Research On Project Finance Of Basic Industries

Basic industries play an important role in the development of the economic progress, which determine the development of direct production process such as industrial, agricultural and commercial investment. And fund is a key factor to the development of basic industries. So it is very important to solve the problem of investment and finance on basic industries. Under the condition of the Big Development of Western Area and the mechanism reform of investment and finance, it is highly significant to change the present investment and finance methods and find a new way of them. This paper is divided into three chapters to give some advices for these problems. Chapter I reviews the traditional investment and finance mechanism of the basic industries and explains the importance of the reform of investment and finance mechanism. Due to the specialty of basic industries, government investment has nearly been the single source of basic industries fund for a long time, which causes the problems of the shortage of fund, the poor efficiency of the use of fund and low marginal rate of revenue product. In this paper I claim that the aim of mechanism reform of investment and finance on basic industries is to establish and consummate a multi-investors mechanism by coordinating the government investor and other investors, that is to say, the investment should be burdened among the central government, local government and enterprises. The central government should regulate and control the process of the investment 4 and finance market, build a better investment decision and investment-risk constraint mechanism to protect a full competence market. At the same time, the central government should also possess the controlship of major project. Chapter II discusses the construction of project finance frame of investment and finance mechanism reform. In this chapter, I suggest that more attention should be paid to the construction of the investment and finance mechanism on the basic industries, which includes the designing of the main body of investment and finance and the structure of project investors, the sources of project finds, the uses of the financed capital and the organization of project finance methods. Chapter III analyses the two main methods of project finance mechanism: Build-Operate-Transfer (BOT) and Asset-Backed-Securities (ABS) based on concession agreement. By discussing the different feature of the two methods and comparing them with our economic situation, this chapter gives some cases and explains the operation of the two project finance methods in our country.