Companies should support state infrastructure: U.N.

GENEVA (Reuters) - The private sector should do more to support governments in developing countries, many of which cannot meet huge needs for roads, ports and electricity on their own, a United Nations agency said on Wednesday.

Impoverished nations are often ill-equipped to attract or maximize investments from multi-national or transnational corporations (TNCs), the U.N. Conference on Trade and Development (UNCTAD) said in a report.

"Investment in infrastructure is part of the unfinished agenda of development: this is apparent in the daily power outages that stifle economic growth in Africa and in the lack of access to drinking water for millions in Africa and Asia," said UNCTAD Secretary-General Supachai Panitchpakdi.

"TNC investment in infrastructure could therefore help meet some urgent development goals," he said in a statement.

Supachai said big companies around the world could support governments by providing finance, technology and expertise to build and maintain infrastructure.

Developing countries cannot link into the global economy and export products competitively without adequate electricity, telecommunications and transport networks, plus basic services such as access to clean water and sanitation, UNCTAD said.

Global foreign direct investment (FDI) in infrastructure increased 31-fold to $786 billion between 1990 and 2006, and the share going to developing countries increased 29-fold to $199 billion, UNCTAD said in its yearly report on investment trends.

About 80 percent of the broad investments in infrastructure in developing and transition economies from 1996 to 2006 went into two industries -- telecommunications and energy, primarily electricity, UNCTAD said. Some 17 percent went into transportation and 4 percent into water and sewage.

INFRASTRUCTURE

Developing countries typically spend some 3 to 4 percent of their economic output on infrastructure, when they should be spending 7 to 9 percent, Supachai told a news conference.

Despite their huge needs, the world's 50 poorest countries known as LDCs attracted little more than 5 percent of foreign infrastructure commitments in this period, UNCTAD said.

Developed-country multi-nationals still dominate overall investments in infrastructure, but companies based in developing countries are also growing in importance. UNCTAD said 22 companies from developing countries featured among the top 100 infrastructure investors in 2006. Most were headquartered in Hong Kong, Malaysia or Singapore.

Such companies, which focus mainly on telecommunications and transportation, now account for an average of 30 percent of foreign investment commitments in infrastructure in developing countries. DP World Ltd of the United Arab Emirates and Hutchison Whampoa of Hong Kong are among the biggest investors in LDC infrastructure.

(Reporting by Jonathan Lynn; editing by Ralph Boulton)