the structures we need.

Three frameworks make this point, and would create deep and wide channels for private investment to flow into our infrastructure challenges. Let’s be extremely clear, we must have increased private investment – starting at $100 billion/year and increasing to at least $200 billion within three years, since it’s a question of both financial resources and creativity. This is not the public sector’s role, since structural forces – the nature of money, the pace of technology, the poverty of government and the power of our own expectations – are driving us in a different direction. We need to give things a hard shove, to move us forward as swiftly as possible.

1. Investment in Stranded Public Assets/Land Value Boosting. The value of public sector assets in the U.S. is $33 – 40 trillion (nobody knows exactly, the country doesn’t have a balance sheet). Investing in these assets is a strategic necessity. In large part these are infrastructure assets, the average age of which is more than 60 years old, including transit stations, airports, reservoirs (there are 128 reservoirs in the U.S. with more than 1,000,000 acre feet of capacity, many owned by the Army Corps of Engineers or the Department of the Interior). Business needs to be able to freely access these assets, invest in them, and – by boosting the value of a transit station, an airport, a reservoir, and the land around it – revitalize our assets, our national wealth.

By bringing in private investment we quickly bring fresh new minds to the challenge, better utilizing assets that are now unnecessarily draining resources, transforming old and decrepit relics of the past into assets that are fresh, shiny and vibrantly useful for a new generation.

2. Investment in World-Class Operations/Performance Contracting. The biggest unseen infrastructure challenges in our country – weighing down our budgets, and depressing our creative minds – have to do with replacing the guts of our water and transit utilities with efficient motors, valves, pumps and pipes — along with sensors, AI and analytics, the brains of modern infrastructure. In transit alone the modernization deficit is more than $120 billion, and it is double that in water and wastewater.  “Health” and “mobility” are what citizens most expect from their infrastructure, and they are both constantly starved of resources. As the director of one transit system told me ‘I spend my time fixing 40 year old things that had a thirty year lifespan.’ And this disproportionally affects the disadvantaged. Our failure to invest in innovation for our water and transit utilities is a ticking time bomb. The solution channel is performance-based investment, allowing private companies to do the diagnostics, invest in the equipment and technology, and optimizes operation, so that these critical assets operate as efficiently as possible, providing safe services, at world-class levels. 

Think of one additional fact: we need a boom of new technology to make our transit systems safe – where will that come from, and why not an investment tax credit (ITC) to make that happen as broadly and quickly as possible?

3. New Model Investment/The “Razor Blade” Model. Maybe the most interesting new channel of all is the razor blade model, explained to me most recently by Sunil Suri of the Menlo Companies, delivering a high value asset for free – a home, a school, a clinic, a transit car – and then collecting revenue from consumables. Taking the transit example, a system’s rolling stock doesn’t need public investment, when private investment – at $2 million per car, for forty years – would revolutionize both the business model, and the cars? These smart assets provide revenue potential limited only by our imaginations – data, entertainment, safety, intelligence – that the public sector has little comparative advantage in providing – not to mention pay for – while the private sector can provide and obsessively optimize.

There are no U.S. rolling stock manufacturers, Chinese firms have recently won major bids in Boston, Chicago and Los Angeles. Under a different investment model who doesn’t think that an Elon Musk wouldn’t emerge to build smart, transformational, rolling stock in the U.S.?  

We talk endlessly about infrastructure investment, but we resolutely refuse to crack open projects to see which investment should be public, which private, and which might be open to competition. This is not a property issue, it is a performance issue. As Nobel Prize winning economic theorist Ronald Coase would have argued, we need to focus on that which will result in more efficient management and operation, and an overall better result, and then do that.

The daunting case of transit networks in the U.S. is the case in point. More than 10 billion transit trips are taken per year in the U.S., heavily subsidized, woefully inefficient. Who does not think that we could revitalize our country’s transit by opening up the sector to all three of the investment channels described above: let the private sector transform stations into rent-providing offices, shops and entertainment facilities – brand new living spaces; let engineering and technology companies invest in the guts of the transit authority operational systems at their risk, and for their reward – brand new experiences; and let our investors, technology companies and manufacturers bring their creative brains to the vehicles that are, after all, the only reasons for transit systems to exist – brand new businesses.

The public sector is no longer able to make these investments, and shouldn’t have to make them. Our public sector needs to be an extraordinary strategic manager of the infrastructure market place, more like a great orchestra conductor – it is not necessary to know everything, play every instrument, or buy instrument, its the music that counts.   

