Innovative Financing for City Infrastructure Investment by Increasing the Rate of Return from Spillover Tax Revenues

Abstract

The growing trend of urban city development requires various infrastructure investments, including water supply, electricity, sanitation, transportation, and other supporting facilities. In facing this challenge, many Asian countries experience significant constraints, particularly on the issues of land acquisition and insufficient financial supply, which potentially create a time delay in infrastructure investment and huge budget deficits. If these infrastructure investments were financed by overseas investors, future exchange rate risks would have to be carried by infrastructure companies. This paper examines further ways to attract more investment in infrastructure by applying spillover tax revenues. Case studies of some innovative financing aspects of Japan and other countries are also presented.

Default risks, moral hazard and market-based solution: Evidence from renewable energy market in Bangladesh

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“…Increased economic activity, in turn, generates increased commercial and tax revenues from businesses and residents within these areas, as well as increased employment opportunities. The economic uplift could be partially harnessed to provide incentives (e.g., service fees, availability payments, or viability gap contributions) that would encourage greater private sector financing (Yoshino, Nakahigashi, and Pontines 2017).…”

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“…More details on methodologies for setting the rate of return for a floating bond can be found at N. Yoshino. et al 2019 Linked to municipal development funds is the approach of pooled financing.…”