Global construction shifting to emerging markets, says AIG
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Leaders from across the construction, finance and insurance industries came together in Singapore to discuss the shifts in the global construction industry and the importance of managing risk as entities expand their infrastructure footprint.
Hosted by AIG, a leading provider of construction insurance, the discussion took place in conjunction with the launch of new research by AIG that found that for the first time construction in emerging markets was outpacing developed markets.
Daniel Abramson, AIG’s global head of construction, said this shift was in significant part being driven by Asia, where population growth and urbanisation were creating the need for more construction investment.
“Last year 52 per cent of the world’s construction [was in] emerging markets. By 2025 we expect this figure to grow to more than 60 per cent, with big infrastructure projects in China and India set to lead the way,” he said.
Singapore has a key role to play in enabling this growth, he said.
When it comes to insuring construction risk, Singapore is now Asia’s insurance hub, with companies based in the city-state projected to underwrite US$4.5 billion (Bt145 billion) worth of construction projects this year, a 22 per cent increase over the past five years. And it is set to rise to $6.5 billion by 2018.
Rudi Spaan, AIG’s head of broker and client management, said what is being seen in Singapore not only indicated the increasing number of projects being undertaken across Asia, but also the multiple risks involved in these projects.
“Today projects involve a global supply chain, where materials and equipment are sourced all over the world, and this inherently increases the risk,” he said. “When the complexity of multiple jurisdictions is introduced, different legal exposure, contractual obligations, tax and compliance issues, and cultural norms such as work safety have to be taken into consideration.”
Companies therefore need to look for tailored solutions to ensure they implement world-class risk-management strategies that are tailored specifically to their project because in today’s environment there is no one-size-fits-all strategy, he said.
AIG is also hosting similar discussions in Hong Kong and London this week.
