Asean Infrastructure More Than Just Roads, Rails and Ports

Investment in soft infrastructure is as important as investment in hard infrastructure as the Asean Economic Community (AEC) pushes for inclusive economic growth by improving the region’s infrastructure as a whole, says Indonesia’s investment chief.

“If you want to go fast you go alone, but if you want to go far you have to go together” is an old African saying that Thomas Lembong used to illustrate the point.

“What we have done is to begin a broader discussion on supporting infrastructure since for so many years now we have been talking about the big infrastructure such as ports, toll roads and railways,” said Mr Lembong, chairman of the Investment Coordinating Board (BKPM) of Indonesia.

“But I believe it is time now to talk more about this supporting infrastructure because toll roads also need rest stops, industrial estates also need dormitories for workers along with catering and laundry, and without the supporting infrastructure then the hard infrastructure will not be feasible or functioning well.

“Supporting infrastructure is also a bigger opportunity for small and medium enterprises and what we policymakers have to do is to create a friendly environment for them to be able to fill that need for supporting infrastructure,” he told Asia Focus on the sidelines of the Bangkok Bank Asean forum held earlier this month.

“Even though these are not headline-grabbing things, numbers do not tell the whole story. We often get distracted by the billion-dollar figures but they rest on many smaller investments in supporting infrastructure, services and systems that in my view, deserve more attention if we are to move forward.”

Robert Yap, executive chairman of the Singapore-based supply chain and logistics operator YCH Group, said more investments for inclusive regional connectivity were essential for every Asean country, though progress was not as rapid as businesses had hoped to see.

“It is also really important that we need to look at where the disconnected pockets in Asean are and what we can do collectively in order to bring it up so that everyone can benefit from it,” he said, citing the need to strengthen the link between southern China and Asean via Laos as an example.

Aung Tun Thet, an economist and adviser to the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), also identified connectivity between China and India to Asean as something that needed improving.

“The big issue is connectivity between Asean and the two economic giants, including ‘One Belt One Road’ China and ‘Look East Act East’ India,” he said.

“We must, whatever we do in the future, focus on how we can capitalise on this since we can use the two giants as a pivot to lift Asean growth but this growth has to be inclusive.”

Stanley Kang, chairman of Joint Foreign Chambers of Commerce in Thailand (JFCCT) and CEO of the Taiwan-based Tuntex group, said that adapting to the new digital environment would also be crucial for Asean. He noted that the Thailand 4.0 policy reflected this priority, in a world where increased use of big data intelligence is changing the way the manufacturing, finance and service sectors operate. As a result, connectivity in software is very important.

“We need to train a lot of new people to adapt to the new world and new jobs so we have to invest in people to make sure that in Asia we will have or can develop our own technology and applications such as our own (ride-sharing service) Uber and (online lodging business) Airbnb,” he said.

Prof Dr Aung Tun Thet said investments in the CLMV (Cambodia, Laos, Myanmar and Vietnam) countries looked more promising than those in other Asean members given their outstanding economic expansion, young and hard-working populations, and free trade agreements expected to be concluded in the near future.

“Asean has a combined market of more than 600 million people and it is projected that by 2030 we will have a combined GDP of about US$8 trillion (from about $2.6 trillion now) and that is going to be bigger than Japan so if we take this into account collectively with 10 countries, we are a force to be reckoned with,” he said.

Among the large regional corporations banking on continued growth of the CLMV markets is PTT Plc, the Thai energy conglomerate.

“We have already expanded to the CLMV with our petrol station and energy exploration businesses in Myanmar and Vietnam. In our retail business, we are expanding in Phnom Penh where the best-selling Cafe Amazon branch is located with an average of more than 1,000 cups of coffee per day at one branch,” said Tevin Vongvanich, president and CEO.

“The CLMV is a market that we know in terms of consumer behaviour and we can predict what our businesses development is going to be like based on what we have experienced in the past.”

He said PTT also was keen to expand exploration in the waters off Thailand and Cambodia, but that would require a resolution of overlapping maritime claims.

Myanmar, meanwhile, requires more electricity as manufacturing is expanding while Laos, as a landlocked country, will continue to rely on Thailand’s transport system and logistics for growth.

PTT has allocated 30% of its five-year capital expenditure worth 900 billion baht to the CLMV but the figure could rise if manufacturing expands in Myanmar and maritime negotiations between Thailand and Cambodia can be concluded.

Aswin Techajareonvikul, the president and CEO of the Thai trading conglomerate Berli Jucker Plc, said modern retail trade coverage in Vietnam reached only around 10% of the 94 million population compared with 40% in Thailand. That means there is still a huge room to grow in terms of retail business.

Vikrom Kromadit, CEO and of the industrial land developer Amata Corp Plc, said Vietnam topped the list when Amata was researching where to expand, compared with other promising places including China, Myanmar and India, because of government stability, close proximity to Thailand, and already built American infrastructure.

“If you want to invest in an industrial estate in Vietnam then there is no cause to think too much because all you have to do is to look for the American military bases that are already installed there and then plant your investment nearby, since whatever the American military needed, the industrial estate will need also,” he said.

“Another outstanding point of Vietnam is that it has a lot of hard-working people and they love to do overtime to the extent that if there is no overtime on offer, the workers will quit. Not only that, Vietnamese people also love to learn and most of them will go to learn English and Chinese after work because of their determination to better themselves.”

In the first half of this year, he said, Vietnam attracted $11 billion in foreign direct investment, surpassing that of Thailand, and he expects the trend to continue in the future.

 

Source: Bangkok Post

 

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