Time for Canada to deliver infrastructure expertise in Asia, report

The latest issue of the Periphery Report is out, and this Smart Infrastructure Edition paints a picture of opportunity for Canadian infrastructure businesses looking to expand in Asia. In this blog, we summarize a few sectors of opportunity highlighted in the report and share some Canadian government programs to support Canadian businesses entering the region.

With shifting demographics, fluctuating temperatures and uncertain geopolitical changes, investment in infrastructure across Asia continues to grow unabated. There is also a continued shift towards smart… smart cities… smart infrastructure…. smart factories… smart streetlights… smart grid… and much more. The region is looking for solutions that help cities, utilities, and other organizations delivering public infrastructure to optimally use resources while reducing impact on the climate.

Transportation and logistics

The United Nations projects that 68 percent of the world population will live in urban areas by 2050 and the Asian Development Bank (ADB) estimates that Asian cities are growing by about 120,000 people per day. This growth is a huge strain on many existing transport and mobility systems.

Many governments have invested in infrastructure and technology for an efficient transit system but there are still opportunities to introduce more efficiencies.

The report discusses one system called Mobility as a Service (MaaS), which is defined as the “integration of various forms of transport services into a single mobility service accessible on demand.” MaaS focuses on a person’s destination rather than the mode of transportation. Cities such as Bangkok, Jakarta and Manila have recently begun investing in sustainable public transport options that incorporate better use of sensors, data and MaaS systems. MaaS revenues are projected to top US$1 trillion by 2030.

The report also highlights the opportunities in supply chain. Calgary-based SingleTrack said that a lot more in shoring, some near-shoring, and a lot less offshoring is driving companies towards technologies that help track efficiencies and reduce environmental impact.

For example, Air Canada, whose passenger business dried up during the pandemic, had to rethink its business model, retool its staff and planes, adopt technologies such as drones and AI, and deliver new communication systems as cargo became a strong source of revenue.

It is shifts and needs like these that drive opportunities for Canadian companies. According to Canadian law firm Osler, Canada is a world leader in technologies such as AI and blockchain that can be applied to warehousing and to better managing supply chains and just-in-time service.

Download the Periphery Smart Infrastructure Edition to learn more.

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2/3

of global infrastructure investment needs are in emerging markets.

54%

is needed in Asia

Waste management

The growth of Asia’s population means cities will need to continue to invest in solutions to manage their solid waste in ways that protect public health and the environment. One estimate by the ADB says Asia will spend an estimated US$1.5 trillion on solid waste management infrastructure over the next decade.

As reported in Periphery’s Cleantech Edition, one major focus will be on waste-to-value projects that provide the double benefit of reducing landfill while providing new resources, such as energy or building materials. Waste-to-energy (WTE) plants can offer an effective means for dealing with municipal solid waste (MSW), which is produced by households and businesses and includes items such as food scraps, paper products and plastics.

One example of WTE technology is the Soc Son WTE plant at Hanoi’s Nam Son Waste Treatment Complex. The site was connected to the national grid in July and the plant’s first incinerator has the capacity to process 800 tonnes of waste daily, producing 15MW of electricity per hour. Four additional incinerators are expected to be operational by the end of the year, removing 4,000 tonnes of dry solid waste per day and generating up to 75MW of electricity per hour.

Canada is well-positioned to support waste management needs. For example, Canada’s Terragon Environmental Technologies leveraged CCC’s support to help them sell their waste to energy solution that enables any habitat to treat its own waste locally and with significant benefits from the recovery of resources contained within the waste. Canada would like to support more companies like Terragon Environmental Technologies to grow their solutions and meet the needs in Asia and beyond.

Download the Periphery Cleantech Edition to learn more about waste management in Asia.

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90%

of the world’s 2.4 billion middle class come from Asia

60%

By 2025, over 60% of ASEAN citizens will reside in cities

Clean energy

Solar, wind, geothermal and other sources of power are becoming more affordable and efficient through improved manufacturing practices, material sciences and greater use of data.

Mordor Intelligence expects Asia’s smart grid network market to grow by an average of 15 percent per year between 2016 and 2026. Countries such as China and India will spur the growth as they adopt smart infrastructure and alternative energy generation to replace aging power systems.

The Asia Pacific region has identified a need for expertise in the development and management of new energy projects that leverage these alternate sources of energy.

There is also a need for big data experts to help understand consumption data to help producers and regulators to understand which areas are generating more pollution or drawing more energy from the grid. These insights will help to target programs toward communities with high demand or high levels of pollution exposure so that policies and interventions can be put in place in a timely manner.

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40%

increase in Asia’s smart infrastructure investments in 2022

$46B

Asian AI spending will rise over $46B by 2026

Deep tech and infratech

“Deep tech” is used to describe a diverse range of technologies, including AI, blockchain, 5G, edge computing and the Internet of Things (IoT) that is either creating, storing, analyzing or acting on data that ultimately provides the smarts of infrastructure.

According to Global Infrastructure Hub (GIHub), infratech can be described as the integration of material, machine, and digital technologies across the infrastructure life cycle.

In 2020, G20 finance ministers and central bank governors endorsed the Riyadh InfraTech Agenda to promote the wider adoption of technology in infrastructure. Asia’s commitment to deep tech and Infratech is partly driven by the need for its economies to improve productivity and efficiency to stay competitive in a global economy.

Their commitment is evidenced by many projects including Singapore’s AI-powered airport terminal that

uses biometrics to allow travelers to clear immigration without having to present their passports or boarding passes and Hong Kong has deployed smart streetlights that utilize sensors and cameras to monitor traffic conditions.

Asia has several key strengths — including a lack of legacy systems and an appetite for innovation among regional governments — that position it well for leadership in the area of smart infrastructure deployment.

