Posted on 28 Apr 2023
Southeast Asia has one of the most diverse economies in the world. Covering an area of 1.6 million square miles, it has a population of 600 million people. In 2022, total Gross Domestic Product (GDP) was US$ 900 billion. It has many ethnic groups who contribute to Southeast Asia’s rich culture, language, religion, and cuisine.1
As the 7th largest economy in the world, Southeast Asia is poised to become the 4th largest economy by 2050. This means, focus will be on the development of infrastructure. The Master Plan of ASEAN Connectivity 2025 emphasizes ASEAN infrastructure development with the focus on sustainable infrastructure, cross country connectivity and private capital mobilization.2
ASEAN
The Asian Development Bank (ADB) forecasts between 2016 to 2030, infrastructure will grow from US$ 2.8 trillion to US$ 3.1 trillion. This requires an investment of between US$184 billion to US$210 billion. Infrastructure projects such as energy, road, rail, water, and others will drive the demand in the construction sector.3
Infrastructure Projects
Indonesia has the most number of infrastructure projects followed by Thailand and the Philippines.
Road Sector
Traffic congestion is a problem faced by all Southeast Asia cities. As the economy grows, upgrading of infrastructure is of utmost importance. Construction of roads and highway expansion are thus a foregoing conclusion.4
Aviation Sector
The aviation sector in ASEAN is expected to remain strong. Demand for construction of airports is due to liberalisation of the ASEAN markets, growth in wealth of the middle class and lack of other form of transport.5 Between 2011 to 2019, air passenger traffic expanded at annual growth rate of 7.5%.
Bridge Sector
Construction of bridges is a way to measure a nation’s success. Investment in bridges will lead to growth in trade and economic expansion. In the long run, the benefit of bridges will out way the construction cost.6
Telecommunication Sector
Dubbed as the next Silicone Valley, the region will all “systems go” for its digital sector.7 In 2023, digital activities are expected to increase, of which 15% of the revenue will be derived from one to three companies. The market value for digital services in Thailand is expected to reach 693.8 billion Thai baht by 2024. In the Philippines, 4,000 new towers will be built to improve 5G coverage.8
Rail Transport Sector
Rail transport consists of mass rapid transit (MRT) systems, light rail transit (LRT) systems, and commuter rail systems (CRS). Countries in Southeast Asia are upgrading and promoting efficient rail infrastructure. Cambodia has commissioned a feasibility study to upgrade its rail network to achieve maximum speed threshold.9
Water and Waste Management Sector
Water supply management is a very important issue in Southeast Asia as many areas still lack clean water. Governments across ASEAN countries are constantly looking for new ways to improve the water treatment facilities. Singapore has achieved the sanitation coverage of 100%. Malaysia is second with 99.7%, Thailand (98.7%), Vietnam (94%). Initiatives have been implemented such as regulatory reforms, innovative technology, new capacity building programmes amongst others.10
Energy Sector
By 2040, demand for energy is expected to increase by 60% in Southeast Asia. This is spearheaded by increase in industrial activities, expanding population and rise in income. There is an expectation to achieve the green city status, and be interconnected with one another. However, challenges will need to be surmounted such as inadequate financial support, regulatory barriers, and unequal access to technology.11
Future of Infrastructure
For the future, countries in Southeast Asia will continue to focus on developing their infrastructure to ensure sustainability. Infrastructure is the backbone of Southeast Asia’s economy. As Southeast Asia countries move towards “green infrastructure” it is important to practice low carbon, climate resistance and meeting the local demand.
Sources
1 Yale University, 2023
2 The Asian Infrastructure Investment Bank (AIIB), 2023
3, 6, 9,10 Southeast Asia Infrastructure, 2013-2023
4 AECOM, 2021
5 Edward Clayton, Airport Infrastructure in Asia
6 Southeast Asia Infrastructure, 2013-2023
7 Forbes, 2022
8 Telecom Review
11 PWC
Source:SEAISI
