Southeast Asia’s Infrastructure Sector and the COVID-19 Pandemic
In 2019, the infrastructure sector in Southeast Asia promised fantastic business opportunities for US-based investors. This sector has recorded a steady growth over the past five years at the level of 4.5%, that the region’s poverty level has been successfully reduced. Unfortunately, the COVID-19 pandemic has caused economic disruption worldwide, including the SEA’s economy.
SEA Economic Slowdown during the Pandemic of Covid-19
It is predicted that the economy of SEA countries will suffer from contraction; for example, Indonesia’s economy will shrink at -10.3%, Malaysia -13.5%, Thailand -13%, and the Philippines -13.6%. This economic slowdown significantly affects the infrastructure sector because most Asian countries’ governments delay their infrastructure projects and focus on taking financial measures related to healthcare.
Opportunities Left in the SEA Infrastructure Sector
However, business opportunities in Southeast Asia’s infrastructure sector do not disappear altogether. Certain countries in this region have taken specific measures that resulted in good investment potential for US-based investors.
- Thailand has announced specific policies to establish the country as an electric vehicle hub in 5 years.
- Malaysia has built up 4.3 gigawatts of solar cell module manufacturing capacity.
- Vietnam has become a popular destination for electronic manufacturing.
The first two points above are strongly related to green infrastructure. This particular segment is expected to give an immense potential for investors over the next decade. Moreover, some rooms for specific infrastructure segments grow as they are the region’s key market trends.
- Railway
Traffic congestion is one of the biggest problems in SEA big cities, and the best solution for it is the mass rapid transit system and high-speed train network. Therefore, it is expected that railway projects will not be delayed entirely, and investors will eventually be profits from this industry.
- Airport
It is predicted that by 2030, the aviation market in Asia will be bigger than the combination of the aviation markets in North America and Europe. This market growth will force the SEA governments to build more airports.
- Roadway
The road infrastructure in SEA countries still needs improvements, especially those located in emerging countries. Investors who want to make investments in this infrastructure segment will have ample opportunities to gain profit.
- Waterway
Some SEA countries badly need an excellent waterway system because they do not have access to clean water; for instance, about 11% of Indonesians do not have access to clean water. Therefore, there are profitable opportunities for foreign investors to invest in this particular infrastructure segment.
It can be concluded that the pandemic of covid-19 does not entirely erase the existence of investment opportunities in the SEA infrastructure sector. Through the right market research and market analysis, investors will gain profit from their investment in this industry.
