China pledges tax breaks for private infrastructure investors

China's top economic planner has pledged tax breaks and smoother regulations for private investors backing infrastructure projects in a bid to inject energy into the lukewarm responses to the schemes.

The announcement by the National Development Reform Commission (NDRC) on Tuesday comes as the world's NO. 2 economy looks to shore up and stabilise growth amid a slowdown caused largely by a property downturn.

Deputy Prime Minister Tharman Shanmugaratnam expressed similar intentions at a forum here on Tuesday, saying infrastructure had the potential to be developed as an asset class under the public-private participation (PPP) funding model, with the right incentives and market conditions for the institutional investor.

Singapore is devising initiatives such as standard document provisions and adequate data to make investing in such schemes more attractive to private investors.

The World Bank is also preparing a report on recommending provisions for the PPP model which would, in the long run, ease the burden on banks and free up capital.

PPP are collaborative projects between governments and private companies that are mainly funded and operated by the latter.

Beijing has been encouraging local bodies to seek private investment for infrastructure projects to cut down on long-popular methods such as off-balance sheet borrowing which absolve firms of legal claims or responsibilities.

Infrastructure investments will "not only stimulate growth, but also address weak links in the economy and lay a solid foundation for long-term development", NDRC secretary general Li Pumin said earlier.

NDRC advertised projects worth 3.5 trillion yuan (S$766 billion) including expressways and railways under the PPP model in recent months, but response has been tepid from the private sector due to scepticism over poor returns and possible lack of proper compensation to their risk concerns. The PPP model "could help improve structural reform of investment and financing, energise private investment", NDRC deputy head Zhang Yong was quoted as saying.

Seven Chinese provinces announced 287 PPP projects worth 940 billion yuan, open to private investors during Tuesday's PPP promotion event. NDRC plans to streamline approval procedures, roll out tax breaks and include other financial perks for private investors participating in the schemes.

A version of this article appeared in the print edition of The Straits Times on October 22, 2015, with the headline 'China pledges tax breaks for private infrastructure investors'. Print Edition | Subscribe