The recent budget announcements across Southeast Asia (SEA) have shown a common focus on infrastructure development, digital transformation and sustainability to drive long-term economic growth. Regional governments are now strategically increasing allocations to enhance connectivity, modernise transportation systems, and invest in energy-efficient and green technologies in line with current sustainability trends.
While some countries aim to boost economic growth with expansionary budgets, others push for fiscal prudence with their own infrastructure priorities. Key trends include a strong emphasis on public-private partnerships (PPPs) to boost infrastructure investments in countries like Indonesia and the Philippines amid reductions in budgetary allocations. Simultaneously, digitisation initiatives, encompassing cloud computing, artificial intelligence (AI) and broadband expansion are gaining traction not only in established digital economies like Singapore but also in emerging markets such as the Philippines, Thailand and Malaysia. Targeted spending on climate resilience and renewable energy has been a common theme across the region.
Mapping regional growth trends
Indonesia
Indonesia’s 2024-25 budget, amounting to IDR 3,613.1 trillion (approximately $230 billion), signals a strategic shift in priorities as the new administration takes charge. With a fiscal deficit target of 2.53 per cent of gross domestic product (GDP), lower than the 2.7 per cent projected for 2023-24, the government has shown a commitment towards fiscal discipline.
The allocation for infrastructure development in 2024-25 stands at IDR 400.3 trillion (around $25.5 billion), a decline of around 5 per cent from 2023-24. The subsidy for energy sources, including fuel, liquefied petroleum gas (LPG) and electricity, has been increased by 6.1 per cent, reaching IDR 204.5 trillion.
The budget focuses on improving the road network and the energy sector. The government has reiterated its focus on improving access and connectivity in remote areas, highlighting its past achievements. In the past decade, the government has constructed around 366,000 km of village roads, 1.9 million km of village bridges and 2,700 km of new toll roads. Additionally, 6,000 km of national roads, as well as 50 ports and airports, have been developed. These developments have contributed to a decline in logistics costs, which now account for 14 per cent of GDP. This progress is manifested in Indonesia climbing up in the IMD World Competitiveness Ranking for infrastructure, improving from 44th in 2022 to 34th in 2023 and 27th in 2024.
The Ministry of Public Works and Housing has been allocated IDR 76 trillion in the latest budget, a significant reduction from the previous allocation of IDR 147 trillion.
In 2023, the Ministry of Public Works and Housing announced over 100 planned projects for the new capital, encompassing roads, bridges, water supply, sanitation, housing, urban transit and more. Notably, the Nusantara International Airport is expected to be completed by the end of 2024.
Recently, the Indonesian government secured a $690 million agreement with the South Korean government to support an underwater tolled tunnel project in the capital. The tunnel will form part of a 47 km highway connecting Nusantara to the Sepinggan International Airport in Balikpapan.
Philippines
The Philippine government has reduced its infrastructure budget for 2024-25 by 0.3 per cent, from PhP 1.510 trillion in 2023-24 to PhP 1.507 trillion in 2024-25. This is the first reduction in infrastructure outlay since 2020. This allocation represents approximately 23 per cent share of the total budget for 2024-25.
The Department of Budget and Management (DBM) announced that it anticipates PPPs to offset the decline in spending. The DBM-announced planned PPPs, mainly focused on infrastructure projects, already stand at PhP 3.183 trillion. Despite the budget adjustments, the government claimed that the proposed infrastructure investments remain aligned with the nation’s fiscal discipline and growth objectives.
According to the government, infrastructure development via the “Build-Better-More” programme remains among the key priorities. The programme aims to develop transportation networks, digital infrastructure and climate-resilient projects. Key priorities include expanding the road and rail systems, irrigation systems, water supply systems, airports, etc., and fostering digital transformation to support the growing digital economy.
Thailand
Thailand’s Budget Bureau’s budget outline for 2024-25 shows a 4.3 per cent increase to THB 3.75 trillion ($103 billion). This follows a substantial 13 per cent rise in the 2023-24 budget, highlighting the government’s continued expansionary fiscal strategy to stimulate economic growth for two consecutive years. Notably, the 2025 budget features the largest projected fiscal deficit to date, equivalent to 4.3 per cent of the nation’s GDP.
There was also a significant increase of 27.9 per cent in the infrastructure budget, touching a level of THB 908 billion ($25 billion). The allocation of funds is primarily focused on developing transportation networks and energy and public utility infrastructure, reflecting the government’s focus on strengthening essential sectors. Furthermore, there is emphasis on promoting initiatives that facilitate the procurement and development of energy infrastructure, reflected in a budget allocation of around THB 2 billion, aimed at ensuring energy security.
Thailand’s cloud-first policy has also received a significant boost in the budget. The allocation for state agencies to procure cloud services has increased fivefold from THB 200 million in 2022-24 to THB 1 billion in 2024-25.
Malaysia
The Malaysian government has allocated RM 421 billion ($96 billion) for the 2024-35 budget, marking an increase of 6.4 per cent from 2023-24. The budget focuses on fostering innovation, infrastructure, digitalisation and clean energy. The government also aims to reduce the budgetary deficit from 4.3 per cent of GDP in 2023-24 to 3.8 per cent in 2024-25.
Approximately RM 86 billion has been set aside for infrastructure, innovation and public sector improvements. Given Malaysia’s vulnerability to natural disasters, about RM 3 billion has been allocated towards flood mitigation. A few major planned connectivity projects include the Penang light rail transit (LRT), the Tawau and Miri airports, and the Kuala Lumpur-Singapore high speed rail. Other major projects include the Kulim Hi-Tech Park expansion and regional development of Sarawak and Sabah, with a total allocation of RM 12.6 billion. It will include developing and improving water supply, transportation and energy infrastructure.
About RM 305.9 million has been allocated towards renewable energy projects. Additionally, around RM 10 million has been set aside to create the National Artificial Intelligence Office to boost the country’s digitisation efforts and almost RM 1 billion to support start-ups in technology like semiconductors and green technology. This increase in expenditure showcases the government’s commitment towards economic development and improving the quality of life.
Singapore
In the 2024-25 budget, Singapore’s projected total expenditure is SGD 131.4 billion, a slight increase from the SGD 130.8 billion allocated in 2023-24. The government has placed emphasis on advancing the AI revolution, committing SGD 1 billion over the next five years under the National AI Strategy 2.0. The initiative aims to attract global and domestic companies to set up AI centres of excellence in the country while promoting the growth of the industry, securing advanced chip supply chains and fostering talent development in the AI sector. Additionally, the budget prioritises upgrading the nationwide broadband network to support up to 10 Gbps internet speed.
A new SGD 5 billion Future Energy Fund has been introduced to drive investments in energy transition infrastructure, accelerating the shift towards cleaner energy solutions. The proceeds from the fund are planned to be deployed in setting up a second LNG terminal.
The Singapore government has also extended policies like the Enterprise Financing Scheme – Green, which provides financing to companies operating in the green energy sector, and the Energy Efficiency Grant, which aids companies adopt energy-efficient equipment.
In sum
The recent budgets across SEA show a collective focus on infrastructure as a key driver for economic growth. Regions are now prioritising connectivity, renewable energy and digital transformation, with countries like Singapore leading in emerging technologies like AI. PPPs have also been proposed in the budgets for financing infrastructure initiatives, ensuring that development aligns with fiscal goals. These
strategies underline the region’s focus on sustainable development and modernisation. By balancing ambitious development plans with prudent fiscal management, SEA has set the stage for a resilient and promising future.
