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A Summary of South East


Asian Infrastructure
Spending: Outlook to 2025
Introduction
Infrastructure spending is a key driver of the global economy and was impacted
by the global financial crisis. However, we expect spending on capital projects
and infrastructure to grow significantly over the next decade.

We have undertaken in-depth analysis of the infrastructure market in


49 countries that account for 90% of global economic output.

This analysis has led to the following conclusions:

• The Asian market, driven by China’s growth, is slated to represent nearly


60% of global infrastructure spending by 2025.

• To realise the expected surge in infrastructure spending, emerging markets


will need to provide the proper mix of economic, social, and environment
factors, sometimes referred to as the enabling environment. Some also will
have to create a more conducive business environment for investors as well
as engineering and construction firms by overcoming obstacles such as
unpredictable regulations, bureaucratic delays, and struggles to secure land
rights.

• Growing urbanisation in emerging markets such as Philippines and


Indonesia should boost spending for vital infrastructure sectors such as
water, power, and transportation.

• Increasing prosperity in emerging markets is expected to drive


infrastructure financing toward consumer sectors, including transportation
and manufacturing sectors that provide and distribute raw materials for
consumer goods.

This publication provides a preview snapshot of our analysis in selected South


East Asian economies in advance of our full report on the global infrastructure
market. To read more about our global report, Capital Project and Infrastructure
Spending: Outlook to 2025, visit our global website, www.pwc.com/gx/en/
capital-projects-infrastructure, following its launch on 16 June 2014.

2 PwC
Contents

Introduction 2

Country snapshots
• Indonesia 4
• Malaysia 5
• Philippines 6
• Singapore 7
• Thailand 8
• Vietnam 9

Contacts 11

South East Asian Outlook to 2025 3


Indonesia

Delivering and enabling investment in infrastructure will be a key agenda item for
Indonesia’s new President. Overall, infrastructure spending in the country is expected to
grow to around $165 bn by 2025, with growth in public investment spending expected
to grow by around 7% per year. This represents a relatively stable proportion of total
investment in the Asia-Pacific region but a growing proportion of global spending.

Infrastructure in global context Indonesia versus peers


Total infrastructure spending per year, $bn
Infrastructure spending
3.5% as a % of Asia Pacific, 2.0%
Forecast LHS 180 Forecast
1.8%
3.0% 160
1.6%
2.5% 140
1.4%
120
2.0% Infrastructure 1.2%
spending as a % of 1.0% 100
1.5% world, RHS Indonesia
0.8% 80 Malaysia
1.0% 60
Philippines
0.6%

0.5% 0.4% 40
0.2% 20
0.0%
0.0% 0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Source: Oxford Economics Source: Oxford Economics

Overall growth is expected across all infrastructure sectors in the country. The most
significant growth is likely in the heavy manufacturing sector, which is expected to grow
from $13 bn in 2012 to $46 bn by 2025, driven by expansion of the mining sector.

Infrastructure spending by broad sector Manufacturing infrastructure investment


$bn per year, current prices $bn per year, current prices

50
180 Social Forecast Fuels
Transport and comms 45 Basic metals
160
Manufacturing Chemicals
40
140 Other utility
35
120 Power
Extraction 30
100
25
80
20
60
15
40 10
20 5
0 0
2005 2015 2025 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Source: Oxford Economics Source: Oxford Economics

4 PwC
Malaysia

Infrastructure investment rose from $6 bn to $16 bn between 2005 and 2013 in Malaysia.
Infrastructure spending is expected to grow by around 9% a year between 2013 and 2025
which is consistent with other countries in the region but substantially faster than the
global infrastructure market.

Infrastructure in global context Malaysia versus peers


Total infrastructure spending per year, $bn
Infrastructure spending as
0.9% a % of Asia Pacific, LHS 0.6%
Forecast 180 Forecast Malaysia
0.8% Philippines
0.5% 160 New Zealand
0.7% Indonesia
140
0.6% 0.4%
120
0.5% Infrastructure spending 100
0.3%
0.4% as a % of world, RHS
80
0.3% 0.2% 60
0.2% 40
0.1%
0.1% 20
0.0% 0.0% 0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Source: Oxford Economics Source: Oxford Economics

Overall growth is likely in infrastructure investment across all sectors. Investment growth
in the utilities segment is expected to be the most significant, owing to the comparatively
higher need to improve its electricity infrastructure in the region.

Infrastructure spending by broad sector Utility infrastructure investment


$bn per year, current prices $bn per year current prices

50 20 Forecast
Social
45 Transport and comms 18
40 Manufacturing 16 Electricity generation
Other utility Gas distribution
35 14
Power Water supply and sanitation
30 Extraction 12 Electricity T&D
25 10
20 8
15 6
10 4
5 2
0 0
2005 2015 2025 2005 2007 2009 2011 2013 2015 2017 2019 2021 2025

Source: Oxford Economics Source: Oxford Economics

South East Asian Outlook to 2025 5


Philippines

The Philippines’ economy has grown very strongly in recent years and infrastructure
spending needs to respond to the growth in the economy to support further growth.
Spending in infrastructure is expected to grow at around 10% a year in the next decade,
reaching a total of $27 bn a year by 2025.

Infrastructure in global context Philippines versus peers


Total infrastructure spending per year, $bn

0.6% Infrastructure spending 0.35%


Forecast as a % of Asia Pacific, 180 Forecast Philippines
LHS Malaysia
0.5% 0.30% 160 Thailand
140 Indonesia
0.25%
0.4%
120
Infrastructure spending 0.20%
100
0.3% as a % of world, RHS
0.15% 80
0.2% 60
0.10%
40
0.1% 0.05%
20
0.0% 0.00% 0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Source: Oxford Economics Source: Oxford Economics

Growth is expected to be focused on manufacturing, transportation and communications,


and social infrastructure. The expansion in the chemicals and basic metals sectors is likely
to lead to significant growth in the manufacturing sector throughout 2025.

