|Infrastructure Update | December 12, 2018
Authors: Sunita Kapoor and Daine Loh
Planning Call on the Post ASEAN Transport Ministers Meeting Infrastructure Roadshow
As a follow up to the recent ASEAN Transports Ministers Meeting in Bangkok, Thailand, the Council will be organising a “Post-ASEAN Transport Ministers Meeting Roadshow” to the Philippines, Thailand, and Vietnam in the first quarter of 2019. The primary objective of this roadshow will be to demonstrate how the capabilities and experiences of U.S. companies can be utilized as solutions to current challenges across the full transport infrastructure value chain. The Council is organising a planning call to define the agenda for this engagement opportunity and to review committee priorities for 2019, on Monday, January 14, 2019, 8.00 - 9.00 pm (Washington DC) or Tuesday, January 15, 2019 9.00 - 10.00 am (Singapore). To register for the call, please click here. For any questions or comments, please contact Sunita Kapoor at firstname.lastname@example.org.
|THE COUNCIL'S TAKE|
Opportunities in Japanese-funded Infrastructure Projects in Philippines and ASEAN
The Philippines is one of the largest recipients of technical assistance provided by the Government of Japan through Japan International Cooperation Agency (JICA). The Japanese Government is also Philippines' top source of official development assistance, which are administered by JICA through the Special Terms for Economic Partnership (STEP) scheme. Under JICA STEP loans, while the prime contractors are limited to Japanese firms, there is no restriction on sub-contractors, provided the minimum Japanese content of 30% is met. This scheme allows other foreign companies such as U.S. suppliers to participate in JICA STEP loan-assisted projects as sub-contractors to Japanese firms.
As part of President Duterte's "Build, Build, Build" Initiative, there are ample of projects with potential opportunities for U.S. firms. Further, due to the 2020 Olympics in Japan and the volume of infrastructure projects in the Philippines, Japanese firms are reaching limits to their absorptive capacity, and require assistance. Where U.S. firms likely cannot compete in terms of cost, they are well positioned to be able to provide high tech and quality products, and expert project management and consulting skills. The Japanese are open to working with U.S. firms on these infrastructural projects, including those that our Members have shown interest in such as the New Clark City, North South Rail, Manila Subway Project, Makati Subway Project, and various other Airport Development Projects.
It may be most effective for U.S. firms to engage Japanese firms in the initial stages, during the "Detailed Design" and feasibility study stage. At these stages, U.S. firms have the highest chance of getting their products and services incorporated into the specifications due to the recognition for quality and technology. However, that does not discount the potential for engagement during the construction supervision stage, and directly with the main contractor once both are awarded. In addition the Council’s Manila office, the US Commercial Service office at the US Embassy-Manila are resources which help provide information about projects. Further, potential for collaborations may not be limited to just projects in the Philippines, but also others in the region under JICA loans. JICA notifications are public, and announced when Japanese firms have been funded to conduct feasibility or detailed design studies for Japanese financed projects in the ASEAN Region. It may be advantageous to reach out to these firms early to discuss collaboration or inclusion in project specifications.
Joint Ministerial Statement on the 24th ASEAN Transport Ministers Meeting
The 24th ASEAN Transport Ministers Meeting (ATM) was held in Bangkok, Thailand on November 8, 2018. H.E. Arkhom Termpittayapaisith, Minister of Transport of Thailand, chaired the Meeting, with H.E Mr. Nguyen Van The, Minister of Transport of Viet Nam, who served as Vice-Chairperson. The 24th ATM Meeting was preceded by the 46th ASEAN Senior Transport Officials Meeting (STOM) and STOM meetings with Dialogue Partners held on 5-7 November 2018.
The main outcomes of the meeting are as follows:
The full Joint Ministerial Statement may be found as attached here.
