In Southeast Asia, it has become clear that some sectors have been reprioritised for infrastructure development, such as renewable energy, logistics and transport, public health, and info-communication technology. In the wake of the pandemic, digital technologies moved quickly from a strategic priority to an operational imperative – both to accommodate remote workers and serve consumers as they flocked to e-commerce channels. SEA has prioritised the creation of green infrastructure such as renewable and energy efficiency technologies to accelerate economic growth. SEA has an opportunity to unlock economic growth by doubling down on green infrastructure as well as addressing basic infrastructure gaps. The infrastructure budget of ASEAN economies targets cushioning the ruinous effects of the Covid-19 pandemic and laying the foundation for economic revival. It focuses on rebooting the economies in the region by prioritising the health sector, pushing infrastructure development and reconstructing economies by tackling the post-pandemic challenges. The ASEAN economies plan to spend enormously on public infrastructure, which is considered the key driver of economic growth.

Digital solutions across sectors

The pandemic has had a dramatic impact on people’s mobility patterns, which has led to disruptions in urban transport services. In such a scenario, digital innovation has made it much easier to collect and analyse realtime data, providing an effective way for governments to identify and quantify disruptions. New mobility systems such as ride-hailing have responded to the crisis as well, providing free or discounted transport for essential workers and healthcare providers, besides facilitating the delivery of food and other essential supplies. Likewise, micro mobility services like bike-share or electric scooters have expanded to serve vulnerable locations. The benefits of these newer solutions can be maximised by integrating them into a comprehensive transport ecosystem that would let users navigate seamlessly across mass transit, shared mobility platforms, and micro mobility. This approach, commonly dubbed “mobility-as-a-service”, is already helping urban residents in the region get around safely during the pandemic. As an example, mobility aggregator apps enable users to plan journeys with a wide variety of transport modes, and to prioritise routes that fit social distancing requirements.

The big hotspots include Vietnam and Indonesia. The big shift in consumer behaviour to digital services has massive implications for both traditional companies venturing into the digital realm and digital-native companies. Education and transport benefited most from the influx of new digital consumers. Thailand is forging ahead with its plans to become a developed digital hub in the SEA region. As one of the regional economies on the path towards Industrial Revolution 4.0 maturity, Thailand is restructuring itself into a value-based, innovation driven economy by looking towards future economic trends – and as part of the Thailand 4.0 roadmap, one of those trends is to modernise urban centres in the country into smart, sustainable cities. In Singapore’s smart nation initiative entitled “Smart Mobility 2030”, Singapore is running trials of autonomous vehicles and buses.

Digital solutions are being looked at in the road sector as well. The Ministry of Public Works and Public Housing and the Indonesia Toll Road Authority will gradually deploy a contactless open road tolling system, also known as single-lane free flow or multi-lane free flow, in Indonesia by December 2022. The complete adoption of the contactless toll road system is expected to be concluded by September 2023. Toll roads in the Greater Jakarta metropolitan region will be the first to accept contactless payments.

Further, Indonesia is working towards transforming Batu Ampar port located in Kota Batam into a smart port in an attempt to boost the port’s efficiency and provide low-cost services in the maritime trade sector. Badan Pengusahaan Batam has deployed InaPortnet, a singleentry system for ship-to-ship/floating storage unit activities, the BP Batam Seaport Information Management System and Foreign Ship Agency Notification. The company will also install the autogate system at Batu Ampar port, which will automatically record vessel arrivals and departures. Besides, Wärtsilä Voyage signed a landmark memorandum of understanding (MoU) with the Maritime and Port Authority of Singapore in November 2021 to further strengthen their collaboration in smart port innovation and digitalisation. The main objectives of this strategic partnership are to initiate, develop and promote innovative solutions that accelerate digitalisation; foster interoperability in e-navigation; and ship-to-shore secure data communications to enable port-to-port optimisation.

Towards cleaner economy

Owing to its geographic location, the SEA region has high solar power potential, estimated at 41 TWh. Even so, solar power development has been severely limited historically due to the greater focus on fossil fuels and hydropower. However, there has been a massive increase in the past two years in solar power capacity despite the Covid-19 pandemic. The dialogue has changed with Covid-19. Concerns about regional interdependency and resilience have come to the fore, together with greater climate awareness. SEA nations have made notable landmark moves in the past two years – Singapore launched its National Green Plan, Indonesia announced a 2060 Net Zero commitment, and the ASEAN Taxonomy Board began work on a regional sustainable finance taxonomy, to name a few. In March 2021, Singapore’s solar energy firm Sunseap Group signed a long-term agreement with Amazon to export solar energy through the national grid. In October 2021, a consortium led by Sunseap Group signed an MoU to develop 7 GWp of solar photovoltaic projects with energy storage facilities in Indonesia to transport energy to Singapore via a proposed subsea cable.