900K

number of elderly citizens in Singapore by 2023

11K

number of Singapore hawkers adopting e-payments

ASEAN: Priority region for trade and investment by Canada

Canada has signed many in region agreements to help facilitate trade in the Asia Pacific region. These include:

Canada-Indonesia Comprehensive Economic Partnership Agreement – In June 2021, Canada and Indonesia launched negotiations towards a Comprehensive Economic Partnership Agreement to support meaningful and sustainable economic growth and help facilitate increased trade and investment.
Canada-ASEAN Free Trade Agreement – In November 2021, Canada and ASEAN agreed to proceed with free trade agreement (FTA) negotiations. ASEAN member state economies represent Canada’s sixth-largest trading partner (2020).
Canada-Philippines MOU – In May 2022, Canada and the Philippines signed a MOU to establish a Joint Economic Commission to improve dialogue and collaboration on shared and emerging economic, investment and trade priorities—including in growth sectors such as renewable energies, infrastructure, agriculture, sustainable mining, and information and communications technology.
Canada-ASEAN MOU – In September 2022, Canada announced the creation of a new C$1 million ASEAN-Canada Plan of Action Trust Fund to promote further collaboration building on the C$3.7 billion in development assistance that Canada has provided to ASEAN and its member states since 2000.

“The Indo-Pacific region is key for Canada’s economic growth, prosperity, and security. Recently, we’ve deepened the relationships built on the 45-year Canada-ASEAN partnership. Together, we are committed to protecting the stability and peace of the region, while opening new opportunities for our businesses, workers, and peoples.”

The Honourable Mary Ng, Minister of International Trade, Export Promotion, Small Business and Economic Development

CANbuild G2G: Support for Canadian infrastructure sector

“Governments across Asia are struggling to involve the private sector, which is why we’re seeing the Philippines and Indonesian governments trying to increase private sector investment through a public-private partnership (PPP) model,” said Martin Desautels, the Vietnam-based managing partner for law firm DFDL. “Canadian companies need to be incentivized to diversify outside of China across the rest of Asia.”

According to Desautels, Canadian firms lack risk tolerance and are missing out on key opportunities.

“Working with Export Development Canada (EDC) and the Government of Canada, we can now offer a very high-quality, government-backed solution that sees Canadian companies step up and develop some truly inspiring projects. Our biggest challenge is that we can only go where Canadian companies are willing to go. Hopefully through this effort, we can demonstrate the amazing opportunities for our nation’s businesses to thrive on the global stage,” said Peter Nesbitt, a senior director at CCC.

To help Canadians de-risk their entry into Asia markets, CCC and Export Development Canada

(EDC) along with Trade Commissioner Service (TCS) and its network of Canadian trade offices throughout the region have teamed up to launch CANbuild G2G , to promote Canada-ASEAN collaboration on infrastructure and other projects of national importance.

Under CANbuild G2G, CCC, EDC, and the TCS engage with government buyers in the region to provide coordinated approaches to large infrastructure projects.

The TCS leverages its on-the–ground network of contacts and engages with Senior Government representatives to identify potential project opportunities, and advocate for Canada as a partner of choice for infrastructure development. Once a project has been identified, EDC provides the upfront capital investment, CCC takes on the performance risk to be the official contractor of record, Canadian companies offer vertically integrated solutions, and the Government of Canada provides a government guarantee of contract performance.

Canada is looking to create more government to government partnerships with ASEAN member countries. If you’re interested in exploring how Canada can address your government’s procurement needs, please contact: Boris Jacouty, Director, Infrastructure at CCC.

Learn more about G2G contracting opportunities in Asia.

Canada’s G2G: Proven model for exporters

Government to government contracting is not a new model but Canada’s unique version has had proven successes. Government buyers at the national and local level across the ASEAN region will:

Get faster project starts – Canada’s G2G contracting approach can satisfy urgent and compelling needs with unsolicited proposals from a list of qualified Canadian suppliers, coupled with a flexible G2G contracting approach.
Reduce procurement risk – CANbuild G2G mitigates vendor selection risk and improves the financial viability of a project with a due diligence that promotes responsible business practices.
Attract sources of financing – Contracts are backed by the Government of Canada, creating a favourable environment to attract project funding.
Improve outcomes of infrastructure investments – Canada’s G2G contracting approach provides a unique Government of Canada assurance contract will be delivered per the agreed terms and conditions, ensuring positive project outcomes.

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How Canada’s G2G compares to other G2G

Many countries provide G2G options for infrastructure, but Canada’s model stands out for two reasons:

Contract with Canada, not a company: The buying nation does not contract with an individual company with Canada’s G2G. Instead, they contract with the Government of Canada. This reduces procurement risks for the buying nation as they do not have to perform the technical, managerial and financial due diligence of the company – Canada does it for them. Canada is also providing the contract performance guarantee.
Much more than financing: Many Canada’s G2G model is about much more than financing. Our model is about supporting the buying nation in co-creating the project leveraging the two governments and the technical expertise of a qualified Canadian supplier. The Government of Canada actively monitors contract performance and handles all financial administration of the project ensuring the funds pay for work delivered. This helps to ensure Canada’s G2G contracts have a positive outcome.

Canada’s G2G program for international projects

The International Prime Contractor service is Canada’s G2G contracting service that is available through the CANbuild G2G program. Administered by CCC, it offers Canadian businesses support to for infrastructure project development at the national, state, and municipal government levels. Participating companies will:

Get an opportunity to access to high-level government buyers
Gain a competitive advantage as the buying government will be purchasing the solution from the Canadian government
Obtain advice and support to navigate the complex government procurement market
Reduce risks such as political, corruption and payment risks
Able to present unsolicited proposals and reduce the sales cycle time that is often seen in the traditional procurement process.

This post was last updated on December 10, 2022.