Vietnam and Indonesia leading on ASEAN infrastructure investment

Infrastructure development in ASEAN and Asia more widely has dominated discussion on international investment flows in recent years. With the establishment of the Asian Infrastructure Investment Bank (AIIB) by China and the Asian Development Bank (ABD) identifying last month that $26tn worth of infrastructure is still required in the region by 2030, the competition is hotting up across the region to attract private, government and multilateral funding.

According to Bloomberg, after China, Vietnam is emerging as one of the most competitive countries in 2016, by measuring the level of combined private and public investment in infrastructure against GDP. According to the statistics, whilst Vietnam managed 5.7% of GDP, positioning it nicely between the giants of China and India, the next ASEAN country on the ranking is Indonesia with less than 3% of GDP spend on infrastructure in 2016.

It is not all bad news for Indonesia however, last week the World Bank announced an investment of $100m into infrastructure in Indonesia, which would be matched by AIIB. This milestone investment is to be routed via PT SMI, Indonesia’s state-owned infrastructure financing firm, which they hope to convert into the Indonesian Development Bank by 2019. In 2017 PT SMI intends to issue IDR10tn ($750 million) of bonds to increase their infrastructure development facility to IDR30tn ($2.25bn).

You can hear more about how public and private financing can meet the significant infrastructure investment needs in Asia from Vice-Presidents of both ABD and AIIB at forthcoming events at Asia House.