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Brick by brick

Infrastructural investments to maintain South-East Asia’s economic growth

Last year, the Asian Development Bank estimated that the seven main emerging economics of the Association of South-East Asian Nations (ASEAN) – excluding Singapore, Brunei and Laos – require infrastructural investments amounting to some 147 billion dollars from the present to 2020 in order to maintain their current growth levels. However, total infrastructural investments currently undertaken by these seven countries equals just 55 billion dollars, the equivalent of 2.3 percent of their total combined GDP. Regional leaders are aware of these issues and are making efforts to increase the level of infrastructure investments to 5.58 percent of their national GDPs, which is the percentage recommended by the World Bank.

There are also ambitious projects such as Philippine President Rodrigo Duterte’s “Build, Build, Build” plan or Indonesian President Joko Widodo’s 196 billion dollar “national building” agenda. The region also boasts several exemplary models: Malaysia, one of the region’s leaders in terms of public transport development, is expanding its long-distance railway network through projects worth a total of 8.68 billion dollars. Bangkok, Thailand’s capital that until the 1990’s was Asia’s most heavily trafficked city, has since built one of the region’s most efficient mass transport networks that is especially expanding in the city centre and near the airport. Bangkok’s pride and joy is the BTS SkyTrain elevated railway, that was inaugurated in December 1999 and is today used by some 700,000 people per day, in addition to the 300,000 using the underground railway: if even a part of these people used the roads, they city would be continuously blocked. By the year 2025, all six of the largest ASEAN countries are expected to have a functioning urban railway in place.

The projects, from Ho Chi Minh City to Jakarta, are mainly funded by China and Japan who are competing ever more fiercely in order to fund the construction of underground railways and other mass transport services in the entire region. Only in the past few months, for example, Tokyo has granted a series of loans to Manila that will fund the first phase of works on the new Manila underground railway – a project worth 7 billion dollars – and a motorway. Works on all underground lines under construction in Ho Chi Minh City and Manila are funded by Japan and use consultancies from the Japan International Cooperation Agency (JICA), that is feeling growing pressure from China which is aggressively promoting the ambitious New Silk Road project in the region. The Manila underground railway project, “Metro Manila”, aims to overcome road traffic congestion and pollution in the city. The government estimates that by the year 2027, two years after the estimated conclusion of the project, the underground railway will be used by half a million people every day. The second project involves the Palridel City ring road in northern Manila that will run along the Pan-Philippine Highway.

Indonesian President Joko “Jokowi” Widodo has launched the first project for an underground railway project in the country that will alleviate the road traffic emergency in Jakarta. Some 84 percent of works on the 24-kilometre north-south underground line have been completed and Mrt Jakarta, the company running the underground railway, has said that the works are running according to schedule. The opening is scheduled for March 2019 and an 87-kilometre east-west line is currently under planning and aims to open by 2025. By the next elections, Widodo plans to build 1,000 kilometres of tolled roads, 3,000 railways, 24 ports, energy plants with a total capacity of 35,000 megawatts and much more. When infrastructural works are not enough, the governments of the region sometimes consider taking radical action: for example, the proposal to transfer the Indonesian capital city from Jakarta to Oalangkaraya, in the Kalimantan province, which is less exposed to flooding and is better interconnected; or the Philippine government’s project to construct the largest “smart city” in the world, “New Manila Bay City of Pearl”, that will integrate the latest technology for urban management, road access, environmental protection and the prevention of damage caused by natural disasters.

For further information about Generali's presence in Asia visit the section about the activities of the Group in Asia.