The Trust Company’s general manager - corporate clients, Andrew Cannane, said Australia faces a number of barriers to foreign infrastructure investment, in particular the lack of clarity on policy decision-making.
He said that regulatory uncertainly was “particularly unsettling” for foreign investors looking to enter or deepen their involvements in the sector.
“Despite strong competition for the quality of assets that come up, if investors can’t predict what the government might do in the future, that has the potential to drastically change the profile of the asset,” he said.
As an example, Mr Cannane said that legislative changes such as doubling the Managed Investment Trust withholding tax rate or thin capitalisation rules have the potential to weaken asset values.
This is despite Australia having the potential to be an attractive investment destination for investors relative to other areas.
Mr Cannane said renewed interest in privatising public assets, as well as in the increasing sophistication of global investors and pension funds, means key infrastructure assets in Australia are growing in popularity.
“Australia has a pipeline of attractive and profitable infrastructure assets that will ensure investment continues to flow in this area,” Mr Cannane said.
However, Mr Cannane said greater certainty is key to long-term investment in infrastructure.
