{"data":{"news":{"items":[{"title":"ASEAN on the rise: navigating growth and managing construction risk","date":"2026-07-28 00:28:07","id":6374,"author":"","blurb":"","blurb_image_uid":"https://dxfpracgmlczp.cloudfront.net/2026/07/1785172347055_Aon -2.jpg","blurb_expanded_image_uid":null,"article":"\n\t\n\n\n

Infrastructure investment, industrial expansion and rapid digital development are reshaping the economic landscape across ASEAN. Vincent Banton, head of construction and infrastructure for Asia at Aon, explains how the next phase of growth is defined not only by its scale but also by rising complexity in financing, climate exposure, supply chains and long-term operational risk.

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Construction activity continues to expand worldwide, with total output increasing from approximately US$16 trillion in 2025 to US$17 trillion in 2026 and expected to approach US$22 trillion by 2030. According to Mr Banton, a significant portion of this growth is being driven by Asia, where Southeast Asia plays a critical role in infrastructure modernisation and industrial development. At the same time, estimated global natural disaster losses of US$260 billion in 2025 reinforce the need for stronger resilience and disciplined risk structuring at the project level.

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Momentum across markets

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Singapore’s construction market is being shaped by major investments in infrastructure, digitalisation and the energy transition, driving demand for sophisticated risk management and insurance solutions, shared Mr Banton. With limited land availability, development is concentrated in high-density, brownfield and mixed-use projects that require careful management of construction, delay, liability and contractual risks.

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Singapore also remains a leading hub for data centres, cloud services and digital connectivity, he said. As facilities become larger and more complex, organisations require integrated solutions spanning construction, property, business interruption, cyber and technology risks. Major transport, logistics and maritime projects, including port, airport and rail expansions, continue to reinforce Singapore’s position as a regional hub. These projects involve significant operational, safety and delay exposures that demand strong stakeholder alignment and risk governance.

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At the same time, investments in grid infrastructure, low-carbon technologies and climate resilience are creating new opportunities and challenges. Mr Banton emphasised that successful projects will depend on disciplined procurement, early risk identification and integrated insurance strategies that support long-term resilience and capital attraction.

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In the Philippines, construction activity is being driven by transport infrastructure and renewable energy projects. Large-scale airport expansions, rail upgrades and renewable energy facilities are designed to improve national connectivity and energy security. However, Mr Banton noted that these projects are often located in regions exposed to typhoons, flooding and earthquakes, which amplify the importance of early-stage risk engineering and catastrophe modelling when structuring construction programmes.

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Malaysia’s construction momentum is increasingly shaped by digital infrastructure. One of the most visible examples is the rapid growth of data centre developments in Johor Bahru, fuelled by demand spillover from Singapore and wider regional adoption of cloud services. From an insurance and risk perspective, Mr Banton said these projects illustrate how construction, energy availability and data security risks are now tightly interconnected. Hyperscale facilities require high construction precision, resilient power infrastructure and stringent operational continuity planning once assets transition from build to live operations. He added that Aon has developed market-leading innovative solutions for this rapid growth, such as the first-of-its-kind data centre lifecycle programme.

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Meanwhile, Vietnam has emerged as one of Southeast Asia’s most dynamic construction markets, supported by steady foreign direct investment and government-backed infrastructure expansion. Major port upgrades, high-speed rail networks and urban transit systems are being developed alongside large-scale industrial and energy projects. Mr Banton cautioned that this extensive construction pipeline heightens exposure to overseas contractor dependency, supply chain disruptions and interface risk among multiple project stakeholders, highlighting the need for coordinated risk management between contractors, lenders and insurers.

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For Indonesia, Mr Banton said the country’s construction sector is defined by its scale and geographic complexity. Investments cover mass transit systems, smelters, industrial parks, mining and power generation assets spread across a vast region. Large national infrastructure programmes continue to attract international capital, but project delivery is constrained by logistical challenges, local regulation and elevated exposure to flood and earthquake risks.

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Thailand remains a relatively mature construction market, anchored by transport infrastructure upgrades, tourism-related developments and industrial facilities aligned with regional supply chains. While project execution frameworks are well-established, rising construction costs and contractor risk are placing greater emphasis on contract clarity, noted Mr Banton. The country is also accelerating the development of its economic corridors and ramping up digital infrastructure investment to compete with regional hubs in Malaysia and Singapore.

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In other markets such as Laos and Cambodia, construction activity is smaller in volume but still strategically significant. Hydropower projects and cross-border transport infrastructure are transforming regional connectivity. He said these developments often involve multinational sponsors through foreign direct investment and sovereign stakeholders, which can increase political risk, regulatory complexity and contractual exposure during both the construction phase and early operations.

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Key challenges

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Mr Banton further identified several risk themes shaping construction outcomes across Southeast Asia. A primary challenge is the rising complexity in project financing, with lenders and investors requiring greater certainty around delivery timelines, cost control and operational resilience. This makes insurance and risk structuring a core component of project viability rather than a back-end requirement.

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Supply chain volatility also remains a pressure point. He explained that global logistics conditions have been unstable in recent months, as many large projects – particularly data centres and energy assets – rely on highly specialised equipment sourced internationally, which is in short supply and driving up costs. Delays in manufacturing and transport will materially affect construction schedules and lead to associated losses.

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Another challenge is climate and natural catastrophe exposure. Much of Southeast Asia’s construction pipeline overlaps with flood-prone, coastal or seismically active regions. This elevates potential loss severity during construction and underscores the importance of resilient design, site selection and effective risk management.

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Finally, construction claims are becoming more complex. Projects involve multiple contractor interfaces and longer defect liability periods. Mr Banton pointed out that when incidents occur, disputes can extend well beyond project completion, highlighting the value of clear, consistent policy wording, strong documentation and proactive loss prevention strategies.

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Managing risks

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Against this backdrop, Southeast Asian construction markets are moving towards more sophisticated, lifecycle-based approaches to risk management, According to Mr Banton, a growing number of developers and investors are now aligning construction risk strategies with long-term operational objectives, particularly for rapidly evolving digital and power infrastructure assets. This approach recognises that decisions made during design and construction have a direct impact on operational performance and resilience.

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Improved use of data and analytics is also transforming construction risk. Aon focuses on enhancing project data, risk modelling and claims intelligence to support better decisions on risk retention, capacity allocation and programme structuring, shared Mr Banton. The company’s analytic tools enable risk exposure analysis, loss modelling and scenario simulations, allowing risk managers to assess risk tolerance, compare insurance structures and make data-driven decisions on risk retention and transfer. He added that earlier collaboration between contractors, insurers and advisers throughout the project lifecycle can help clients address complex risks before losses occur.

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Looking ahead, construction activity in Southeast Asia is expected to remain robust but increasingly selective, concluded Mr Banton. Projects that demonstrate strong governance, early risk clarity and integrated insurance strategies are more likely to attract capital and deliver sustainable outcomes. He asserted that digital infrastructure, power and industrial upgrades will continue to boost demand for specialised construction solutions, while the ability to balance speed with resilience will be critical.

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Note: This story has also been published in the Jul/Aug 2026 issue of SEAC. Click here to read it online or here to download the PDF (pages 38-39).

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