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I think they are late to the party.....
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Washington, D.C. – The House today passed the BUILD Act of 2018 (H.R. 5105) to increase opportunities for American job creators in emerging overseas markets. Specifically, the bill consolidates OPIC, USAID’s Development Credit Authority and other development finance authorities into a modern, self-sustaining U.S. International Development Finance Corporation. This will enable the U.S. to support countries that want an alternative to predatory development finance models offered by China and others.
On the House floor prior to the vote, Chairman Royce delivered the following remarks (as prepared for delivery):
“The BUILD Act is the product of months of bipartisan and bicameral work, along with the White House, to make America’s private sector more competitive in emerging markets.
Across the globe, lack of access to capital often constrains economic growth – especially in the world’s least developed countries. According to the International Finance Corporation, micro, small and medium-sized enterprises have an unmet financing need of $5.2 trillion every year in emerging markets, depriving them of the capital they need to grow. Foreign investment is critical to empowering entrepreneurs, creating jobs and reducing poverty.
America has an undeniable interest in supporting the development of vibrant and stable economies around the world. Healthy private sectors promote good governance, support thriving civil societies, and help reduce civil strife. The resulting stability is good for our national security, and also benefits U.S. exports and jobs.
Increasingly, other countries are working to advance their economic and political interests by shaping overseas markets. China’s ‘One Belt, One Road’ initiative, which has been estimated at $1 trillion or more, dwarfs the size of the Marshall Plan that rebuilt war-torn Europe in the 1940s and 1950s.
Across Africa, Asia and beyond, Beijing is making massive investments in new construction and infrastructure projects – from the headquarters of the African Union to a port in Djibouti, where both the U.S. and China have military bases. Beijing now owns 80 percent of this strategically located African nation’s foreign debt.
As the President and CEO of OPIC – the Overseas Private Investment Corporation – testified to the Foreign Affairs Committee, ‘a condition of many of these loans is that Chinese firms – and labor – get the business… This state-directed approach is not consistent with our values, which incorporate the high standards of international financial institutions related to governance, transparency, debt sustainability, environmental, and social safeguards.’
Chinese development practices have often left countries worse off, putting some countries into debt distress. Last December, Sri Lanka gave control of a strategic port to Beijing for 99 years after it could not repay the Chinese-backed loans used to fund it, granting Beijing a foothold in the Indian Ocean and its critical shipping lanes.
And due to Beijing’s ‘no strings attached’ financing, some of Africa’s most brutal regimes have been thrown an economic lifeline, undermining democratic governance. Unlike the United States, China does not have anti-corruption standards and is willing to fund just about any government, from Venezuela to Sudan.
The U.S. cannot and should not match China’s investments dollar-for-dollar, but we can and should do more to support international economic development with partners who have embraced the private sector-driven development model.
However, America’s development finance toolkit – which is spread across multiple agencies – is limited, duplicative and uncoordinated. The BUILD Act will address these shortcomings and modernize America’s antiquated development finance capabilities to address the challenges of the 21st century.
Specifically, this legislation will merge OPIC and USAID’s Development Credit Authority into a standalone U.S. International Development Finance Corporation, which will also have new authorities. Among these will be the ability to co-finance projects with our allies, like the U.K.
Through the provision of loans, guaranties, limited equity investments, feasibility studies, political risk insurance and other instruments of support, the new Development Finance Corporation will mobilize private capital to provide countries a competitive alternative to the state-directed approach of Beijing and Moscow.
I am pleased that this bill doesn’t just merge existing functions together, but also includes critical reforms to protect taxpayers, improve government efficiency and make America’s development finance toolkit more effective. Notably, it adopts many of the same principles as the Millennium Challenge Corporation, including the constraints analysis, which directs investment to where it will have the most impact. For example, this bill will:
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Washington, D.C. – The House today passed the BUILD Act of 2018 (H.R. 5105) to increase opportunities for American job creators in emerging overseas markets. Specifically, the bill consolidates OPIC, USAID’s Development Credit Authority and other development finance authorities into a modern, self-sustaining U.S. International Development Finance Corporation. This will enable the U.S. to support countries that want an alternative to predatory development finance models offered by China and others.
