HSBC predicts urban infrastructure requirements in Asia to total to US$11 trillion (By IFN)

HSBC predicts urban infrastructure requirements in Asia to total to US$11 trillion

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GLOBAL: The growing urban population across major cities in Asia is expected to incur development costs of up to US$11 trillion, or 80% of the entire region’s GDP, between 2010-30. HSBC, which analyzed the figures for its HSBC Asia Infrastructure Measure, divided the Asian economy into three groups: Foundation economies, where infrastructure deficit is the greatest and comprised of less developed ASEAN countries and India; Take-off economies, where gains to infrastructure are robust and policy makers have the incentive to play a bigger part such as in China, Malaysia and Sri Lanka; and Flying economies, comprising the “Asian tigers” – Hong Kong, South Korea, Singapore and Taiwan. Of the Take-off economies, Malaysia and China recorded the largest growth in urbanization since 2000 and this sector is expected to be a key driver of infrastructure investment over the medium-term. Infrastructure development in Malaysia has stood at a steady pace over the last 10 years, allowing the country to maintain its bullish growth, said the bank. The private sector currently provides up to 70% of Malaysia’s infrastructure development needs, superseding the government’s role in this sector. Strong domestic demand; buoyed by the current government’s US$444 billion Economic Transformation Program, is expected to further spur growth in the Malaysian economy. According to HSBC, the highest demands for infrastructure is in the internet, energy and water sectors of Indonesia; telephone, internet and rail for Malaysia; and port development in the Philippines. Data from Dealogic (rolling) as at the 21st May ranked metal and steel, telecommunications, transportation, government and mining as the top Islamic finance related financings by sector over the last 12 months. Metal and steel related Shariah compliant financing topped US$3 billion, while the other sectors hovered between US$2-3 billion. In terms of issuers, Telekom Malaysia, Dubai Electricity and Water Authority, TH Plantations and DanaInfra Nasional (a wholly-owned company of the Malaysian Ministry of Finance which has been mandated to undertake funding for infrastructure projects) had all issued Sukuk between the period of the 30th January to the 26th April this year.