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Asia Construction Growth After COVID-19 Pandemic

30 Nov 2021 | Southeast Asia

Despite the disruptions caused by the COVID-19 pandemic, Asia Pacific's construction sector's long-term growth projection remains in a positive trend. For example, China is steadily on its way to becoming the most prominent construction industry worldwide over the next decade as it bounces early from the pandemic.

The impact of the global crisis was most severely subdued in the residential construction, with residents hesitating to spend large shares of their wallets to cope with uncertainties stemming from the COVID-19 virus outbreak. As a result, most Asia Pacific governments focus on developing affordable housing to provide accessible accommodation and encourage consumer spending during volatile times. The Indian government recently launched its Affordable Rental Housing Scheme (ARHS), explicitly targeting migrant workers. The measure seeks to drive the growth of India's residential construction growth as the economy reopens and businesses start to return to the pre-pandemic levels.

Similarly, the Malaysian government has announced several initiatives included in the 2021 budget in the form of incentives to encourage homeownership in the country. Among the relaxation was a full-stamp duty exemption for first-time house buyers and those willing to purchase postponed housing projects in the area. Hopefully, the discounts would invite industry players to continue half-completed projects previously abandoned due to rising costs and complex supply chain challenges during the pandemic.

Governments Encouraging the Reawakening of Construction Companies in Asia

Asia Construction Growth After COVID-19 Pandemic

Aside from residential awakening projects, the Asia Pacific governments also focus on infrastructure development to establish long-term economic benefits. The Chinese government, for example, has recently continued its state railway operating development to double the size of its high-speed railway system. Japan also primarily drives its railway network expansion, budgeting over USD 19 billion of construction activities allocated to build the Chuo Shinkansen and Maglec Rail Line.

The investment activities going in and out of the Asia Pacific have lately been diversified. Previously, the region's infrastructure investments were primarily coming from China and Japan, focusing on three of the region's largest economies: the Philippines, Singapore, and Vietnam. However, today, the governments have agreed to participate in a more dynamic investment ecosystem by enabling free trade zones to invite foreign investors in both public and private developments.

As of today, the Philippines stands as one of the most attractive investment destinations alongside Vietnam. The two countries present healthy characteristics of emerging economies with multilayered explorable yet underdeveloped dimensions seeking knowledge transfers usually available in more developed countries. Some of the most sought-after sectors were renewable energy industries. Governments are looking for ways to fulfill their pledge to achieve zero-emission in 2030, hence diversifying energy sources away from coal.

Construction Challenge in Asia

However, Asia's attractive infrastructure and construction landscape possess unique challenges that require investors better understand the inherent risks of each of the economies. One of the most considerable risks is maintaining the quality of the project's deliverables, as each country may pose different regulatory risks and measures to cover activities in the area. Foreign investors are then faced with the need to obtain local preferences and knowledge to survive in the domestic landscape of Asia's emerging economies.


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