The Pacific Islands Investment Forum says economic conditions caused by the coronavirus pandemic are an opportunity for the region’s superannuation, pension and provident funds to accelerate plans to pool their resources and invest in commercially-viable infrastructure across the Pacific.
Pacific Islands Investment Forum (PIIF) members—18 superannuation, pension and provident funds with combined funds of approximately NZ$ 75 billion (US$50 billion) —are keen to look at opportunities where they can work together to support national development and grow member funds.
CEO of the Cook Islands National Superannuation Fund and the PIIF Secretariat, Damien Beddoes says they have offered governments the option to exchange cash for equity—that is, to buy shares in government entities. Beddoes says this provides the funds with an opportunity to diversify beyond currently-volatile public markets (publicly-listed stocks) and gives governments “an initial large sum payment into their books, into their finances.”
“They can then choose to do with that cash what they want,” Beddoes says. “They can reinvest it into other areas of infrastructure that may be social, that may provide options to use it for budgetary support, however governments choose to use that money is entirely up to them. “
Beddoes says it would give PIIF members consistent returns for their contributors and the ability to contribute to the responsible management of national infrastructure projects, as well as “a chance to build the infrastructure, to reinvest, to grow it, to make it more resilient, to improve its outputs, to take it in new directions, by investing in that infrastructure we believe we can improve it for our people and assist in the long term development within our countries.”
The PIIF favours investments in monopoly utilities, such as electricity providers, and aims to take a significant stake, allowing it to bring expertise, transparency and independent board members with a long-term commitment.
As Beddoes says: "We're not just there for the initial 'here's the cash, thank you for the 50% ownership'." Pacific Islands governments are largely looking to donor partners and multilateral financial institutions for grants, soft loans and debt restructuring to keep their economies afloat and fund economic stimulus measures. Beddoes says, “the Pacific region actually has the money to solve its issues”, although there are a number of barriers to investment including double taxation, dividends, stamp duties, capital gains taxes and other fees and charges. The PIIF has urged Pacific Islands Forum Economic Ministers to look at easing these barriers, or to provide an exemption to PIIF members to allow free movement of investment funds around the region.
Forum Economic Ministers are due to meet again next month, and Beddoes hopes this matter will be on the agenda.
He says the PIIF has approximately NZ$3.5 billion (US$2.32 billion) available for investment across various sectors, but that this figure is growing. The Cook Islands National Superannuation Fund for example has grown by $80 million due to compound interest in the past four years.