Geneva: Fast dispute resolution mechanisms along with robust anti-corruption policies will help mitigate risks in infrastructure projects, where private investors worry about political and regulatory risks, says a report.
In a report released on Wednesday WEF said the world's huge infrastructure demand cannot be met by the public sector alone while "private investors and operators are needed, but they worry about political and regulatory risk".
The World Economic Forum, which has prepared the report in collaboration with the Boston Consulting Group, said that political and regulatory risk is one of the major constraints on infrastructure investment decisions.
To mitigate such risks, private as well as public sector entities can look at various ways.
Among others, the report said that investors and operators could seek political-risk insurance while companies could deter government intervention by carefully crafting ownership and commercial structures.
"On the public-sector side, the national government could provide investors with protection by offering constitutional guarantees -? for instance, by ensuring fair and fast dispute resolution mechanisms, and by enforcing robust anti-corruption policies," it said.
The report titled 'Mitigation of Political & Regulatory Risk in Infrastructure Projects" said that today political and regulatory risk takes many forms such community protests, tightened regulations and corruption.
Such risks are relevant in both developing and industrialised countries, it said.
"It takes different forms over an infrastructure project's life cycle, from delayed construction permits and community protests to breach of contract, tightened regulations and the non-renewal of licences.
"In addition, some broader risks apply throughout the life cycle -- changes to taxation laws, for instance, and endemic corruption," the report said.
Pedro Rodrigues de Almeida, Director and Head of Infrastructure and Urban Development Industries at WEF, said that unless there is a common language to categorise the specific types of political and regulatory risks, it would be impossible to raise awareness of the opportunity to invest in the infrastructure sector.