Increasing Doubts over China’s Belt and Road Initiative
Prabowo Subianto is slated to run against incumbent President Joko Widodo in the upcoming Indonesian Presidential elections in April 2019. Several foreign policy issues have been on the foreground of presidential campaigns, including Indonesia's infrastructure projects as part of China’s Belt and Road Initiative. Prabowo had announced that he will review these existing projects if he wins the election. This is amidst the slow progress of projects, fear of debt traps, and increasing domestic anti-Chinese sentiment. These existing criticisms are also aligned with common criticisms used by Jokowi's rivals for being too close to the Chinese business community.
In April, Indonesia and China signed five contracts worth more than US$23 billion under the belt and road. These are in addition to belt and road projects already underway in Indonesia such as the Jakarta-Bandung High-Speed Railway (HSR) and Morowali Industrial Park in Sulawesi. Yet, progress of these projects has been slow. The HSR was designated as one of Jokowi’s national strategic projects since January 2016 but only 10% of the work has been completed to date. Sources have cited that this is due to issues of lengthy land clearance, acquisition of construction permits and other legal deadlocks.
Further, Prabowo had argued that Jokowi’s infrastructure drive is too expensive for the country’s state-owned enterprises and state budget, especially amid an economic downturn that has seen the rupiah’s value against the US dollar hit its lowest level since the 1998 Asian monetary crisis. This puts the country at risk of a debt trap, observable in some countries such as Sri Lanka and Zambia.
Domestically, anti-Chinese sentiment still runs high, including leaders of Islamic organization, retired military generals, former high-ranking officials, academics and public intellectuals. According to a 2017 ISEAS nationwide survey, 62% of Indonesian adult population felt that close economic ties with China would bring little benefit. Issues of hiring Chinese mainland workers over Indonesia workers have also caused significant displeasure amongst the population, including recent controversies of Chinese working illegally on tourist visas.
Prabowo’s move is in line with recent regional trends of pushback against the Belt and Road Initiative. Malaysian Prime Minister Mahathir Mohamad has suspended two Chinese-funded projects worth US$26 billion since his election victory in May, while Myanmar negotiated a significant scaling back of a Chinese-funded port project on the Bay of Bengal over fears of unsustainable debt.
Singapore launches Infrastructure Asia
Singapore launched a new government agency “Infrastructure Asia” to spur investments and support regional infrastructure projects. A second initiative Singapore Infrastructure Dispute-Management Protocol was also introduced to help parties manage disputes and minimise the risk of time and costs overruns. As a regional financial hub, Singapore hopes to play the role of a neutral and reliable facilitator between private investors and Southeast Asian states. Other regional infrastructure development bodies based in Singapore include: Infrastructure Financing Center of Excellence (INFCOE) and the Asia Infrastructure Center of Excellence (AICOE) which is the “sister entity” to the ASEAN Infrastructure Fund (AIF) headquartered in Malaysia. The Asian Development Bank estimates that developing economies in Asia will need to invest about $26 trillion in infrastructure projects until 2030. Singapore aims to “increase [the] bankability” of projects and cooperate more closely with various stakeholders by leveraging on its comparative advantages of a robust ecosystem between project structuring and development, financial and legal advisory. In 2016 and 2017, Singapore was the largest overseas investment destination for China along the Belt and Road, capturing 22.3 percent of total investment outflow from China to the Belt and Road countries. With this initiative, Singapore may come to be an effective counterweight amid rising regional concerns of over-dependence on China and global protectionist trends.
Business Mission to the ASEAN Transport Ministers Meeting, November 8-9
The US-ASEAN Business Council recently conducted a business mission to the ASEAN Transport Ministers (ATM) Meeting on 8-9 November, 2018 in Bangkok, Thailand. Led by Council’s Senior Vice President and Regional Managing Director, Ambassador Michael Michalak, six U.S. companies engaged key officials on transport to discuss safety and opportunities to advance transport infrastructure development in ASEAN. This year marks the Council’s third consecutive meeting with all ten ASEAN Transport Ministers, Senior Transport Officials along with the Secretary-General of ASEAN, H.E. Dato Lim Jock Hoi. During the mission, the Council delegation reiterated that safety should be addressed holistically in all phases of infrastructure projects from planning, design, construction, turnover, operations and maintenance. For more information, a consolidated notes from our working luncheon may be found as attached here.
