Speaking in Vietnam just a few hours ago, President Trump launched a debate on the future of development finance by committing the Administration to help American businesses invest and compete in the developing world.

The president told the CEO gathering at the Asia-Pacific Economic Cooperation Summit that the United States is “committed to reforming our development finance institutions so that they better incentivize private sector investment in your economies.” Pointing to the competition in the developing world from countries like China, the president said the U.S. needs to “provide strong alternatives to state-directed initiatives that come with many strings attached.”

America’s Development Finance Institution
Since its creation in 1971, America’s development finance institution, the U.S. Overseas Private Investment Corporation (OPIC), has helped American businesses make investments in the developing world. It does so by providing guarantees on investments in developing economies where private sources of financing are unavailable, but opportunities for profitable investments exist that also promote economic development.

To date, OPIC has facilitated more than $80 billion in U.S. exports and supported 280,000 American jobs in small and medium sized American companies. OPIC’s investments also come at no net cost to the American taxpayer, as they are fully funded by the fees and interest generated by the agency’s services and investments. For 39 consecutive years, OPIC has returned money to the U.S. Treasury – reducing the deficit by $2.3 billion over the past six years alone.

Options for Strengthening OPIC
While OPIC’s funding and authorities have remained largely unchanged for the past forty-five years, other countries around the world have dramatically increased their investments in development finance. The U.K. recently proposed quadrupling the budget of its development finance institution. China has been adding more staff and financial capital to its own agency annually than OPIC has in total. And earlier this year, Canada also became the last of the large “G7 economies” to create its own development finance institution.

The U.S. Global Leadership Coalition’s Report on Reports found broad consensus on strengthening America’s development finance capacity and identified several options for how to do so:

1. Let OPIC Make Limited Investments. Unlike other development finance institutions, OPIC lacks the authority to make limited direct investments in American-owned businesses operating in emerging economies. If OPIC were provided with limited “equity authority”, experts agree that OPIC would be able to increase its returns to the U.S. Treasury, boost the development impact of its portfolio, and guarantee that the projects it invests in adhere to high standards of accountability.
2. Let OPIC Help Companies Build Capacity to Invest. In the past, OPIC has observed that it has had to leave dozens of “deals on the table” because it is unable to provide funds to small and medium-sized American businesses to help them develop the capacity and skills to invest in emerging markets. If OPIC were able to re-invest a portion of its own funds into training American businesses and opening up overseas markets, it could start to meet the demand for its services and expand its impact and reach.
3. Raise OPIC’s Caps. Currently, OPIC has a $21.5 billion portfolio across 100 developing countries. By law, OPIC’s portfolio is not allowed to increase above $29 billion, capping the size of additional projects it can support at $7 billion. OPIC is also limited by its small staff, set by Congressional mandates on the agency’s administrative expenses. If Congress were to increase OPIC’s portfolio cap and the cap on administrative expenses, OPIC would have the staff and resources – at no additional cost – needed to not only generate greater development impact but also tackle new foreign policy challenges.

Beyond the agreement on the three steps above, there are different views about whether OPIC should be strengthened in its current form (“OPIC on steroids”) or whether the United States should create an entirely new development finance institution that consolidates OPIC with development finance capabilities in other parts of the government at USAID, the U.S. Trade and Development Agency, and the Treasury Department.

The Next Step: The Budget and Bringing in Congress
The Administration has quietly been laying the groundwork for the President’s supportive comments for months. OPIC’s newly confirmed CEO Ray Washburne – who joined President Trump in Asia – has said from the start that he is here “to build it.” At the National Security Council, conversations have been underway on how to strengthen America’s development finance capabilities to boost U.S. economic diplomacy, while Secretary Tillerson recently suggested the U.S. will develop America’s finance tools to counter Chinese investment in Asia.

Yet funding for OPIC was zeroed out in the Administration’s FY18 budget request, despite estimates by the Heritage Foundation that closing the agency would cost $2.2 billion over the next decade. Saying “reports of OPIC’s death” are “greatly exaggerated,” OPIC executive vice president David Bohigian called for the Administration to work with Congress to ensure OPIC is authorized on a long-term basis and to increase OPIC’s authorities to adapt to a competitive international environment.

The Administration should also turn to Capitol Hill, where there is already strong interest in strengthening development finance. Freedom Caucus member Rep. Ted Yoho (R-FL) and Rep. Adam Smith (D-WA) recently introduced the Economic Growth and Development Act, which seeks to strengthen OPIC. In the Senate, Senator Chris Coons (D-DE) has been working on a similar bill for months.

With rising consensus in the White House and on Capitol Hill, today may be an opportunity for positive change to America’s diplomacy and development toolkit and for Republicans and Democrats to come together to help create American jobs by promoting economic development in some of the fastest growing economies against steep competition.