|Infrastructure Update | August 3
Authors: Sunita Kapoor, Jack Myint, Ben Black
August 31-September 1: Laos Business Mission: The US-ASEAN Business Council is now registering member executives for the 2017 Business Mission to Laos. Contact Matt Solomon at firstname.lastname@example.org with any questions.
August 16-17: Health & Life Sciences Mission to Myanmar. The US-ASEAN Business Council is now registering member executives for the 2017 Health & Life Sciences Mission to Myanmar. Contact Ying Hui Tng at email@example.com with any questions.
September 7-9: Save the date for the ASEAN Economic Ministers (AEM) Meeting in Manila.
September 26-28: Mission to 35th ASEAN Ministers on Energy Meeting The US-ASEAN Business Council is now registering member executives for a mission to the 35th ASEAN Ministers on Energy Meeting (AMEM35) in the Philippines.Contact Riley Smith at firstname.lastname@example.org with any questions.
|THE COUNCIL'S TAKE|
Viaduct Collapses in Singapore, Construction Suspended
A viaduct under construction as part of the upper Changi Road East project collapsed on July 14, leaving a Chinese national dead and 10 foreign nationals injured. A Singapore Civil Defence Force team of 60 officers and search dogs were deployed following the incident, and on-site work has stopped. The Land Transportation Authority (LTA) halted all infrastructure projects in Singapore for the day to conduct safety checks. Or Kim Peow (OKP), the construction firm contracted to carry out the project, has been the subject of incidents in the past. On July 11, the company was convicted and fined S$250,000 for the 2015 death of a worker resulting from an incident at the Yio Chu Kang Flyover site and from January to April this year, OKP was blacklisted by the Ministry of Manpower for not meeting safety standards. The other bids for the contract ranged from S$129.7 million to S$193.7 million, but OKP’s contract was valued at S$94.6 million – 27% lower than the next lowest bid. The Building and Construction Authority has revoked OKP’s permit and required a detailed investigation report from project engineers while temporary bypass roads are constructed.
The Funding Behind BRI
While many headlines have announced the multi-trillion dollar estimated totals of China’s Belt and Road Initiative (BRI), the sources of funding and the level of risk associated with some projects has become a topic of interest to analysts and private sector stakeholders in the region. The financial commitments to infrastructure projects totaling between $1.4 trillion and $4 trillion have become a defining project for Chinese President Xi Jinping, but those amounts are long-term estimates, and the reality of state funding for BRI is more complex and limited in the scope perceived by many observers. In May at the BRI Forum, President Xi announced an extra $113 billion in funding, to be distributed through three existing state-owned funds. The first is the Silk Road Fund, which opened in 2015 with $40 billion to invest solely in BRI projects. The China Development Bank and the Import Bank of China, which in 2015 invested $27 billion and $80 billion, respectively, are the two other paths for President Xi’s extra funding for BRI, but it is unclear how much of those banks’ funds will be part of BRI, and whether President Xi’s announcement means their funding will increase, or be redirected to BRI projects. The Asia Infrastructure Investment Bank (AIIB) is another avenue to investment in the BRI, but since it opened in 2015, the bank has lacked the institutional and staffing capacity to conduct large-scale investment. In 2015 it invested $1.5 billion, and in 2016 that amount rose to just above $3 billion. Jin Liqun, President of the AIIB, says the bank plans to invest $10 billion in 2018, most of which is expected to be part of the BRI initiative. Further funding has come from commercial banks privately investing in projects in addition to foreign governments announcing investment in the BRI region, such as Singapore’s Development Board announcing around $20 billion in investments. While the funding that is currently available comes far short of the estimated multi-trillion dollar totals, some experts have cautioned that the returns on some BRI projects may be poor. Tom Miller of Gavekal Market Research Group has reported that Chinese officials are cognizant of potentially high losses for some BRI projects, including an 80% loss in Pakistani projects (specifically, the $46 billion highway from Gwadar to China) and a 50% loss in Myanmar. According to Charles J. Hall, the acting President of the U.S. Export-Import Bank, the BRI initiative ultimately represents the aggregation of existing investments in the wider Asian region with the addition of significant Chinese investment and focus. For Southeast Asia, the BRI initiative will continue to represent increased infrastructure investment and interest in capacity building by China and its regional partners.
