It will also drive construction sector growth by 2.7% annually between 2018 and 2022.
Singapore’s new measures to expand fund sources for infrastructure projects are likely to drive long-term infrastructure spending growth, BMI Research noted.
At the 2018 budget announcement, Finance Minister Heng Swee Keat announced the establishment of Rail Infrastructure Fund and the possible permission to allow government agencies and state-owned enterprises (SOEs) to issue bonds for funding of infrastructure projects.
“The latest budget proposals will help secure financing for Singapore’s pipeline of large-scale transport and utility projects, many of which have construction timelines extending well into the next decade,” said BMI Research.
“The proposed $5b Rail Infrastructure Fund will help finance transit projects such as the MRT Jurong Region Line and the MRT Cross Island Line, both of which are in early planning stages and have expected completion dates in the latter half of the 2020s,” they added.
In line with this, BMI Research expects the new funding measures to push the growth in construction sector as residential and non-residential building momentum slows down.
Whilst the construction sector shrank by 8.4% in 2017, BMI Research predicts growth at annual average of 2.7% between 2018 and 2022.
“Long-term infrastructure investments in Singapore, which include a high-speed rail link to Kuala Lumpur, a new airport terminal and hundreds of kilometres of rail transit extensions, will help support growth in the country’s construction sector,” the FitchGroup unit said.
Outside the rail sector, higher infrastructure spending is also seen to help with the establishment of Changi Airport Terminal 5.
The country’s infrastructure spending is expected to reach an estimated $20b this year.
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