Risks may persist around infrastructure investment in APAC, but the overall outlook is very positive
While there are certain political and economic caveats, respondents are clearly looking east for growth and returns. Below are five key points that commentators feel will have a major influence on the APAC infrastructure market in 2019 and beyond:
APAC governments are planning to increase infrastructure financing and development by easing regulations for private and foreign investor participation
1. A growing market
Our survey revealed that road transportation is looking very promising as a sector as countries develop. But overall, the sheer number and diversity of major projects listed by respondents can be seen to reflect a general excitement for APAC infrastructure— and countries’ ambitions—not to mention the great number of different countries that are viewed as attractive in the coming years.
2. Looking long term
Given current global macroeconomic and political volatility, it is hardly surprising that the majority of respondents are looking at larger, more ‘stable’ economies such as Australia, Singapore and India in 2019. However, countries such as Indonesia, Malaysia, Thailand and the Philippines also feature prominently, and it is likely because investors see the long-term benefits on offer. Indeed, when asked about the benefits of investing in Asian economies, the strength of long-term investment return came out as the top answer.
3. Renewables refreshed
The renewable energy market is showing sustained growth. Technical risks and costs have reduced as the volume of projects builds beyond the first generation of offshore wind projects. Political risk still exists—changes in governments and policies on green energy can cause short-term setbacks—but a changing climate and demand for sustainable energy mean that renewables projects are set to grow.
4. Investment incoming
Barring major macroeconomic shocks, which are always a risk for government-backed infrastructure programmes, more market reform will allow investors access to a wider portfolio of projects. Variation in definitions notwithstanding, PPPs formed and executed well will bring benefits for public and private sectors. ‘APAC governments are planning to increase infrastructure financing and development by easing regulations for private and foreign investor participation’, says the managing director of an investment fund in Hong Kong.
5. Tech takes control
All the infrastructure sectors outlined in the report rely heavily on technology and this dependence is only going to grow in the coming years.
The managing director of an investment fund in Canada says: ’I feel technology will play a significant role in infrastructure development in 2019 and beyond. Technology disruption and the use of machine learning, robotics and AI will be centre stage and will completely alter the way infrastructure development happens in the future’.
However, investors shouldn’t just see technology as a disruptive force but an enabling one allowing major projects to be completed more safely, quickly and efficiently.
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