The Government of Philippines aims to generate 35 per cent of total power generation from renewable sources by 2030 and 50 per cent by 2040 under the National Renewable Energy Program 2020-2040. To meet this target, the country will need to add at least 92 GW of renewable capacity to its energy mix. CleanTech Global Renewables has partnered with Singapore-based The Blue Circle to build a 1.2 GW offshore wind farm in Oriental Mindoro province of the Philippines. The wind farm will comprise of 100 turbines with a unit capacity of 12 MW and will cover a total area of 40,095 hectares, making it the country’s largest offshore wind farm. More recently, France-based Proparco, a subsidiary of Agence Francaise de Developpement, announced an investment of $25 million to support GreenYellow’s solar projects in Thailand, Vietnam and Cambodia. The investment will support an estimated 140 MWp of installed solar capacity. Proparco’s investment will increase the company’s ability to develop solar systems for commercial and industrial clients, mainly food retailers and manufacturing companies, in the three SEA countries. This move is also expected to support climate mitigation and the low-carbon transition of Thailand, Vietnam and Cambodia.

In order to boost decarbonisation of the power sector in Indonesia, the Japan International Cooperation Agency has partnered with Japan-based utility companies to develop strategies to boost the decarbonisation of Indonesia’s power sector. These companies include the Tokyo Electric Power Services Company, JERA Company Incorporated, Tokyo Electric Power Company Incorporated and Tokyo Electric Power Company Power Grid. The utilities have formed a joint venture (JV) to conduct a data collection survey of the power sector in Indonesia from November 2021 to March 2022. The firms will then propose roadmaps that the Government of Indonesia can adopt to reduce its reliance on coal-fired energy power generation and retire conventional energy generation.

Communication: Emergence of data centres

SEA is fast emerging as a hotspot for data centre players as enterprises in the region are rapidly deploying new-age technologies and adopting cloud-based services for operational efficiencies. The onset of the Covid-19 pandemic and the ensuing lockdown and other restrictions imposed by governments across the region seem to have fast-tracked the digital journey of enterprises. In addition, various factors are acting as driving forces for the growth of the data centre industry in the region. Growing internet penetration in the region is leading to the uptake of IoT- and AI based solutions by enterprises and smart devices by consumers. According to a recent study by Knight Frank, the maximum growth in the data centre segment within Asia-Pacific is expected to be in the SEA region. This is because, apart from Singapore, the remaining region is largely underdeveloped in terms of its data centre industry 

Over the past few years, the SEA region has garnered a lot of interest from both big and small data centre players who are rushing to grab a share in the growing market. In February 2021, Microsoft announced that it would establish its first data centre in Indonesia to deliver trusted cloud services locally, with data security and privacy, and the ability to store data in the country. Likewise, in January 2021, SpaceDC launched the 1.45 MW JAK2, its first data centre at Jakarta Barat, Indonesia. The data centre was established in partnership with Singapore’s sovereign wealth fund, GIC. Malaysia too has made positive strides in building a robust data centre ecosystem in the country. And the government is playing a key role in facilitating this development. For instance, the Malaysian government recently granted conditional approval to AWS, Microsoft, Google Cloud and Telekom Malaysia to build and manage hyper-scale data centres and cloud services in Malaysia.

This move will support the government’s aim of migrating 80 per cent of public data to the hybrid cloud system by end 2022 as part of its “cloud first” strategy.

The way forward for financing

In most urban areas in Asia-Pacific, the public sector remains the predominant source of infrastructure financing, but it is constrained by the lack of overall financial resources at its disposal. This leads to funding not being available for projects that could otherwise be financially viable in the long term. The problem is further compounded by the low credit quality of most urban local governments, which significantly limits private sector participation in the delivery of urban services. Commercial banks mostly offer short maturities, with terms not suitable for infrastructure projects that have a long payback period. Most countries in the region have not tapped into domestic capital markets to fund urban infrastructure, although a few creditworthy cities have managed to issue bonds.

Evidence suggests that, in general, the private sector can effectively and efficiently finance, construct, operate and maintain infrastructure assets. Therefore, in the postCovid-19 “new normal” world (once the crisis phase is over), PPPs will become even more relevant and useful. Governments struggling to come up with upfront capital expenditure on building infrastructure and services may structure public-private partnerships (PPPs) using an availability payment model (where government retains the demand risk for the project but makes contractually determined performance-linked payments). Banks and investors will no longer take full demand risk as they have done in many of the PPPs in the developing countries of Asia. Therefore, the use of availability payments may become a key consideration in the way governments look to pay for PPP projects. Governments will need to consider using various credit enhancement measures to support PPP projects and provide comfort to banks and investors.