The region has taken a number of positive initiatives in the past one to two years to improve the policy and regulatory environment in the infrastructure sectors. The governments have become more conscious of solving policy and regulatory issues affecting the infrastructure sector and has come up with new policies/guidelines. The ASEAN Open Sky Agreement/ Policy has been formulated to create a unified and single aviation market in Southeast Asia. The Philippines adopted the National Transport Policy that aims to unify all transport-related projects in the country.
The Philippines government has also introduced the new water quality guidelines. New regulations for power purchase agreements have been adopted by the Indonesian government with the objective of resolving risk allocation and bankability concerns. The Singapore government has introduced the Cross-Border Railways Bill for developing inter-country railway links.
Funding through government budgets has been the mainstay for infrastructure financing. The high financial risks, long gestation periods, huge capital requirements and low returns deter private investors from participating in big-ticket infrastructure projects.
Of late, greater focus is being laid on mobilising new sources of finance such as China-led Asian Infrastructure Investment Bank, the ASEAN Infrastructure Fund, infrastructure bonds and Sukuk financing to complement the traditional funding sources.
Over the past two years, the 10 ASEAN economies implemented several key reforms to enhance the ease of doing business. These reforms relate to easing the process of obtaining building approvals, quality of land administration, access to credit, tax administration and compliance, bankruptcy regime, labour market regulations, and judicial efficiency.
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 2018 and 2022.
Among the region’s 10 member countries, the Philippines and Vietnam are expected to lead in terms of actual growth numbers among the ASEAN 5 (Indonesia, Malaysia, Philippines, Thailand and Vietnam).
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.
This issue gives a yearly round-up of key developments in the infrastructure sectors across the Southeast Asian countries.