ASEAN: Mega construction projects will rebound to reach US$2.9 trillion over the next five years

• 25 June 2020
• Construction Focus
• 3962 Views

Increasing investment in ASEAN construction industry

The COVID-19 crisis has left many economies across the globe, including the construction industry, closed for a months during the first quarter of 2020.

For ASEAN, significant opportunities for the growing demand for construction machinery are expected to increase after 2020, due to large infrastructure projects and changing labour dynamics in the construction equipment rental market.

The construction sector is expected to rebound at more than 6% after 2020. And it is estimated that over the next five years, the combined cost of all mega projects in the region will reach US$2.9 trillion. According to Business Wire, about $ 1.5 trillion of this total will be invested in planning and pre-planning.

These estimations are calculated based on the contributions of mega public and private infrastructure development investments such as the such as the Indonesian National Medium-term Development Plan (US$460 billion), the Vietnam Socio-Economic Development Plan (US$61.5 billion), and the Philippines Development Plan Build, Build, and Build (US$71.8 billion).

Current status of the construction sector in Cambodia

In Cambodia, the sector is also likely to grow again after 2020. Only the construction of airports across the country are not under US$3 billion, excluding major projects such as major ports and highway construction.

On 22 June 2020, Prime Minister Hun Sen said that construction in both the private and government sectors, such as roads, airports and residential buildings, were continuing as planned.

“The new Phnom Penh Airport Company is investing US$1.5 billion. The company did not talk about a lack of investment funding, nor did it talk about a moratorium on construction. We have other companies like Peng Huoth and Chip Mong, which are continuing their projects just like they did before the COVID-19 crisis.” the PM explained.

These factors demonstrate that the situation in Cambodia seems to be much better compared to the overall global situation where the global construction equipment rental market has only seen positive growth in the last three years (2017-2019) resulting from the vast investment made in the housing and smart commercial buildings and government policies before it declined.

Major government projects, such as the construction of hospitals, key utilities and infrastructure, continue to operate, but at a slower pace with less workforce at work to prevent the spread of infectious diseases. Therefore, by the year 2020, the global construction equipment rental market prices will likely drop by 30%.

• Economy and Finance
• Investment and Funding
• Road and Infrastructure