Ramp up investments in air links, Asean urged

Member states of the Association of Southeast Asian Nations need to ramp up investments in infrastructure to improve air connectivity, address overcapacity in most airports in the region, and meet the expected growth in regional demand for air travel.

“Demand for air transport in our part of the world is going to grow very rapidly, driven by the fact that the growing middle class in Asia is going to exceed the size of the middle class in North America and Europe combined. And it’s not going to take a long time for this to be realized, the estimate is 2030… But that’s not actually a very far timeline at all,” said Josephine Teo, senior minister of state, Ministry of Finance of Singapore.

“Of the estimated 800 million new passengers on air travel this year, half will originate from Asia, and that’s a fairly significant growth for aviation in our part of our region,” she added.

Apart from stressing the need to invest in airport infrastructure to address overcapacity, Teo said during one of the sessions of the World Economic Forum on East Asia yesterday that Asean should also look into how air  transport agreements can be further liberalized.

Although Asean as a bloc has agreements with other countries, Teo raised possible opportunities in securing region-to-region air transport agreements, such as one between Asean and the European Union.

She said there was growing interest in such an agreement among Asean and EU member-states.

If realized, Teo said the agreement could become a “game changer” in the global economy.

Air connectivity is one of the components in the regional bloc’s thrust to boost connectivity, which is deemed critical in ensuring the successful establishment of the Asean Economic Community (AEC).

Teo stressed that Asean connectivity is one area of challenge and also of opportunity if the bloc is able to fully realize the idea of the AEC.

“When you talk about making sure that there is free flow of goods and services, Asean connectivity is central to this. We would like to see  equitable development across Asean and you need connectivity to achieve that. We would like to see the region becoming more competitive, and in order to achieve that, we need connectivity. The idea is that we want to be a globally attractive region, to achieve that, we need that connectivity,” Teo explained.

Under the Masterplan on Asean Connectivity, the regional bloc targets to connect the 10 member states through enhanced physical infrastructure development (physical connectivity); effective institutions, mechanisms and processes (institutional connectivity); and empowered people (people-to-people connectivity).

It is expected that through enhanced Asean Connectivity, the production and distribution networks in Asean will be “deepened, widened, and become more entrenched in the East Asia and global economy.”

“What it means for business is that when you think of the large scale and scope of investment needed to achieve that connectivity, it spells opportunity. We  would like to bring in the resources and expertise of the dialogue partners and of the international financial institutions… The infrastructure needs are so vast in the region,” Teo said.

Teo said that as far as connectivity is concerned, Asean has already achieved significant gains, completing some 70 percent of the measures set by the regional bloc.

“But those are the low hanging fruits. There are more challenging ones,” she added.