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“Build, Build, Build” would be felt not only in the Philippines but also across the so-called “tiger cub” economies of Asean as governments ramp up infrastructure development to sustain economic growth, UK-based Oxford Economics said Friday.
“Philippine President Duterte’s phrase ‘Build, Build, Build’ can be aptly used to describe the vast growth potential and opportunities of the Asian construction sector over the next 10 years in the Asian century,” Oxford Economics said in a report titled “Asia to ‘Build, Build, Build’ as a region-wide construction boom gathers pace.”
Oxford Economics noted that Asean tiger cubs—which besides the Philippines include Indonesia, Malaysia, Thailand and Vietnam—are now among the fastest-growing economies globally, even outpacing expansion in mature Asian tigers such as Hong Kong, Singapore, South Korea and Taiwan.
“And with China’s once-booming economy slowing, the ‘cubs’ may also soon be growing faster than the region’s dominant economic powerhouse,” Oxford Economics said.
“To maintain their current, strong growth trajectory, and fulfill their long-term economic potential, these [tiger cub] countries need to invest heavily in infrastructure such as transportation and utilities like power generation and distribution, water, and sewage networks. While underpinning continuing strong economic expansion, these expected investments will simultaneously boost the living standards of the people of these populous nations,” according to Oxford Economics.
In the case of the Philippines, it will likely benefit from closer ties with both China and Japan, according to Oxford Economics.
“Japan’s government is increasingly competing to invest in infrastructure projects in Southeast Asia. In one example, the Philippines recently signed a deal with Japan to build the Philippines’ first subway for $6 billion,” it noted.
“But whether investment flows from China or Japan, the overall impact is further fuel for the Southeast Asian construction sector,” it added.
In Asean, “rising living standards and increasing incomes for the region’s 639 million people will fuel demands for better quality housing and public facilities, including for healthcare and education, as these nations see a burgeoning of their better-off middle class,” Oxford Economics said.
“At the same time, even with rising incomes, the region’s growth is also being buoyed by its evolution as a key regional and global manufacturing hub supported by its large supply of still relatively cheap labor. This increasingly powerful trend is attracting a strong flow of inward business investment from both local and multinational manufacturers. In turn, this is stoking demand for commercial and industrial buildings and improved transport connectivity across each country and the wider region,” it added.
Also, “with all Asean member-countries (except already heavily developed Singapore) still undergoing rapid urbanization, there are huge requirements for new built structures (beside infrastructure construction) to accommodate the increasing demand,” it said.
“In terms of residential development, across the Asean region there is equally a large under-supply of housing. When combined with the need for commercial real estate and infrastructure to service both sectors, we expect the region’s construction sector to remain on a strongly upward growth path over the next five years,” according to Oxford Economics.
It helps that China’s “One Belt, One Road” initiative is aggressively aiming to connect the mainland and Southeast Asia with the rest of the continent and as far as Africa and Europe, Oxford Economics said.
For Oxford Economics, “the Southeast Asian region is a pivotal element in the One Belt, One Road initiative, and China has the financial muscle to develop these projects aggressively while they are keenly embraced by countries in the region lacking the resources to develop such much-needed infrastructure projects.”
As such, “the resulting increased scale of development (from the China-led initiative) looks set to prove to be win-win for all in the region, it said.
In the next five years, Oxford Economics estimated construction investments across Asia to average $1.61 trillion yearly and exceed the projected $890 billion in the European Union as well as $697 billion in the United States.
Last year, Asia’s construction industry, as measured by gross value added in real terms, reached $1.4 trillion, surpassing the EU’s $831 billion and the US’s $648 billion./jpv
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