Southeast Asia infrastructure in need of $2.1tr

Vania Goncalves 16 Aug 2016 ASIA BUILDINGS

Southeast Asia is in need of $2.1tr in infrastructure spending by 2030 to meet their growing population demands, according to a report by banking group HSBC.

HSBC economist Joseph Incalcaterra stated in the report that the urban population in the region will rise by over 90M by 2030 and that the planned infrastructure spending would only cover $910bn.

Incalcaterra said: “To fill the infrastructure gap, more non-government financing is necessary, both from private sources and institutions such as the Asian Development Bank and new Asian Infrastructure Investment Bank.”

The six countries covered in the report are Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam.

According to the report, regional governments have to increase infrastructure spending. Low- to middle-income economies should spend at least 5% of gross domestic product (GDP) on infrastructure — only Vietnam has been meeting this target.

Indonesia and the Philippines have been increasing infrastructure budgets, while Thailand and Singapore had promised increased infrastructure spending and Malaysia should attract more investment.

Incalcaterra added: “Governments across the region thus need to be much more aggressive with increasing PPP programmes and instituting proper reforms to deepen capital markets. Only that will fill ASEAN’s gaping infrastructure pothole.”

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