US introduces BUILD Act, which provides for development finance in the Asia-Pacific region and beyond

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Photo: Facebook screengrab OPIC

In a press briefing with representatives from media from the Asia Pacific region, David Bohigian, Executive Vice President of the U.S. Overseas Private Investment Corporation, the US’ development finance institution, spoke about the regional impact of new US legislation called BUILD Act.

BUILD Act, which Bohigian said to have been called “a legislative miracle” was passed to “strengthen the US government’s capacity to mobilize private sector investment, to accelerate development and move societies forward.”

Under the BUILD Act, the Overseas Private Investment Corporation (OPIC) will be creating the New Development Finance Corporation for its initiatives in Asia. To date, OPIC has a $23 billion portfolio across 90 countries in the areas of private equity, project finance, and political risk insurance in a broad range of sectors.

Bohigian recounted having taken several trips to Asia over the summer, for the purpose of understanding “development finance can help unlock human potential throughout one of the world’s most dynamic regions, and really getting to understand at the country level of the kind of projects we were going to be able to work on.”

He mentioned, as an example, launching a Venture Capital Initiative in India, the first time OPIC has done so; and expects that OPIC will be able to do much more across Asia and in other parts of the globe.

Bohigian also told how just a year ago, OPIC had been threatened to be removed from the budget, but now, Bohigian says that OPIC is on the “starting block” in creating a New Development Finance Corporation, which will include equity for the first time. They will also offer technical assistance and work with the private sector to stay on track in meeting countries’ development needs.

OPIC’s New Development Finance Corporation will work together with USAID and its Development Credit Authority.

Bohigian said, “by and large, I think what is crucial here is that we are building 21st-century opportunity societies.  When I look across the world at development finance, we’re trying to encourage countries to be able to race to the top where they’re opening their markets, where they’re creating economic reform; they’re providing opportunities for their people.  So I think the Overseas Private Investment Corporation has almost a 50-year history in doing that, and with the BUILD Act, the New Development Finance Corporation next year will carry on that tradition in a way that is strengthened for a 21st-century economy.”

Amongst the initiatives that BUILD Act will be partnering with are a trilateral agreement with Japan and Australia as part of their Indo-Pacific strategy, The Ten Bali Project and financing the wind farm in Indonesia, as well as others.

In answer to questions from the media, Bohigian responded that OPIC continues to have an interest in investing in the Philippines due to its “entrepreneurial society,” and that more investments can be expected that country. For Taiwan, OPIC is looking to see how it can co-invest side by side. For Cambodia, OPIC will look into the infrastructure needs of the country to see where it can come in, and for Vietnam, Bohigian announced that “major projects” are currently already “in the pipeline” as well as on the ground.

US Vice President Mike Pence is expected to talk more about BUILD Act in his trip to the region next week for APEC 2018, scheduled to be held in Port Moresby, Papua New Guinea on November 17 and 18.

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Some say, however, that BUILD Act, or more specifically development investments in other countries, is the newest front in the trade war between the United States and China, and is an in direct competition to China’s ‘Belt and Road Initiative,’ where China is infusing $1 trillion in investments and construction aid in over 100 countries.

Mr. Bohigian did not mention China in this respect in his briefing.