Interview: Rubén Camba
How do you assess the infrastructure investment climate in the region amid Covid-19, and to what extent might the economic downturn disrupt plans?
RUBÉN CAMBA: The GDP of the Asia-Pacific region has grown by an average of 5-6% in recent years, and proved its ability to recover quickly from economic shocks after the 2007-08 financial crisis. The region fell into a recession due to the Covid-19-induced crisis but looks set to rebound in the short term with GDP growth of around 7% in 2021, according to the IMF’s October 2020 estimates. Although we will probably not experience a full return to regular operations until a vaccine is available, it seems that Asia Pacific has already overcome the worst part of the economic crisis.
With regards to the infrastructure sector, many projects were affected by lockdowns that kept people at home, and supply chains were also disrupted to some extent. Industries such as aviation and travel have been severely damaged, which may affect investment in infrastructure. However, the potential multiplier effect of improved infrastructure could play a considerable role in boosting economic recovery in the longer term, and governments will therefore remain committed to prioritising infrastructure development.
What will be the main growth drivers for construction and infrastructure projects in South-east Asia in the post-pandemic period?
CAMBA: Medium-term infrastructure demand will be led by projects related to water, renewable energy and urban transport. Demand for water will increase exponentially as a result of demographic expansion: water treatment, sewerage, waste management and purification infrastructure will be crucial. Meanwhile, demand for renewable energy will continue to rise – not only due to the will of governments, but as an urgent requirement in a world that has been adversely impacted by climate change, with widespread awareness of environmental sustainability among younger generations. Both the public and private sector are fundamental to undertaking water and renewable energy initiatives: governments act as the key facilitators, while the private sector is needed for investment and project development.
Urban transport, for its part, is a priority in the region to decongest mega-cities that have unsustainable volumes of traffic. There are ongoing investment programmes in this area: the Philippines, for instance, is already constructing the Manila Subway. Urban transport systems will be an important enabler of growth going forwards. These projects require assistance from multilateral agencies, and organisations such as the Japan International Cooperation Agency and the Asian Development Bank are already working with governments and corporations to this end.
Which developments should be prioritised to improve the Philippines’ wider transport system?
CAMBA: The Build, Build, Build (BBB) infrastructure development programme marks a step in the right direction for the sector. The Philippines needs to improve its transport system on multiple fronts, and the BBB programme is aimed at both improving movement in Metro Manila and enabling crucial infrastructure projects elsewhere in the country – including the construction of airports and bridges to connect more islands. Improvements to general road transport at a national level are also ongoing.
The Manila Subway is the most relevant project to date, and has been prioritised alongside the development of the railway system. There are currently 200 km of railway in the Philippines, which will be doubled by the completion of the North-South Commuter Railway project, stretching from Clark to the south of Luzon. Bridge connections have proven to be fundamental for economic and social development, and projects like the Cebu-Mactan bridge and the future Bataan-Cavite international bridge will therefore make a difference.
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