We need to re-build a sense of role and purpose in our public sector, says Norman F Anderson, President & CEO, CG/LA Infrastructure Inc.
Do you think the global economy revs up its engine for infrastructure growth?
One of the smartest ways for policymakers to generate growth – and growth that maximizes oppÂortunities for people – is through infrastructure investment. So, yes, I think that infrastructure invesÂtment could be, and should be, a powerful growth engine. But there are a number of problems. First, the infrastructure funding model is broken – and this makes everything take more time, is more costly. Second, most countries don't have an overall vision for their infraÂstructure initiative – and thus projects become political, when they are really national security imperatives, designing the country's future comÂpetitiveness, oppÂortunity matrix and next generation of creative growth.
How do you see sustainability in global infrastructure growth?
This is a growing areas, and critically important to the future of infrastructure. You have to be concerned not just with internal design of a projects, and the materials selected for use (its carbon footprint) but the impact that the project has on its overall environment. And you have to think hard about that impact over the lifetime of the project. We work closely with the Institute for Sustainable Infrastructure on these issues. And recently we were selected to manage the annual Latin American Sustainability awards. It would be great to do something like that for India.
According to you which are the major issues hampering infrastructure growth across the world. Is there will be any way out in near term?
We believe that the model is broken, there is no longer a strong paradigm that facilitates project develÂopment. In addition, and more recently, the collapse of the European banks has created a giant hole in terms of available expertise on projects.
We believe that there is an out in the neat term, but it is a gradual out. Everyone seems to think that the 'solution' is greater private sector involvement in infrÂastructure, but in fact it takes two to Tango.
We need to re-build a sense of role and purpose in our public sector – after all, infrastructure is a public good, not a private good. So one question is: how do we create a competent, honest, efficient public sector, that can oversee project investments. Singapore's solution was to remunerate the public sector extraordinarily. Other countries only take the best and the brightest into the public sector, and these people also teach in the best universities…
We also believe that vision plays a critical role in infrastructure project development. That is, what do you want your country to be in 10 years, and how does that country plug into the world economy?
Thinking hard about those issues will allow you to select priority projects. But what is the vision? What is most important? Opportunities for all? Rising per capita income? A light in every home? International trade success? You have to choose, and this is the result of a national conversation.
Please mention 4 segments of infrastructure which needs immediate attention?
This depends on the vision, of course. But think about what drives economic growth. We tend to believe that electricity is fundamental, without electricity there really is no possibility for growth. We also believe that water and wastewater are fundamental. In this sector it is very very important to take two factors into consiÂderation, factors that are almost considered when thinking in narrow financial terms.
These factors are, first, the long-term benefits of clean water and wastewater – that is, you have not only an improvement in life, but an improvement in land values (ie, a larger tax base); and, second, there are long-term productivity gains, ranging from healthier employees to the avoided costs of health care. We believe that water and wastewater must be a national priority, period.
In terms of economic competitiveness, we strongly believe that a focus on logistics is critical to… competitiveness, opportunity creation and increased incomes across the board. A focus on logistics systems allows you to prioritise the biggest bang for your investment, and also creates ample space for highly productive and measurable private sector investment.
A fourth area that is critical is an old-fashioned one, freight rail. Aside from waterways, this is absolutely the most efficient way to move goods and services around a country, and to make sure that producers get paid well for their products, particularly agricultural produces. Rail has made amazing strides in efficiency over the last decade. In the last 30 years, for example, fuel productivity in rail has increased by 100 per cent. During the crisis the US rail industry, privately owned, increased its annual investment from $8 billion per year to $23 billion per year. There is an economic logic to rail, like there is for logistics systems; for electricity and water/wastewater there is a fundamental social logic.
Which are the countries you find most aggressive on their infrastructure growth and why? Where will you put India compared to other developing nations?
I think that India has fallen behind. Of the large countries, Brazil is putting a tremendous emphasis on infrastructure development, but fell short of its investment goals by something like 40 per cent last year. Indonesia, Mexico, Colombia, the Philippines, all are struggling. I think that the best way to answer your question is to re-emphasize that countries need an overall vision, and that vision has to make sense to the majority of the population – they have to buy into it – this vision will have a visceral connection to compeÂtitiveness, to increasing opportunities and per capita income for all. Once this is in place, then priority projects are more easily identified and supported, they become – in effect – national security priorities. And of course you need LEADERSHIP.
How 6th Global Strategic Infrastructure Leadership Forum will help the sector? Please elaborate.
The 6th Global Leadership Forum is incredibly important. There are five ways in which the Global Forum helps the sector:
- We recognise the best projects in the world, those that are critical to a country's competitiveness -these are our Strategic 100
- We bring all practitioners together around specific projects, across 10 infrastructure sectors – so engineers, financiers, technology executives and public policy executives get to know each other, building expert global communities
- We also help people think of infrastructure as strategic, an idea that the World Economic Forum has adopted – the projects you build determine your choices for the future, including the next generation of projects after that, and the kind of industries that the private sector will create…
- Its also fantastic, wonderful, to recognize key project decision-makers as global leaders –
- Lastly, we get a lot done – people invest in projects, form partnerships and develop whole new businesses. CG/LA itself is building a global social business network for the infrastructure community, an idea that emerged from the Global Forum experience, and that will provide public sector decision-makers with 'just in time' expertise, and private sector experts with enormous opportunities.
This year we will have nearly $240 billion in projects presented at the Global Forum, creating more than 4 million direct and indirect jobs around the world.
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