Among the ASEAN countries, Thailand is the second fastest growing destination for exports of heavy machinery from Singapore. The construction industry is also anticipated to register a CAGR of 5.6% during the forecast period of 2018 – 2023. While in the short term, there was an expected subdued economic activity during the mourning period after King Bhumibol’s death, in 2016, the Thai and Chinese governments have reportedly agreed on a USD 5.2 billion deal for the first phase of a high-speed railway project. The Deputy Transport Minister also announced in 2015 the government earmarked USD 95 billion during 2015-2022 for transport infrastructure.
Additionally, the country is also considered one of the most exciting hubs for the contractors in Southeast Asia, with huge construction sector to invest in. For instance, with increasing public works, such as the construction of transit lines and subway infrastructure, the demand for residential construction has been consistently increasing. Furthermore, the growing tourism, irrespective of political turmoil, is also increasing the demand for commercial buildings, such as shopping malls, restaurants, and hotels. For instance, the Thai Shopping Center Association is also planning to invest, in the next two years, on expanding the number of stores in the country.
Philippines has registered one of the highest CAGR for Singapore exports of heavy machinery, among the ASEAN countries. Its construction industry has one of the highest growth forecasts among the ASEAN countries and is expected to continue growing to register a CAGR of 12.8% during the period of 2018-2020. The Philippines construction sector is likely to benefit from the government expenditure of approximately USD 144 billion on infrastructure over the next 6 years. Hence, we expect an increase in government involvement in planning, coordinating, and financing projects, which will also generate further demand for heavy machinery.
For instance, the construction of Cebu-Cordova Bridge is expected to begin mid-2018 and will be carried out by Acciona in a partnership with First Balfour Inc. and D.M. Consuji Inc. The design expected is likely to finish by June 2018 and the bridge is expected to be completed by 2021, with a construction cost of PHP 30 billion. It is considered to be among the largest infrastructure projects outside Metro Manila.
Vietnam is a growing market for the United States construction machinery manufacturers with sector exports of USD 77.4 billion. Construction machinery and engines make up the majority of machinery sector exports. Although urbanization and infrastructure growth push Vietnamese buyers towards such machinery sector products with superior reliability and productivity, less-costly Chinese products are widely available and an attractive alternative to country’s construction machinery products. Passage and enactment of the Trans-Pacific Partnership (TPP), which is expected to eliminate tariffs of up to 59% on the United States construction machinery sector products, is also anticipated to place exporters in a much more favorable competitive position in the country.
The boom in the construction sector in Malaysia is anticipated to continue in 2018 with real growth at nine% on the back of the country’s overall gross domestic product growth of 5.3%.
The contract flows are expected to sustain, of which, the momentum should be sustained year-on-year for 2018 with a target of between USD 6.27 billion and USD 6.50 billion. According to MI analysis, USD 42 billion worth of mega projects are expected to be rolled out over the next one-year or two.
Some of the projects will be led by the US-based companies and the estimated overall local content of these to stand at USD 21.31 billion, 51% of project value. However, in terms of spending, this year is expected to see a flattish trend, but the development expenditure has been set at USD 11.53 billion.
About the Market
The Mordor Intelligence report values the ASEAN construction machinery market is expected to register a CAGR of 3% during the forecast period of 2018-2023.
Mordor Intelligence is a market intelligence and advisory firm operating in 14 industry segments, serving over 600 clients worldwide.