India, Indonesia to lead regional infra investments

S&P expects that some of the world’s most intensive investments in infrastructure will happen in countries in south and Southeast Asia.

India and Indonesia are expected to continue to lead infrastructure investments in south and Southeast Asia, likely offering the world’s most intensive infrastructure programmes in the coming years, according to a fresh report by S&P Global.

The region will need to spend $9.5 trillion on infrastructure from 2016 to 2030, including investments in measure to combat climate changes, the ratings agency said, citing estimates from the Asian Development Bank.

In India, where infrastructure deficits exist across all sub-sectors, it expects “most of the heavy lifting” to be done by state-owned enterprises, particularly in the transport sector, with private companies more active in the power and renewables sectors.

On the other hand, capex in Indonesia is expected to rise sharply, with an estimated jump of 47 percent in spending from 2018-20 compared to the previous three-year period. The jump will be driven by the country’s ambitious infrastructure targets as domestic SOEs scale up capex in power, toll roads, and ports.

“We expect sector companies in Singapore, Malaysia, Thailand and the Philippines to maintain stronger credit profiles and lower leverage than those of Indian and Indonesian peers,” said Abhishek Dangra, primary credit analyst at S&P and the author of the report.

In a broader sectoral overview, power utilities will dominate the region’s infrastructure spending, supported by moderate economic growth, government-led infrastructure agendas and higher commodity prices.