Malaysia beats NZ, South Korea in infrastructure project risk ranking

KUALA LUMPUR, July 27 ― Malaysia ranked top among emerging countries in Asia in a BMI Research survey measuring the risk of infrastructure projects, with its risk considered to be lower than in developed nations like Hong Kong, South Korea, New Zealand and Taiwan.

Malaysia ranked fourth out of 21 countries in the Asia Project Risk Index by the Fitch Group research house, beating neighbouring nations like Thailand (9th), Vietnam (11th), the Philippines (12th), Indonesia (13th), Cambodia (20th) and Myanmar (21st).

Singapore topped the list, followed by Australia, Japan and Malaysia.

“Among emerging countries, Malaysia and Thailand outperform, scoring high in the Financing component, while Cambodia and Myanmar register the lowest scores, far below the regional average,” said BMI Research.

Malaysia scored 75.6 out of 100 in the index, compared to Singapore’s 79. A higher score denotes lower risk.

Malaysia also ranked the second-highest in the “financing” category at 81.7, behind Japan’s 86.5.

“Asia currently receives the most support of any region in terms of number of projects supported by MDBs, accounting for over 31 per cent of the global total according to our Key Infrastructure Projects Database,” said BMI Research, referring to the multilateral development bank (MDB) regime.

Malaysia also ranked 7th in the “construction” category, beating other developing countries.

“The developed countries together with Malaysia lead the pack with regard to Construction Risk scores on the back of their strong performance in enforcing contracts (PPPs or otherwise) and their ability to realise infrastructure projects in a timely manner,” said BMI Research, referring to public-private partnerships (PPPs).

“However, 'Construction' is where Asia scores the lowest across the three areas of the index which reflects a still challenging construction phase in the emerging markets,” it added, partly attributing the region’s low score in the “construction-costs” factor to rising labour costs in countries like Malaysia, Singapore, South Korea and China.

BMI Research said labour shortages and low skill levels in developing nations, particularly Sri Lanka, Pakistan and India, also posed difficulties to investors.

In the “operation” category that measures the risk of operations, BMI Research said higher political stability in Asia together with lower crime and security risks in recent years has created “a more stable operational environment”.

Malaysia ranked 5th in the “operation” category, followed by Singapore and neighbouring countries.

“Demand for infrastructure is also strong across the region. GDP per capita growth levels in the region are high and as such demand for transport and energy infrastructure is elevated, driven by urbanisation, efforts to improve regional inter-connectivity and growing tourism sector,” said BMI Research.