ASEAN’s golden anniversary heralds a golden age for infrastructure

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ASEAN’s golden anniversary heralds a golden age for infrastructure

By Stuart Tait, Regional Head of Commercial Banking, Asia Pacific, HSBC 
Special to The Nation

Stuart Tait

 

ASEAN marks its 50th anniversary with its biggest economies pledging to double infrastructure investment to more than US$700 billion (Bt23.2 trillion) in a fiveyear span that could enhance trade, tourism and development and drive sustainable economic growth for decades to come.

 

Transport initiatives are a key focus for the 10 member economies of the Association of Southeast Asian Nations (ASEAN) until 2020.

 

Such investments are vital given infrastructure’s crucial role in creating longterm economic strength, according to the annual World Economic Forum Global Competitiveness Report.

 

The emphasis on building better connections to facilitate trade and investment and the flow of goods and people in and around ASEAN cannot be underestimated.

 

It will help domestic and international companies maximise the opportunities inside one of the world’s most populous, fastestgrowing and vibrant regions. It is one that, with a combined GDP of about US$2.8 trillion, already ranks as the world’s seventh largest and is on track to be in the top three by 2030.

 

Improving transport links in the ASEAN supply chain will reduce import costs, no small thing considering that 70 per cent of global trade is now in intermediate goods and services and capital goods, according to World Bank estimates.

 

No small thing either considering that ASEAN trade volumes are forecast to roughly double to US$2.8 trillion from 2014 to 2025, fuelled by the consumption anticipated from 57 million new middle-class households set to be created in the coming decade.

 

The massive potential consumer spending power of this substantial, young and increasingly urban population is a key attraction for China under its Belt & Road Initiative (BRI) to upgrade the physical infrastructure, investment and business links that help drive trade. 

 

ASEAN and China share a goal to double their bilateral trade from around US$500 billion last year to US$1 trillion by 2020. Such growth makes the business opportunities for infrastructure investment and the ecosystems that grow around major projects particularly compelling.

 

Thailand is set to play a substantial role in this infrastructuredriven trade story, with the government planning US$120 billion of spending. 

 

The impetus to improve Thailand’s transport links is driven in large part by the fact that manufacturing generates 84 per cent of Thai GDP and almost all manufactured goods (96 per cent) are moved by land.

 

The fasttracking of 56 mega projects worth US$70 billion and Thailand’s US$44 billion Eastern Economic Corridor development plan make it a key market for private sector financing, with around a quarter of funding needed likely to come from “PublicPrivate Partnership” sources.

 

Railway investment is a key anchor of planned transport spending, with highspeed links to Singapore and Bangkok at the heart of a blueprint that will also upgrade existing mass transit capacity and develop East Coast networks.

 

Singapore’s transport infrastructure is already some of the best in the world – and it’s going to become a whole lot better under a government plan to double the size of the city state’s metro system by 2030.

 

Adding 113 kilometres of track to the network in three new lines should create US$60 billion of new investment between 20162020, compared with the US$50 billion spent from 20112015.

 

Add in the huge spending planned for Indonesia, Malayisa and the Philippines and it becomes clear just how much emphasis ASEAN economies are putting on laying the foundations for growth and development for decades into the future.

 

Put another way, ASEAN’s Golden Anniversary is shaping up to be the start of a golden age of infrastructure-backed trade and investment growth. 

 

Source: http://www.nationmultimedia.com/detail/aec/30324366

 

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