The ongoing Covid-19 pandemic has brought about a series of unprecedented challenges for the Southeast Asian economies. It has affected all the infrastructure sectors, with roads being no exception. From derailed project execution to reduction in traffic numbers, the sector faced unanticipated disruptions on account of Covid. While a number of measures were announced by the Association of Southeast Asian Nations (ASEAN) governments to mitigate the impact of the crisis, all the economies witnessed supply chain disruptions and experienced economic slowdowns.
Southeast Asia Infrastructure reviews the impact of the Covid-19 outbreak across the roads and bridges sector, the countries’ response to the current challenges and the way forward…
The fallout of Covid-19
Government restrictions
Overall construction activity was severely impacted during the first quarter of 2020-21 as the governments remained focused on containing the spread of the pandemic. The subsequent lockdown measures acutely weighed down construction activities.
The movement control order (MCO) issued by the Malaysian government kept the road construction activities to a minimum. While the government has eased certain restrictions and has also allowed carrying out of construction work on projects which had achieved physical progress of 90 per cent in the pre-Covid time, the MCO, which has been extended till December 31, is expected to affect the pace of construction works. On the same lines, on April 18, 2020, Singapore imposed a mandatory 14-day stay home notice for its 180,000 foreign construction workers that make up the bulk of the road construction industry.
The Indonesian government has also announced its plan to divert around 30 per cent of its funds allocated to big-ticket infrastructure projects (including roads) for public works to battle Covid-19. As a result, contractors expect significant budget cuts, which would result in limited project execution. Similarly, the Cambodian government decided to reduce the 2021 state budget to $4 billion (a 50 per cent drop) due to the negative impact of Covid-19. Vietnam’s quarantine measures have also created problems for tanker trucks moving bitumen into city-based road projects in different parts of the country.
Project execution – A mixed bag
The pace of project execution has been badly impacted due to the various steps undertaken by the ASEAN governments to contain the virus spread. A number of projects have already missed their deadlines and are running behind schedule. However, the impact of Covid-19 on project execution varied across countries.
The Department of Highways, Thailand, had planned the implementation of seven key projects worth over $1.4 billion during 2020. Of these, the design work for five projects has been completed with median prices being calculated for bidding. The five projects are the fifth Thai-Lao Friendship Bridge connecting Bung Kan province in Thailand and Bolikhamsai province in Laos (16 km, 3.9 billion baht), the eastern bypass for Nong Khai (16 km, 3 billion baht), an outer ring road for Nakhon Ratchasima (24 km, 3.06 billion baht), a motorway project king Bang Khunthian district of Bangkok and Samut Sakhon’s Ban Phaeo district (25 km, 32.2 billion baht), and another motorway linking NakhonPathom and Phetchaburi’s Chaam district (109 km, 79 billion baht). The contracts for these projects were scheduled to be awarded by May 2020; however, the same is pending till date and is unlikely to happen in the coming one-two months.
In light of the negative impact of Covid-19, the Vietnamese Ministry of Transport has planned to change the financing pattern of three sub-projects under the Eastern North- South expressway project from public-private partnership (PPP) to public investment. While construction work on the projects is now expected to start from the third quarter of 2020, the change in the financing pattern will delay their implementation. Just like in other countries, Indonesian road and bridge projects have also been facing the brunt of the pandemic. The ongoing pandemic has not only created short-term macroeconomic challenges for the country, but has also derailed project execution.
While Covid-19 has frozen a number of sectors in Cambodia, road projects remained relatively unfazed by the pandemic. Construction works on the country’s first expressway continues to make headway under the joint efforts being made by the Cambodian and Chinese workers. The 190 km long expressway will connect the capital city of Phnom Penh and the deep seaport province of Preah Sihanouk in south-western Cambodia. Expected to entail an investment of $2 billion, the expressway is progressing well despite the pandemic.
The road ahead
No nation has been spared from the widespread disruption caused by Covid-19. However, its degree of disruption, timing and the nation’s response have varied significantly. While the larger nations generally have the resources to weather the pandemic, the less developed and developing countries, like Philippines, Indonesia, Thailand, Malaysia and Vietnam, began facing the crisis at a disadvantage.
According to industry experts, while the ASEAN countries experienced a number of trends, the potential recipe for recovery also lies in these trends. One of the key focus points that have emerged is the increased attention on infrastructure projects. Many economies have already devised plans to give the much-needed impetus to road infrastructure. Thailand’s transport ministry has planned to increase its spending on road projects during 2020-21, starting October 2020, to aid the economy hampered by the slump in exports and tourism. On similar grounds, the Indonesian government has firmed up its plans to invest heavily in infrastructure projects across the country (including roads) till 2025.
The Build Build Build (BBB) programme of the Philippines is being touted as one of the key programmes to revitalise the domestic economy after the pandemic. While construction of nearly 10,000 km of roads has been completed (including renovation, upgrading and widening for existing roads, bridges, etc.), implementation of some projects has been cancelled. Currently, the government is reviewing the long list of road and bridge projects under the BBB programme so as to prioritise the flagship projects that will facilitate growth in the economy.
In line with its focus on improving regional connectivity through the development of the country’s infrastructure, the Vietnamese government has also planned to increase its focus towards the development of its transport infrastructure. In June 2020, the Vietnamese National Assembly adopted the law on PPP investment, which is aimed at regulating investment activities and attracting private investment in the country’s infrastructure projects. While the pandemic has certainly impacted road projects – from limited construction activity to adherence to additional measures to ensure social distancing, mandatory quarantine rules, and limited availability of raw materials required for road construction, among others – the road sector is expected to be a key driver of economic revival for ASEAN economies.
