Asia Pacific

2021 Rank

Country

1

Singapore

5

Australia

12

Hong Kong

13

Japan

14

South Korea

20

China

29

Malaysia
31India
32Thailand
33Indonesia
38Khazakhstan
40Vietnam 
42Philippines
47Cambodia
48Bangladesh

With some of the strongest growth prospects in the world, many nations across the APAC region are attractive destinations for infrastructure investment, with a focus on green and digital technologies.

LNG offers solutions

There are opportunities across the APAC region for infrastructure projects using liquified natural gas (LNG). With much of the region still dependent on coal for electricity generation, LNG can play a major role in the region’s energy transition and it can be used to plug the gaps which cannot currently be met by renewable sources in the region.

LNG-to-power projects are taking off, particularly in Indonesia, the Philippines and Vietnam. Many of these new projects will make use of floating storage and regasification facilities as an alternative to traditional land-based terminals, as they offer shorter delivery times, greater flexibility and lower costs.

There are other applications for LNG. In May 2021, Singapore became the first country in Asia to complete a ship-to-ship bunkering of an LNG-fuelled oil tanker, as the maritime industry continues to switch to natural gas as a fuel source. The city state is also exploring the feasibility of using LNG to power data centres. 

Solar and wind pick up pace

Although coal power projects are still being financed, renewable energy infrastructure investment across the APAC region is strong. While lagging Europe in their efforts to decarbonise, some of the largest emitters in the region, including China, Japan and South Korea, have recently set Net Zero targets.

The last two years has seen unprecedented activity in the uptake of solar and wind projects, with Vietnam emerging as a regional renewables powerhouse within the South East Asia region. Favourable tariff policies and tax incentives to encourage investment coupled with a natural endowment of solar power had driven Vietnam to surpass Malaysia and Thailand to reach the largest installed capacity of solar panels in Southeast Asia.

Making cities smarter

A growing number of smart city projects are developing in the region. Construction of a new capital city from the ground up in Indonesia, Nagara Rimba Nusa, is set to commence this year. The Japanese government announced plans at the end of 2020 to provide USD 2.4bn of funding to Japanese companies to develop smart city projects in 26 cities across Southeast Asia. The Government of India has pledged to create 100 new Smart Cities in the country. And China currently has roughly 800 smart city pilot programmes under way, which is more than half of the world total.

Open for business

While many countries across the region have historically had relatively stringent FDI rules surrounding foreign ownership, particularly regarding infrastructure sectors of strategic importance, many nations have begun to loosen their stance. Governments across the region have recognised the need to bring in new policies to lower barriers to entry, particularly in the energy sector, and to encourage greater private sector participation in projects. Countries including the Philippines, Malaysia, Indonesia and Vietnam are all slowly unwinding FDI rules and streamlining processes to make investment in infrastructure more attractive to foreign investors.

Not all governments are moving at the same speed, or the same direction. Australia recently announced changes to its FDI law, meaning foreign investors will face greater scrutiny when bidding for sensitive assets.

Japanese and Korean investors will continue to play a large role in infrastructure investment in the Philippines, Singapore and Vietnam, where they have been active in the past. China, meanwhile, furthers its influence in the region through its Belt and Road Initiative (BRI) projects. With a renewed focus on digital and greener projects, Chinese investment through the BRI will be critical in helping the APAC region overcome its infrastructure gaps.

Publication
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Authors

Adrian Wong
Adrian Wong
Partner
Singapore
Marc Rathbone
Marc Rathbone
Partner
Singapore
Kelvin Aw
Kelvin Aw
Partner
Singapore

“There’s only so much local capital can do.  The natural way forward is to allow for more foreign capital to be invested in these economies.”