Infrastructure spending in Southeast Asia is expected to grow in the range of 7-8 per cent for the next five to six years. The ADB estimated that ASEAN will require $2.8 trillion in infrastructure investments from 2016 to 2030. The fact that infrastructure development is crucial to cater to the burgeoning population and rapid urbanisation has been well accepted by countries in the region. Governments in ASEAN have been undertaking reform and measures to create an enabling environment for various stakeholders and promote “smart” infrastructure.
The gradual improvements in the overall business environment have brightened Southeast Asia’s prospects of attracting investments and becoming a more favourable investor destination in the world. The region’s macroeconomic stability has attracted several transnational companies to invest in infrastructure sectors across ASEAN.
Private financing is also picking up pace. In recent times, private infrastructure finance – with syndicated loans provided by one or more financial entities – has grown steadily in Southeast Asia. The PPP mode of project implementation is also being explored to establish businesses and channel funds in the region’s infrastructure space.
Several external risks might influence the region’s business prospects, leading to interest and exchange rate risks. For instance, the predicted credit and economic slowdown in China is expected to reduce the country’s demand for raw materials, adversely influencing Indonesia and Malaysia, where raw material is a key export component. At the same time, geopolitical and economic uncertainties under the US government are also expected to lead to exchange rate fluctuations
Nevertheless, Southeast Asia’s infrastructure sector is expected to offer huge business opportunities in the years to come. Investors perceive the region as an attractive destination due to its sustained growth rates, growing consumer markets, strong labour forces, and steady economic and regional integration among its 10 nations.
Growth prospects across the region will be boosted by strong domestic demand, better macroeconomic governance, regional integration, increased use of ICT and an improved business environment. Sectors such as railways, urban transport, electricity, and oil and gas offer huge opportunities for stakeholders.
This issue gives a yearly round-up of key developments in the infrastructure sectors across the Southeast Asian countries.