Responding to the Global Financial Crisis of 2008, many Asian governments have committed to increase spending on infrastructure as part of national fiscal stimulus efforts. There is also increasing interest in developing regional and national bond markets in Asia to tap the significant current account surpluses of many of the faster growing local economies and this is expected to become a source of medium to longer-term infrastructural financing in the region. But, even with public sector fiscal stimulus and investments funds generated through the increased issuance of local and regional bonds, there will be a significant financing gap if the desired targets for Asian infrastructural investment are to be met.
While the financial downswing of 2008 resulted in halving the global flows of foreign direct investment (FDI) during subsequent years. However, since 2011, an increasingly significant proportion of FDI is targeted at emerging markets, with the most significant flows coming into the Asian region
For the first time ever, the Economist reports that emerging markets have attracted more FDI than developed countries. For 2009-2014, FDI in Asia is expected to increase from US$246.4 billion to US$496.7 billion, or at a rate of well over 10% per annum, a figure that leads expected FDI investment in other emerging markets (including Latin American, Africa and the Middle East) during the next four years.
This means significant demand for specialist international and local consulting services in sectors involving infrastructure in Asia such as transportation, telecommunications, power, water sanitation and waste management, as well as in health and education, among others. It also means promising opportunities for foreign and local private sector in participation, not only under management and lease contracts but as longer term concessionaries for PPP or public - private - participation projects such through BOT, BOO, BOOT and similar PPP modalities.
The Philippines Government has continued to target stimulus spending for infrastructure development for over US$2 billion in sectors such as power, water transport and telecommunications. This level of spending is planned without resource to additional borrowings and is part of a broader effort to upgrade Philippine infrastructure under the Government's updated Comprehensive and Integrated Infrastructure Program or CIIP.
CIIP contemplates overall infrastructural spending demands during the next few years of approximately US$22 billion, of which about US$8 billion is targeted for projects and programs in transport and slightly less - around US$6.5 billion - estimated for spending in the power and energy sector. This is part of a broader Government effort to promote improved logistics and service links to facilitate increased economic growth with particular emphasis on addressing infrastructural bottlenecks through policy reform, institutional initiatives and administrative improvements.
About one-third of this contemplated investment in the Philippine infrastructure in coming years is expected through private sector participation. This means increased opportunities in a wide range of public and private sector projects and collaborations. The Asian Development bank, based in Manila, in their ongoing program for the Philippines, contemplates construction of new power generation plants, including plants that use renewable energy resources, expansion or rehabilitation of power transmission lines, initiatives that promote energy efficiency projects, including those that reduce systems losses, efficient urban transport systems (such as light rail transit and bus rapid transit), and construction, modernization and operation of port facilities, among other activities.
Keeping these considerations in mind, BCG can provide your company and management with a unique brand of dedicated and professional service critical to make your marketing efforts in the Philippines (and other Asian countries) more productive and to increase your profitability. BCG will introduce your staff to an effective and focused network of connections to provide your company with the competitive springboard it needs to succeed in Asia, in particular, in the Philippines. We can guide your staff in developing a better understanding of the ways in which successful businesses in the Philippine and Asian development and in helping your management to develop and implement the right strategies for you.