Position Paper: Advancing Safety in Road and Rail Infrastructure Projects in ASEAN
In lieu of the large infrastructural investments and development in the region, the Council believes that Safety should be a key topic to advance for increased regional discussions and regulatory harmonization. The Council would like to put forth that the operational safety of infrastructure projects, particularly for road and rail, must be accurately estimated by government planners and an integral part of project planning, execution and maintenance cycle. The Council has prepared a position paper that outlines how US companies can support ASEAN governments to elevate safety in road transport and railway infrastructure projects through the sharing of knowledge, expertise and best practices, thereby assisting in the increase of public awareness and the creation of programs with unique public value. The position paper can be reviewed here for more details.
|IN THIS UPDATE|
Boeing, Airbus fret over trade war as China displays aviation ambitions Channel News Asia 6th Nov 2018
Going green with infrastructure investments The ASEAN post 21st Nov 2018
SOUTH-EAST Asia’s aviation industry could contribute nearly US$100 billion a year to the regional economy if the Asean Single Aviation Market is brought to fruition, according to a new report from a Malaysian think-tank. The Business Times 16th Nov 2018
What will drive demand for electric cars? Channel News Asia 3rd Nov 2018
Study to shed light on air connectivity in Mekong region Khmer Times 19th Nov 2018
Singapore, Cambodia JV to raise mixed-use project in Tuol Kork Khmer Times 2nd Nov 2018
Indonesia's Lion Air to meet Boeing next week to discuss MAX series orders Channel News Asia 22nd Nov 2018
Belt and Road investment under fire in Indonesia’s presidential elections East Asia Forum 20th Nov 2018
Government tells Go-Jek, Grab to settle problems with drivers The Jakarta Post 19th Nov 2018
Lion Air: A deadly crash and a whole lot of questions for Boeing Channel News Asia 15th Nov 2018
Second Sulawesi wind farm project near completion The Jakarta Post 7th Nov 2018
Boeing to issue safety advice on 737 MAX after Lion Air crash Channel News Asia 7th Nov 2018
Don't use Village Fund to develop infrastructure: Jokowi The Jakarta Post 5th Nov 2018
Hyflux seeks ‘super priority’ for rescue financing from Indonesian investors Channel News Asia 2nd Nov 2018
Leveraging Competitiveness Of Transport SMEs Lao News Agency 8th Nov 2018
Lao think tank suggests to maximize Laos-China railway Xinhua 6th Nov 2018
"Space data offers instant clues to cause of deadly Laos dam disaster": Stanford Professor Laotian Times 5th Nov 2018
Malaysia's AirAsia X reports wider Q3 loss on higher fuel cost Channel News Asia 21st Nov 2018
Malaysia government will not give in to cabbies' demands to ban Grab: Transport minister Channel News Asia 1st Nov 2018
What Malaysia’s MRT has to learn from Indonesia’s BRT South China Morning Post 23rd Nov 2018
Mersing Airport one of projects identified for next year The Edge Markets 12th Nov 2018
Govt explores possibility of cement plant in Chin Myanmar Times 2nd Nov 2018
German firms eye Myanmar’s water sector The Myanmar Times 14th Nov 2018
Myanmar’s first dry port opens for business The Myanmar Times 13th Nov 2018
Myanmar, China sign agreement on new port project Bangkok Post 9th Nov 2018
Myanmar agrees smaller deal for China-backed port after 'debt-trap' concern Channel NewsAsia 8th Nov 2018
Gov’t Inks Agreement with Chinese Firm to Develop Kyaukphyu SEZ The Irrawaddy 8th Nov 2018
Myanmar agrees smaller deal for China-backed port after 'debt-trap'... Reuters 8th Nov 2018
China hopes to enhance economic corridor construction with Myanmar: CPC official Xinhua 7th Nov 2018