Infrastructure spending by broad sector Manufacturing infrastructure investment


$bn per year, current prices $bn per year, current prices

14
30 Social Forecast Fuels
Transport and comms Basic metals
12 Chemicals
25 Manufacturing
Other utility 10
20 Power
Extraction 8
15
6
10
4

5 2

0 0
2005 2015 2025 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Source: Oxford Economics Source: Oxford Economics

6 PwC
Singapore

Singapore has high quality infrastructure which means that its infrastructure needs
will be lower than other countries in the region. Hence, its share of regional and global
infrastructure spending is likely to fall. Singapore’s overall infrastructure spending is
expected to approach $18 bn a year by 2025.

Infrastructure in global context Singapore versus peers


Total infrastructure spending per year, $bn
0.8% 0.30%
Forecast 70 Singapore
Infrastructure spending as Forecast
0.7% 0.25% Malaysia
a % of world, RHS New Zealand
60
0.6% 0.20% Thailand
50
0.5% 0.15%
40
0.4% 0.10%
Infrastructure spending as 30
0.3% 0.05%
a % of Asia Pacific, LHS
0.2% 20
0.00%
0.1%
10 Forecast
0.0% 0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Source: Oxford Economics Source: Oxford Economics

Rail projects are a key driver of investment growth in Singapore with a doubling of the
metro system by 2030, contributing to an estimated $16 bn to be spent over the coming
decades. Manufacturing and social infrastructure are also expected to see growth in
investment.

Infrastructure spending by broad sector Transportation infrastructure investment


$bn per year, current prices $bn per year, current prices

20
7
18 Social Forecast Ports
Transport and comms Airports
16 6 Rail
Manufacturing
14 Other utility Roads
5
12 Power
Extraction 4
10
3
8
6 2
4
1
2
0 0
2005 2015 2025 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Source: Oxford Economics Source: Oxford Economics

South East Asian Outlook to 2025 7


Thailand

There is positive outlook for increase in infrastructure investment in Thailand which is


expected to reach $58.5 bn by 2025. Thailand’s share of total global spending will rise in
the near term due to the expected high speed rail project but will be broadly stable over the
longer term.

Infrastructure in global context Thailand versus peers


Total infrastructure spending per year, $bn
Infrastructure spending as
1.6% a % of Asia Pacific, LHS 0.8%
300 Forecast Thailand
1.4% 0.7% Malaysia
Singapore
250
1.2% 0.6% South Korea

1.0% 0.5% 200


Infrastructure spending as
0.8% a % of world, RHS 0.4% 150
0.6% 0.3%
100
0.4% 0.2%
50
0.2% 0.1%

0.0% 0.0% 0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Source: Oxford Economics Source: Oxford Economics

Investment is expected to grow across all sectors in Thailand. An ambitious high-speed


rail project under construction, which is expected to cost $32 bn over 7 years, shall project
significant spending in the transportation sector.

Infrastructure spending by broad sector Transportation infrastructure investment


$bn per year, current prices $bn per year, current prices

12
70 Social Forecast Ports
Transport and comms Airports
10
60 Manufacturing Rail
Other utility Roads
50 8
Power
Extraction
40
6
30
4
20

10 2

0 0
2005 2015 2025 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Source: Oxford Economics Source: Oxford Economics

8 PwC
Vietnam

Vietnam has strong prospects for economic growth but bears significant infrastructure
challenges. Its infrastructure spending is expected to top $56 bn by 2025 with growth rate
of around 9% a year which is in line with the regional growth.

Infrastructure in global context Vietnam versus peers


Total infrastructure spending per year, $bn
1.2% Infrastucture spending 0.7%
Forecast as a % of Asia Pacific, 60
LHS Forecast Vietnam
1.0% 0.6%
Malaysia
50 New Zealand
0.5% Philippines
0.8%
40
0.4%
0.6%
30
Infrastructure spending 0.3%
0.4% as a % of world, RHS
20
0.2%
0.2% 10
0.1%

0.0% 0.0% 0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Source: Oxford Economics Source: Oxford Economics

Growth is expected across all infrastructure sectors in the economy of Vietnam. Significant
investment is expected in the transportation and manufacturing sectors.

Infrastructure spending by broad sector Transportation infrastructure investment


$bn per year, current prices $bn per year, current prices

18
60 Social Forecast Ports
Transport and comms 16 Airports
50 Manufacturing Rail
14
Other utility Roads
Power 12
40
Extraction 10
30
8

20 6

4
10
2

0 0
2005 2015 2025 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Source: Oxford Economics Source: Oxford Economics

South East Asian Outlook to 2025 9


10 PwC
Contacts

Singapore
Mark Rathbone
Asia Pacific Leader
Capital Projects and Infrastructure +65 6236 4190 mark.rathbone@sg.pwc.com

Indonesia
Rizal Satar
Partner +62 21 528 90350 rizal.satar@id.pwc.com

Malaysia
Datuk Mohd Anwar Yahya
Senior Executive Director +603 2173 1811 mohd.anwar.yahya@my.pwc.com

Philippines
Rose Javier
Partner +63 (2) 459 3016 rose.javier@ph.pwc.com

Thailand
Charles Ostick
Partner +66 (0)2 344 1167 charles.ostick@th.pwc.com

Vietnam
Johnathan Ooi
Partner +84 8 3824 0126 johnathan.sl.ooi@vn.pwc.com

South East Asian Outlook to 2025 11


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