While infrastructure has been an important priority area for the Southeast Asian economies, the pandemic outbreak will certainly blur this focus. Prioritising health and employment will be the key goal for most emerging economies. Covid-19 has led to disruptions in project delivery, raw material availability, labour supply, capacity addition and investments. However, activity has started to return to normalcy with the phased lifting of lockdowns across countries.

Overall, growth in ASEAN countries is expected to pick up pace over the medium term owing to a strong rebound in trade, robust domestic demand and infrastructure development initiatives undertaken by various governments. Southeast Asia’s growth is expected to remain strong at 5.2 per cent  between 2019 and 2023.

Among the region’s 10 member countries, Cambodia, Lao PDR and Myanmar are projected to grow the fastest between 2019 and 2023, while the Philippines and Vietnam are expected to lead in terms of actual growth numbers among the ASEAN-5 (Indonesia, Malaysia, the Philippines, Thailand and Vietnam).

While PPP has an increasing role in infrastructure development, there has not been much change over the past decade in terms of its real contribution to overall infrastructure investment in Southeast Asia. A total of 770 infrastructure deals were made between 1990 and 2019 in Southeast Asia. These deals were able to garner a total investment of about $231 billion.

The World Bank, ADB and AIIB are stepping up, putting in place emergency financing measures, debt relief, funding to strengthen health services and primary healthcare, and expanding trade finance.

With the onset of Covid-19, many logistics companies are adopting technologies including AI, IoT and robotics to enhance efficiencies in their transport system and build more resilient supply chains. The Brunei government announced the Digital Economy Masterplan 2025 in June 2020 to provide its citizens with the right digital environment and infrastructure. In Singapore’s smart nation initiative called Smart Mobility 2030, Singapore is running trials of autonomous vehicles and buses. Vietnam visualised four potential digital futures and will transit into a digital economy by 2030, while growing sustainably and improving business competitiveness and productivity. Technologies are also being leveraged to develop smart digital solutions to ensure smart city advancements and urban transformation in Bandung, Indonesia.

In the next five to six years, Southeast Asia’s infrastructure sector is expected to offer huge business opportunities to various stakeholders such as project developers, EPC contractors, technology and equipment providers, financiers, etc. Investors perceive the region as an attractive destination due to its sustained growth rates, growing consumer markets and strong labour forces, and steady economic and regional integration among its 10 nations

Construction activity is expected to remain slow at least in the short run, as the Southeast Asian countries face the ravages of the ongoing Covid-19 pandemic.

While issues pertaining to raw material, equipment and labour availability might tide off soon when the disease spread is controlled, funding of new infrastructure projects might continue to pose challenges even in the post-pandemic time.

For PPPs to take off across Southeast Asia, decision-makers should focus on offering a few well-prepared PPP projects that can deliver demonstrable effects. Across the region, the capacity of national and subnational government agencies dealing with PPPs need to be improved, and multinational development banks can help client governments build this capacity.

Despite concerns of a slowdown triggered by issues such as the US-China trade war and the Covid-19 pandemic, Southeast Asia will continue to offer attractive long-term project finance opportunities for years to come.