2013-01-07 06:06:49 - Fast Market Research recommends "Central America Infrastructure Report Q1 2013" from Business Monitor International, now available
BMI View: Opportunities are available across the Central America region; however, the fragmented nature of the region and the high risks inherent in some markets make it far from a unified positive outlook. We highlight Panama, Costa Rica and Nicaragua as outperformers and note that Spanish, Chinese and regional companies will be best placed to capitalise on growth sectors.
Central America presents a broad range of opportunities across the infrastructure and wider construction sectors as infrastructure deficits across the region are addressed. However, it also poses significant risks. Home to deep-run corruption, high crime rates and unsophisticated institutions, the generally small industry sizes offer little to make those risks palatable.
Domestically, there is insufficient capacity and technical ability to support the complex
projects being developed across the region. As a result, with significant opportunities and limited competition for international construction companies to enter the market. Best placed to capitalise will be regional players, which have the ability to build on proximity to market to access contracts. Some of the highest potential is offered to the large construction players in Mexico and Brazil (such as ICA and Odebrecht). We also see a growing Chinese presence in the region, especially in Costa Rica. High-risk tolerance and the ability to secure cheap and abundant capital have seen Chinese companies make a dent in the region; Sinohydro, for example, is active in a number of power projects.
Full Report Details at
- www.fastmr.com/prod/523863_central_america_infrastructure_report ..
Some of the first movers into the region have been Spanish companies, which are capitalising on cultural ties to incorporate Central America into their successful and broad international expansion plans. Many of the Spanish companies are building on their existing presence in Mexico or the Southern United States to access the Central America market, with Acciona and Iberdrola both having a presence. We see little potential for the other European majors to target the region, given the limited scale and cost of establishing operations.
These companies are finding opportunities across a wide range of sectors. Social infrastructure is a significant growth area as the region's governments seek to address the wide housing deficits. At the same time, economic infrastructure is being built up to cater for the ongoing expansion of the Panama Canal, including new ports in the region, as well as an ambitious plan to build a rival canal in Nicaragua. Building up electricity generating capacity is also seeing growth, as companies seek to capitalise on the region's indigenous and lucrative renewable resources, as well as providing electricity to support industrial growth.
In particular we highlight opportunities in Panama, Nicaragua and Costa Rica:
?? By far exceeding the rest of the region in growth terms are Panama and Nicaragua, which we estimate recorded 2012 real growth of 20.2% and 18.6% respectively. Whilst we do not anticipate growth to continue at this rapid pace, it should remain robust in 2013 (11.4% and 7.8% respectively). Panama is being boosted by the canal expansion, while a housing boom is stoking industry value growth in Nicaragua. ?? Our outlook for Nicaragua could vastly improve if further signs of progress are seen on the US$6.5bn refinery, and the US$30bn Nicaragua Canal, which has long been considered a pipe dream but appears to be seeing investment into feasibility studies. ?? Costa Rica is posting far lower growth figures than Nicaragua and Panama, with the industry having posted its first positive growth figures in H112 since 2009. However, we highlight Costa Rica as an outperformer in terms of business environment and sustainable growth potential. The country has a decent portfolio of projects in the pipeline, including transport concessions, although the ability to tap into private capital will be reliant on leveraging its more sophisticated business environment.
Despite highlighting three countries as outperformers, opportunities can be found across the region, with a handful of sectors having a positive medium-term growth outlook:
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