A land of opportunity
Despite the setbacks resulting from the global pandemic, the phenomenal growth we are now seeing in Asia Pacific (APAC) makes it an extremely exciting market opportunity going forward. Our foray into the region (Malaysia and Singapore) was more than three decades ago, when the region’s share of GDP globally was around 22 percent. Today, the region's share of global GDP has grown to just over 30%, and by 2030 is forecast to reach 40%1, as governments across the APAC region are looking to infrastructure to help stimulate growth as the region begins to return to some form of normality post-pandemic.
Author: Leslie Harland, Regional Director, Singapore, Driver Trett APAC
Encouraged by this government focus, investors are turning to view Asia-Pacific as a land of opportunity. In the APAC region, construction holds the key to economic recovery due to its potential for job creation, with some market observers suggesting that on a regional level, the construction industry might reach US$313 billion by 2024.
The growing potential of the region has, for example, resulted in significant investment by data centre operators, a construction market that was valued at US$15 billion in 2022 and is expected to reach US$24 billion by 20282. This predicted increase has been driven by the development of multiple industrial zones, rapid growth in submarine cable connectivity, and digitalisation. Operators in the region are participating in the government's efforts for sustainable energy adoption by using renewable energy, signing power purchase agreements, or setting targets for carbon-free operations.
However, rapid growth is not without challenges as construction projects around the world rely heavily on long supply chains: equipment, materials, and labour.
A disruption to any link in that chain can result in delay and increased costs, and the way parties approach risk allocation.
It is almost three years since the outbreak of Covid-19. At the moment, it is still impossible to quantify the precise long-term impact of the pandemic, save that insofar as international construction projects are concerned, it is likely to be material.
This is borne out by early analysis from the World Bank, which estimates that 256 developing country projects have been disrupted or cancelled due to the pandemic, and we have seen (and will continue to see) project stakeholders battle over the resulting cost implications3.
Covid-19 is, and will continue to be, a catalyst for construction disputes, particularly as the true and longer-term impacts manifest themselves. In short, the scene is ripe for construction disputes4, for many years to come.
Driver Trett has expanded its APAC footprint with offices in Singapore, Malaysia, Hong Kong and Australia. Our offices work as one team, bringing together elite capabilities across various disciplines and industries, native language and cultural knowledge, and on-the-ground support.
Our presence in Singapore, an ever-growing popular seat for arbitration, is a place where our Asia-based clients increasingly require our assistance with their disputes, whether being appointed as delay, technical, or quantum experts through our Diales expert services brand, or providing commercial and contractual support on underperforming projects.
As we receive more enquiries from our Korean based clients, we have recently opened an office in Seoul, which is manged by Jung-Guk Lee. This is a long-term investment opportunity which is crucial in maintaining and growing our Korean business and key for boosting integration across other offices in APAC.
This new office will also give our Korean clients more immediate access to high-calibre construction specialists within our organisation globally, which is part of our five-year strategic plan for APAC as we continue to invest in our people, which we see as key to our success. Our aim is to be the go-to global construction consultancy in the APAC region as we move forward.
This article was written for issue 25 of the Driver Trett Digest. To view the publication, please visit: www.driver-group.com/digest-issue-25
1 Asia 2050 Realizing the Asian Century
2 Bloomberg
3 World Bank COVID-19’s Impact on Infrastructure
4 Global arbitration review