Road linking Myanmar and Thailand to be upgraded Asia Times 5th Nov 2018
Labor shortage seen in construction Phil Star Global 26th Nov 2018
ICTSI opens country’s first container barge terminal Phil Star Global 25th Nov 2018
Japan commits P95-billion loan for 2 infrastructure projects Phil Star Global 23rd Nov 2018
China consortium bags Manila-Bicol railway deal Phil Star Global 22nd Nov 2018
Japan consortium wins bid to build P11-billion Metro subway Phil Star Global 22nd Nov 2018
DICT, China Telecom eye submarine broadband infrastructure Phil Star Global 21st Nov 2018
FDI inflows, infra spending to support economic growth — DOF Phil Star Global 19th Nov 2018
PPA gets unsolicited offer for GenSan port Phil Star Global 5th Nov 2018
More infrastructure project tie-ups coming, says Neda chief, despite warning of China ODA ‘debt trap’ BusinessMirror 22nd Nov 2018
Xi begins visit as PHL, China ink 29 agreements Business World 20th Nov 2018
‘Turning point’ PHL visit by Xi Jinping seen to focus on belt-road initiative Business Mirror 20th Nov 2018
PHL, Japan sign Exchange of Notes for MRT-3 Rehabilitation Project BusinessMirror 8th Nov 2018
Ceza inks magnetic levitation train manufacturing agreement with two China companies BusinessMirror 8th Nov 2018
Philippines, Japan sign loan deal for New Bohol Airport expansion | BusinessWorld Business World 6th Nov 2018
SilkAir to transfer 17 routes to Scoot ahead of merger with Singapore Airlines Channel News Asia 22nd Nov 2018
Singapore, Jiangsu to deepen economic partnership, advance BRI with signing of 13 MOUs Channel News Asia 20th Nov 2018
Singapore, US renew agreement on infrastructure collaboration Channel News Asia 16th Nov 2018
ComfortDelGro to trial self-driving shuttle bus at NUS from March 2019 Channel News Asia 12th Nov 2018
Hyflux gets second deadline extension for sale of Tuaspring plant Channel News Asia 8th Nov 2018
Asean Summit will see region's leaders discuss ways to take grouping forward The Straits Times 10th Nov 2018
Flat rate monthly taxi fare plan for unlimited trips Bangkok Post 1st Nov 2018
IATA wants faster work on runways Bangkok Post 1st Nov 2018
Treasury Department's land scheme ready in a few years Bangkok Post 26th Nov 2018
Bang Sue mega-station to operate by January 2021 Bangkok Post 23rd Nov 2018
Terminal put on ice pending feedback Bangkok Post 22nd Nov 2018
BoI offers incentives to meet Bt300-bn EEC target The Nation 20th Nov 2018
CP consortium submits bid for high-speed rail project in Thailand Global Railway Review 14th Nov 2018
BTS, CP consortia enter bid for airport train project Bangkok Post 12th Nov 2018
Traffic project tipped to cause chaos Bangkok Post 12th Nov 2018
Human resources added to EEC S-curve target industries Bangkok Post 9th Nov 2018
BMTA set to welcome new NGV bus fleet Bangkok Post 9th Nov 2018
Terminal 2 at U-Tapao airport to be fully opened in February The Nation 8th Nov 2018
ACV to pour VNĐ4 trillion into upgrading Cát Bi International Airport Viet Nam News 27th Nov 2018
Vân Đồn International Airport getting ready for flights Viet Nam News 21st Nov 2018
Transport ministry to set higher emission standards for vehicles Viet Nam News 15th Nov 2018
New aviation decree to ease burden for firms Viet Nam News 13th Nov 2018
Vietnam's newest airline Bamboo gets aviation licence Channel News Asia 13th Nov 2018
Bà Rịa-Vũng Tàu to develop logistics sector Viet Nam News 7th Nov 2018
MoT seeks US$40 million for Mỹ Thuận-Cần Thơ expressway project’s site clearance Viet Nam News 6th Nov 2018
Need for logistics space at all-time high: JLL Viet Nam News 3rd Nov 2018
Vietjet inks US$6.5 billion Airbus deal for 50 planes Channel News Asia 2nd Nov 2018