Market Highlights: Dynamic Growth and Emerging Trends in Southeast Asia
With a combined gross domestic product (GDP) of US$2.4 trillion, and ranked as the world’s seventh largest economy, Southeast Asia is on route to accelerated economic growth.
By 2030, its high urban share of 45% of its 600 million population, coupled with the region’s young demographic, presents an optimal setting for heavy investment by MNCs while governments follow through on infrastructure improvement and economic enhancements to support increasing urbanisation.
- Asian Development Bank (ADB) estimates that between 2010 and 2020, energy and transport sectors will form 62.6% of the total ASEAN infrastructure investment needs
- In line with projection by Goldman Sachs, infrastructure spending in power and transport for four ASEAN countries alone (Thailand, Malaysia, Indonesia, Philippines) would amount to about US$524 billion come 2020
- Of particular interest are two big scale land infrastructure projects that are underway, including the ASEAN Highway Network (AHN) and the Singapore-Kunming Rail Link (SKRL)
- The AHN, an extension of the ‘Trans-Asian Highway’, will stretch 38,400 kilometres through all ten ASEAN countries once completed
- During the ASEAN Informal Summit in 2000, route number one of the SKRL highspeed rail which is to consist of a 5,382km distance from Singapore to China through Malaysia, Thailand, Laos, Vietnam and Cambodia, including two spur road sections, was given the green light
- With Southeast Asian countries being a fast developing region, the need for power to propel this growth has also grown exponentially
- By 2035, total projected market demand for power in eight ASEAN countries is projected to reach 1,958 terawatt-hour (TWh)
- Another major ASEAN infrastructure initiative is the ASEAN Power Grid (APG) which aims to interconnect power systems between neighbouring countries by building transmission lines between them, to attain a totally integrated Southeast Asian power grid system. The investment requirement of the APG is estimated at USD 5.9 billion
Source: ASEAN’s half a trillion dollar infrastructure opportunity / Goldman Sachs 2013, ASEAN Power Grid / ASEAN Centre for Energy 2015, ASEAN Poised for Accelerated Economic Growth / KPMG International Cooperative 2015, An Overview of Infrastructure Opportunities in ASEAN / KPMG International Cooperative 2015, Master Plan on ASEAN Connectivity / Ministry of Foreign Affairs of the Kingdom of Thailand