Investment in public-private partnership (PPP) projects in Asia will see limited scope for growth over the next two to three years. Infrastructure specific headwinds in major PPP markets such as China and India, coupled with a still-challenging business environment in many ASEAN markets will continue to hinder private sector interest.
We believe interest in public-private partnerships (PPPs) in Asia will remain relatively subdued over the coming two to three years, and expect private investment only to gain significant traction beyond 2017. This is largely attributed to the fact that large PPP markets such as India and China will continue to face headwinds over the coming two to three years, with factors such as unfavourable market structures and high debt levels of companies limiting private investment. Meanwhile, in other markets within Asia, significant challenges to attracting private sector interest remain, and these include: a lack of legal frameworks to execute PPP projects, inadequate institutional capacity and financing constraints.
Data from the World Bank's Private Participation in Infrastructure (PPI) Database indicate that private investment in Asia (includes South Asia, East Asia and Pacific regions as defined by the World Bank) have been on the decline since 2010. In fact, investment in PPP projects hit a six year low of USD18.3bn in 2014, less than one third of the USD69.8bn invested in 2010. Similarly, the number of projects that reached financial closure has also been on the decline since 2011.
| Declining Private Investment |
| East Asia and Pacific & South Asia - Investment In PPP Projects, USDmn |
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