BANGKOK (Reuters) - In western Thailand, bulldozers will soon
clear land for a highway into Myanmar. In the Philippines, another Manila-area
toll road is getting under way. Indonesian leaders promise more railways and
airports. Singapore has unveiled plans for a new subway line.
Across Southeast Asia, public
works are being expanded by governments needing to counter a slowdown in global
demand and sustain an acceleration in growth that has made the region one of
the few bright spots in a volatile world economy.
Spending on big infrastructure
projects usually spans many years, and a combined figure for how much Southeast
Asia is investing this year compared with in 2011 is not available. But
anecdotal evidence indicates infrastructure spending is rising.
One key aspect of Southeast Asia
being a global bright spot is that some of its governments have strong enough
fiscal positions to jack up such spending -- unlike many in the West and
elsewhere at present. Indonesia, Southeast Asia's largest economy, says it will
raise capital spending by 15 percent in 2013. The Philippines says next year's
infrastructure spending will be more than 19 percent above this year's allocation.
The Asian Development Bank (ADB)
estimates that Southeast Asia's 10 countries need at least $60 billion a year
to fund ambitious infrastructure work. That's a little bigger than the entire
gross domestic product of Myanmar, itself embarking on huge infrastructure
projects as it emerges from isolation, another boost to the region.
Big spending on public works,
combined with strong domestic demand, partly explains the optimism among many
economists in Southeast Asia, a region that has often withered during global
downturns due to its reliance on exports.
The Manila-based ADB, for
instance, forecasts 5.2 percent economic growth this year across Southeast Asia
and 5.6 percent next year, up from 4.6 percent in 2011.
"The increase in economic
growth in the Asia Pacific region, amid the global economic downturn, must be
supported by infrastructure," Indonesian President Susilo Bambang
Yudhoyono told a conference in Jakarta last week. "For Indonesia,
infrastructure development is the main priority."
EXECUTION PROBLEMS
Infrastructure projects are not
without danger. Execution problems and cost overruns are common. Land
acquisition can be thorny -- laws sometimes don't help -- and financing can be
complicated.
But the benefits of upgrading a
country's infrastructure are clear.
"The short-term impacts of
local demand boost and employment generation, for construction and related
services, could help create some counter-cyclical effects," said Arjun
Goswami, head of regional cooperation in the ADB's Southeast Asia department.
"In the medium- to
longer-term, improved infrastructure would contribute to lowered costs of doing
business, increased market accessibility and enhanced competitiveness."
The Association of Southeast
Asian Nations (ASEAN) groups Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Some of the impetus for building
roads, rail links, ports and airports is the creation of the ASEAN Economic
Community (AEC), which will allow free movement of goods, capital and skilled
labor in the region of 600 million people from 2015.
Thailand, for example, is
building a 46 billion baht ($1.47 billion) highway that will eventually run 160
kms (100 miles) west from Bangkok to the border with Myanmar, providing a fast
link to the $50 billion Dawei industrial zone being built in Myanmar by
Thailand's Italian-Thai Development Pcl .
Arkhom Termpittayapaisith,
secretary-general of the National Economic and Social Development Board
(NESDB), told a seminar Thailand planned $80 billion in infrastructure spending
over the next 10 years, with up to 50 percent of that going into railways to
induce a shift from road to rail transport.
"Half of the investment cost
will be shouldered by the government. Around 20 percent will be on a
public-private partnership (PPP) basis," he said.
Alan Raybould
Reuters
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