Invest in Road Signs for Safer Roads in ASEAN
The United Nations Decade of Action for Road Safety has less than three years until its conclusion in 2020, and significant work remains for ASEAN member states to meet the goals of stabilized and decreasing traffic fatalities. The World Health Organization (WHO) estimates that road fatalities in Southeast Asia will rise to 330,000 in 2020 from 87,000 in 1990 – a 144% increase. In a 2015 status report on the U.N. road safety goals, the WHO noted that there are 17.3 traffic fatalities per 100,000 persons in Southeast Asia, compared to 9.3 in Europe. One avenue to decreased road fatalities is improved legislation to reduce speeds on urban roads to under 50 km/h, which has not been established in the majority of ASEAN member nations. In Indonesian urban centers alone, the WHO estimates yearly traffic fatalities to be 50,000. If fully adopted into a uniform and standardized system, robust markets for road sign manufacturing and high-quality construction could be created. The implementation of improved road signs, specifically in a system that separates high-speed and vulnerable travelers, is an important step to accompany legislation that conforms to international best practices.
|IN THIS UPDATE|
Following China’s debt-paved Silk Road World Finance 19th Jul 2017
ADB: Climate Change Threatens Asia’s Development Gains The Diplomat 19th Jul 2017
Joining the AIIB Projects—What You Must Know about Affiliated Debarment and Cross-Debarment Lexology 19th Jul 2017
AIIB chief outlines plans to use capital markets The Standard 19th Jul 2017
ADB ready to cooperate with AIIB in Asia, insider says Asia Times 18th Jul 2017
Temburong residents eagerly anticipate new bridge completion – Borneo Bulletin Online 26th Jul 2017
Construction investment up by a third Khmer Times 17th Jul 2017
More than $1bn invested in local infrastructure Khmer Times 13th Jul 2017
Lancang-Mekong exhibition opens in Cambodia to promote regional trade, investment Xinhua 13th Jul 2017
A quantum leap for Cambodia’s telcos Phnom Penh Post 13th Jul 2017
China donates 98 buses, 2 wreckers to Cambodia for Public Transport Xinhua 13th Jul 2017
Infrastructure in Indonesia: Campaign Promises Kept? Brink News 13th Jul 2017
Govt to issue reference price for industrial estates The Jakarta Post 18th Jul 2017
JB-Singapore MRT link to start passenger service by end-2024, says minister malaymail 31st Jul 2017
‘Keep investing in infrastructure’ the star 31st Jul 2017
Uber: MRT growth is helping business The Star Online 20th Jul 2017
More to come for commuters The Star Online 18th Jul 2017
Government launches project to reduce Sabah’s power outage woes Free Malaysia Today 17th Jul 2017
SPAD: MRT Line 2 and LRT 3 projects to spur growth the star 17th Jul 2017
Malaysia hopes opening of MRT line will ease congestion Bangkok Post 17th Jul 2017
Transport Co eyes Myanmar links Bangkok Post 15th Jul 2017
CCEA clears widening of Manipur-Myanmar highway stretch - Times of India The Times of India 13th Jul 2017
Burma: Villagers allegedly ‘trapped’ during land grab operation for Thilawa project Asian Correspondent 12th Jul 2017
Regional govt to build bridges, underground road system | Eleven Myanmar Eleven Myanmar 12th Jul 2017
Cabinet approves road linking Manipur with Myanmar India.com 12th Jul 2017
PPP mode proposed for LGU infra projects philstar.com 22nd Jul 2017
Govt studying SMC’s Bulacan airport plan The Manila Times 17th Jul 2017
MPIC mulls bid to operate Clark airport terminal Business World 17th Jul 2017
Big-ticket projects boost B.O.I. approvals BusinessMirror 16th Jul 2017
55 big-ticket infra projects await ICC action; 6 pass feasibility stage Business World 12th Jul 2017
Congress to work hard to fund Duterte infrastructure projects Manila Bulletin News 12th Jul 2017
Infrastructure spending target doubted Business World 19th Jul 2017
Clark is preferred airport project because of shorter timeline Business World 17th Jul 2017
BCDA to build momentum for infra push Business Mirror 14th Jul 2017
Singapore companies aim to nab high-speed rail project- Nikkei Asian Review 17th Jul 2017
Safe and free flow of goods key to realising potential of China's Belt and Road Initiative: DPM Teo TODAYonline 13th Jul 2017
Chinese interested in EEC link Bangkok Post 12th Jul 2017
Thailand, China to move forward on train, EEC projects Bangkok Post 24th Jul 2017
Thailand to tap 'domestic sources' for US$5.3b rail project with China — official The Edge Markets 17th Jul 2017
Vietnam’s tale of two metros built by the Japanese and the Chinese South China Morning Post 30th Jul 2017
Insufficient funds in Vietnam Asia Times 21st Jul 2017
Vietnam: Joint ventures more preferred for equity investment in real estate DealStreetAsia 12th Jul 2017