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Apr 20, 2016 11:27:08
ASEAN Infrastructure Development Beneficiaries

Summary

- ASEAN is made up of over 600 million people living within the region, with a combined GDP of $2.6 trillion, making it the 7th largest economic bloc globally and 3rd largest in Asia, while its labour force is the third largest globally after China and India.

- Underbuilt and growing from low base - On a per capita basis, ASEAN nations have only a small proportion of the roads and railways found in OECD countries, with significantly lower electricity, clean water and sanitation. For example, for every 1000 people in ASEAN, an estimated 10km of roads have been built, a far cry from the ~200km of roads per 1000 people in economically advanced countries (source: ADB).

- Infrastructure needs - ASEAN needs an estimated $100bln yearly in investments to address its infrastructure needs, but is currently investing less than the amount, which results in infrastructure bottlenecks and high logistics costs for businesses.

- Encouraging signs of regional efforts and policies moving in the right direction - With the region’s sizable private savings and foreign exchange reserves, regional efforts are ongoing to address the under-built infrastructure status through multiple infrastructure projects on roads, railways, power, clean water supply and other critical infrastructure.

- While the process will take time with funding & execution risks, investor expectations are low. The structural story is attractive from a multi-year perspective, while increases in near term pump-priming by regional governments to stimulate the economies will act as a positive growth cushion against external macro headwinds.

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