Survey: governments failing to drive private investment

The perception that the global econonomic downturn has led governments to focus effectively on infrastructure investment as a way of driving growth is challenged by a new survey from KPMG. Less than half of those surveyed think government policies in this area will have a positive impact.

A new survey from KPMG, which polled executives from 161 engineering and construction firms globally, found that just 47 percent of respondents thought their government’s policies were having a positive impact on private sector investment in infrastructure.

KPMG’s survey, “The great global infrastructure opportunity”, noted that with “austerity policies in many countries constraining the scope for public sector spending, it is vital to create an environment that encourages private sector investment”.

But the survey noted that scepticism of government policy was “fairly consistent across all regions”. The percentage citing a positive impact was lowest in the Americas (41 percent), compared with 47 percent in Europe and the Middle East and 49 percent in Asia Pacific.    

It noted that respondents from bigger organisations were the least optimistic, which the survey said was “perhaps an indication that governments are focusing on smaller- to medium-sized enterprises and assuming larger businesses need less help”.

Asked for the most significant barriers to infrastructure investment, a whopping 80 percent cited “lack of leadership by government”. But the onus falls almost as much on the private sector, according to those polled, with 67 percent citing “lack of private sector initiative”. Other factors to get multiple mentions were “lack of investment by government” and “the planning system”.

When asked for their views of the most attractive sectors for public-private partnerships (PPPs), respondents in the Americas showed a strong preference for transport projects, with 56 percent saying the sector offered the most potential, compared with just 19 percent voting for energy. By contrast, 40 percent of those in Europe and the Middle East opted for energy and 30 percent for transport.

Unsurprisingly, given the ongoing euro crisis, 82 percent of those in Europe and the Middle East cited “economic uncertainty” as the greatest concern over business conditions within the region. This compares with 70 percent in the Americas and 51 percent in Asia Pacific (where “skill shortage” was close behind on 45 percent).

When it comes to deal flow, however, a much brighter picture is painted. For 2011, 56 percent of respondents globally said they had experienced an increase in backlog and only 18 percent a decline. The number citing an increase was at its highest in Asia Pacific (64 percent). Furthermore, only 11 percent globally predict a decline in 2012, with 49 percent expected an increase.