We have to do it, and we have to do it urgently, for economic recovery, public safety, and so that we can be better. As the eternally wise Yoda said, “Do or do not. There is no try.”

Let’s block ads! (Why?)



Source link

Continue Reading

Investment

Beginner investors should follow this timeless advice from Warren Buffett – Financial Post

Published

on


This article was created by StackCommerce. While Postmedia may collect a commission on sales through the links on this page, we are not being paid by the brands mentioned.

Taking that leap into investing your money isn’t easy. If you’re not careful, you can wind up losing money. (You probably will at some point anyway, to be fair.) Luckily for all those curious to dive into the investment world, there are plenty of experts out there who you can learn from.

For example, American investor and billionaire Warren Buffet has some timeless tips that can steer you in the right direction.

Of course, if you want to really dig in and grow your investing know-how, The Complete Finance Training & Investing Bundle is another great resource you can use to take your understanding further. Below, we’ve highlighted some timeless advice from Buffett as well as how this training bundle can help you become a better investor. Read on for details:

When you buy a stock, plan to hold onto it forever

Buying stocks isn’t like purchasing the latest fashion trend. You want to be sure you’re buying something you want 10 years down the line. “Our favourite holding period is forever,” Buffet once said. That’s because the more you buy and trade stocks, the higher your tax returns. Plus, building wealth takes time.

The course “You Won’t Get Rich in the Stock Market” can help instill this understanding. It offers knowledge on a long-term planning strategy for financial independence, as well as insight on the amount of wealth necessary for a secure future. It’s a good basics course that will further bring home why stocks are something to hold onto.

There’s no easy answer to investing

Look, investing isn’t exactly complicated, but that doesn’t mean it’s simple, either. You don’t have to be a master of economics to be able to effectively invest your money, but you can’t turn to a set of rules to answer every question related to an investment. It’s something that takes time and thought to do right. “You don’t need to be a rocket scientist,” Buffet said. “Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ.”

The bundle’s “The Complete Financial Analyst Training & Investing Course” offers 22 hours of TEDxTalk speaker and venture capitalist Chris Haroun’s expertise. Here, you can learn about risk management and how to value companies so you make informed decisions when buying stocks.

Be sensible

That means don’t take too many risks, make emotional decisions, or time the market. Low-cost index funds are a sensible choice for a beginner investor. Buffet is big on these! They don’t carry the fees that other investment funds do. It’s not only a safe strategy; it’s one that works. “Investing 102: Stock Markets & Index Funds – Learn to Invest” teaches you how to build a diversified portfolio and a key rule: Never invest what you’re not willing to lose.

Understand price versus value

Stock prices aren’t always the best marker to determine the value of a company. For instance, stock prices may drop during financial crises—but that doesn’t mean those companies aren’t worth investing in. After all, we’re thinking long-term here, right? These are often the best moments to buy quality stock. It’s cheaper. “Price is what you pay,” Buffet said. “Value is what you get.”

“Investing 102: Stock Markets & Index Funds – Learn to Invest” is a great course to really dig into the difference between value and price. That’s why The Complete Finance Training & Investing Bundle is a worthy investment for only $34.99 USD today. The course can be your first step toward securing financial freedom.

Prices subject to change.

Let’s block ads! (Why?)



Source link

Continue Reading

Investment

Africa’s Biggest Investment Takes Shape Under Islamist Threat – Yahoo Canada Finance

Published

on


(Bloomberg) — Dozens of soldiers clutching AK-47s and grenade launchers watch over roaring bulldozers on the white sand beach that meets a tropical turquoise sea. They’re guarding Africa’s biggest investment: a $23 billion project to export Mozambique’s natural gas from an area increasingly besieged by an Islamist insurgency.

Companies led by Total SA will pump the gas from wells about 40 kilometers (25 miles) offshore, cool it to temperatures below minus 260 degrees Fahrenheit so that it turns to liquid, then ship it to electricity plants from France to China. The consortium is about to finalize almost $16 billion in project financing — another record for the continent.

“The work is immense,” said Ronan Bescond, the 44-year-old French chemical engineer who Total chose to lead the project after a career of nearly two decades at the company. “The first cargo of LNG must be in 2024. And we are on the right track,” he said to a handful of reporters in a prefabricated room at the site 32 kilometers south of the Rovuma River that marks the border with Tanzania.

