Regional Analysis 2019 Southeast Asia

Southeast Asia Market Review 2019

The Southeast Asia region continues to develop at a steady pace, with economic growth projected to reach an annual average rate of 5.1% during 2018-2022. This makes it the fastest-growing among all global regions

5.1%
Projected growth rate to 2022

Southeast Asia Market Review

In this commentary, Southeast Asia is taken as countries bordering the South China Sea, particularly Singapore, Vietnam, Malaysia and Indonesia.

The Southeast Asia region continues to develop at a steady pace, with economic growth projected to reach an annual average rate of 5.1% during 2018-2022. This makes it the fastest-growing among all global regions, and marks an acceleration from the already-healthy rate of 4.8% recorded over the last five years.  

It is expected that construction in the member states of ASEAN (Association of South East Asian Nations) is poised to grow by more than 6% annually over the coming five years, with the combined value of megaprojects (with a minimum value of $25 million across the region standing at $2.9 trillion. Much of this growth is driven by investment in new infrastructure, while increasing domestic demand is driving the rise in the construction of buildings across the Residential and Non-residential sectors. It has also been bolstered by
numerous reforms to promote Public Private Partnerships (PPPs), which were almost universal across the ASEAN region. The Philippines, Myanmar, Laos and Vietnam have undergone such reforms, to create more accessible markets for private sector investment in construction through PPPs. 

It is expected that construction in the member states of ASEAN (Association of South East Asian Nations) is poised to grow by more than 6% annually over the coming five years.

Whilst the outlook for Southeast Asia is very encouraging, Malaysia is transitioning through political reform, resulting in some adjustments to planned major construction for the coming years. Mahathir Mohamad was sworn in as Malaysia's seventh prime minister in May 2018, defeating the coalition that has ruled the nation for six decades, since it obtained independence from Britain. This change in leadership brought with it a detailed review of the capital expenditure outlook, and in fact, resulted in the reduction of the 2019 budget, which affects a number of megaprojects. Two such projects were the Chinese-funded $20 billion East Coast Rail Link (ECRL) project and a natural gas pipeline project in Sabah, which have been postponed. It should be noted that the cancellations and suspensions of major rail projects, including the Singapore-Kuala Lumpur high-speed railway and the East Coast Rail Link, influences not just direct construction expenditure, but also reduces the potential for real estate development along the route. 

Contributors: John Butler and Michael Murphy


 

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