Study On Ways To Invest In Roads For Private Capital

Road traffic is an important component of the integrated transport system, which is in a very important position in the development of the national economy. Construction and maintenance of roads as infrastructure require enormous funding. As the wave of international privatization, our government has introduced a series of policies to encourage private capital to invest in road construction to alleviate their financial burden. Therefore, this article aims to have a research on ways and decision-making factors for private capital investment in road construction, which will provide private investors with relevant theoretical references.This article deals with four ways of private capital investment in road construction: TOT, BOT, BT and PPP. Firstly, from multiple angles, deal with concrete operating steps, critical control points, the scope of application and the advantages and disadvantages of the four ways. Secondly, analyze and identify the similarities and differences among TOT, BOT, BT and PPP from the following four aspects, such as road management authority in the building, operating and transferring phase, the correlation between right to operate and liberalization, financing and tax concessions, rights and obligations with regard to risk sharing. Finally, compare one way to another way. Compare BOT with PPP, compare BT with PPP, compare BOT with TOT and comprehensively compare TOT, BOT, BT and PPP so that the essential features and differences existing in the four ways will become obvious.After the detailed comparative analysis of ways of private capital investment in road construction, on the basis of the results of literature, this article summarizes four factors that private investors must consider in their decision-making. These factors are investment return, financial structure, risks and government policy. Firstly, through the collection of 2001-2005 highway sector data in our capital markets, by the use of CAPM model and Eviews Software, make a conclusion of a reasonable investment return on highway industry, as an expectant theoretical rate for private investors. Secondly, financial structure, risk factors, essential government supporting policies, government-assistant matters and the provision of tax incentives must be considered at the same time. Any way will involve the four key decision-making factors. Therefore, in order to reduce investment risks and ensure their success of road investment projects, private investors should not only consider the essentialfeatures and differences of the four ways, but also take into account the four decision factors of each way in their selection of investment ways.Through the study on ways to investment in construction of roads for private capital, this article draws a theoretical conclusion. From the government's point of view, the first choice may be BT and PPP, TOT and BOT may be the second choice;on the contrary from private investors' point of view, the first choice may be BOT and TOT, PPP and BT may be the second choice. The orders above are only theoretical results in some certain assumptions. Therefore, the future research prospect presented by this article is through questionnaires, investigating private investors' preferences to TOT, BOT, BT and PPP in their choice of ways of investment in road construction, which is on the basis of the four decision-making factors, thus getting their actual preferences to ways of investment, ultimately proving the consistent level between theoretical order and practical order of their preferred ways.