On the House floor prior to the vote, Chairman Royce delivered the following remarks (as prepared for delivery):
“The BUILD Act is the product of months of bipartisan and bicameral work, along with the White House, to make America’s private sector more competitive in emerging markets.
Across the globe, lack of access to capital often constrains economic growth – especially in the world’s least developed countries. According to the International Finance Corporation, micro, small and medium-sized enterprises have an unmet financing need of $5.2 trillion every year in emerging markets, depriving them of the capital they need to grow. Foreign investment is critical to empowering entrepreneurs, creating jobs and reducing poverty.
America has an undeniable interest in supporting the development of vibrant and stable economies around the world. Healthy private sectors promote good governance, support thriving civil societies, and help reduce civil strife. The resulting stability is good for our national security, and also benefits U.S. exports and jobs.
Increasingly, other countries are working to advance their economic and political interests by shaping overseas markets. China’s ‘One Belt, One Road’ initiative, which has been estimated at $1 trillion or more, dwarfs the size of the Marshall Plan that rebuilt war-torn Europe in the 1940s and 1950s.
Across Africa, Asia and beyond, Beijing is making massive investments in new construction and infrastructure projects – from the headquarters of the African Union to a port in Djibouti, where both the U.S. and China have military bases. Beijing now owns 80 percent of this strategically located African nation’s foreign debt.
As the President and CEO of OPIC – the Overseas Private Investment Corporation – testified to the Foreign Affairs Committee, ‘a condition of many of these loans is that Chinese firms – and labor – get the business… This state-directed approach is not consistent with our values, which incorporate the high standards of international financial institutions related to governance, transparency, debt sustainability, environmental, and social safeguards.’
Chinese development practices have often left countries worse off, putting some countries into debt distress. Last December, Sri Lanka gave control of a strategic port to Beijing for 99 years after it could not repay the Chinese-backed loans used to fund it, granting Beijing a foothold in the Indian Ocean and its critical shipping lanes.
And due to Beijing’s ‘no strings attached’ financing, some of Africa’s most brutal regimes have been thrown an economic lifeline, undermining democratic governance. Unlike the United States, China does not have anti-corruption standards and is willing to fund just about any government, from Venezuela to Sudan.
The U.S. cannot and should not match China’s investments dollar-for-dollar, but we can and should do more to support international economic development with partners who have embraced the private sector-driven development model.
However, America’s development finance toolkit – which is spread across multiple agencies – is limited, duplicative and uncoordinated. The BUILD Act will address these shortcomings and modernize America’s antiquated development finance capabilities to address the challenges of the 21st century.
Specifically, this legislation will merge OPIC and USAID’s Development Credit Authority into a standalone U.S. International Development Finance Corporation, which will also have new authorities. Among these will be the ability to co-finance projects with our allies, like the U.K.
Through the provision of loans, guaranties, limited equity investments, feasibility studies, political risk insurance and other instruments of support, the new Development Finance Corporation will mobilize private capital to provide countries a competitive alternative to the state-directed approach of Beijing and Moscow.
I am pleased that this bill doesn’t just merge existing functions together, but also includes critical reforms to protect taxpayers, improve government efficiency and make America’s development finance toolkit more effective. Notably, it adopts many of the same principles as the Millennium Challenge Corporation, including the constraints analysis, which directs investment to where it will have the most impact. For example, this bill will:
- create a dedicated Inspector General of the new Corporation;
- require that the Corporation prioritize support in the poorest countries and those making continual progress toward economic policies that support free enterprise; and
- create lasting institutional linkages between the Development Finance Corporation and other development agencies.