The obstacles facing a project that’s expected to transform the impoverished southeast African nation are huge.

To achieve the target of first production for an undertaking worth billions of dollars more than Mozambique’s entire economy, developers need to move thousands of tons of equipment through territory thick with Islamic State-aligned insurgents. At one stage, a Covid-19 outbreak saw the Total site accounting for three in four of the country’s confirmed infections. All this as natural-gas prices plunged to near 25-year lows.

Militants who first pledged allegiance to IS in 2018 have carried out increasingly brazen attacks this year.

Deadly Raid

Last week, they raided Mocimboa da Praia for a third time, and occupied the town for as long as three days. It’s a crucial supply hub just 60 kilometers south of the project site and the closest port.

As many as nine workers for Total subcontractors Fenix Construction Services Lda died in the attack, Jasmine Opperman, an African analyst at Wisconsin-based Armed Conflict Location & Event Data Project, said in a Twitter post. The company didn’t answer seven calls and two emails seeking comment.

Before the gas discoveries and insurgency, the remote coastline was more famous for luxury tropical island resorts. Last month, one of the nearby hotels offered a discount price of $19,820 a night to hire out an island as a refuge from the coronavirus.

The private military company that Mozambique hired in April to provide air support to government troops in the form of helicopters fitted with machine guns has struggled to quell the violence. Lionel Dyck, the founder of Dyck Advisory Group, the firm the government employed, declined to comment when contacted by mobile phone.

IS Warning

Governments including South Africa, the U.S. and Portugal have indicated willingness to help fight the insurgency.

“The insurgency is a challenge but we’re happy that our defense and security forces have been playing their role,” Max Tonela, Mozambique’s energy and natural resources minister, told reporters during the June 19 site visit. “We all as Mozambicans must fight against this evil that comes from external attacks.”

About 1,300 people have died in the violence, with a further 220,000 displaced since the first attack three years ago, which also took place at Mocimboa da Praia.

For the second time, IS referred directly to the projects in a weekly newsletter this month. The group said that it would be “delusional” to think that the government could protect the investments, and warned other countries against getting involved.

The marginalization of young men in a region that’s predominantly Muslim and 1,900 kilometers away from the capital, Maputo, has helped lead to radicalization that’s fueled the insurgency, according to researchers including Saide Habibe at the Maputo-based Institute of Social and Economic Studies who have studied the origins of the fighters.

Total’s project will hire 14,000 people at peak construction, of which at least 5,000 will be Mozambican and many from the region, Bescond said at the briefing, wearing a surgical mask, as all visitors to the site must do to prevent another outbreak of the coronavirus.

The financial rewards are worth the cost to the government of the soldiers patrolling the vast compound and snipers on its perimeter fence — Total’s estimate is $50 billion in direct and indirect revenue over 25 years for the $15 billion economy.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="For more articles like this, please visit us at bloomberg.com” data-reactid=”31″>For more articles like this, please visit us at bloomberg.com

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Subscribe now to stay ahead with the most trusted business news source.” data-reactid=”32″>Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.

Let’s block ads! (Why?)



Source link

Continue Reading

Investment

Indonesia says trade, investment deal with Australia takes effect – TheChronicleHerald.ca

Published

on


JAKARTA (Reuters) – An Indonesia-Australia deal that eliminates most trade tariffs between the two nations and aims to open up investment, took effect on Sunday, Indonesia’s Trade Ministry said.

The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), signed last year and ratified by the Indonesia’s parliament in February, aims to boost bilateral trade that was worth $7.8 billion in 2019.

“COVID-19 has resulted in economic slowdown in nearly all countries,” Trade Minister Agus Suparmanto said in a statement. “IA-CEPA momentum can be used to maintaining Indonesian trade and improve competitiveness.”

In a signing ceremony last year, the two countries said the pact would eliminate all Australian tariffs on imports from Indonesia, while 94% of Indonesian tariffs would be gradually removed.

Australia aims to boost exports including wheat, iron ore and dairy, while Indonesia hopes to increase automotive exports, textile and electronics. The deal opens up investment, including for Australian universities in Indonesia.

The ministry said in the statement it has issued three regulations to allow for implementation of the deal.

(Reporting by Fransiska Nangoy; Editing by William Mallard)

Let’s block ads! (Why?)



Source link

Continue Reading

Trending