Asia-Pacific projects and trends 

Energy and infrastructure 2016 is the fourth edition of our sector specific guide to the legal markets of Asia-Pacific, Central and Eastern Europe, Latin America, the Nordic and Baltic region and Sub-Saharan Africa.

In the last six months our team of legal journalists in London, Hong Kong and New York have interviewed lawyers, industry figures and in-house counsel active in the relevant sectors to source their opinions on law firm performance and the state of the energy and infrastructure sectors in their jurisdiction and regions, and what they see as the main talking points, challenges and areas of activity.

From these conversations and their extensive research, the IFLR1000 team in Hong Kong has summarised, by country or sub-region, the main trends and developments across Asia-Pacific below.

Energy and infrastructure 2016 is the first research project to utilise IFLR1000's new Deal Database, a fully searchable database of significant deal records from over 120 countries. Our Hong Kong team has selected some of the most significant Asia-Pacific energy and infrastructure projects which emerged from this research period, and you can view these data records below.

Energy and infrastructure project records 

Trends and developments   


Globally, 2015 was a significant year for energy, with plummeting commodity prices, coal plant closures, records set for global solar projects, and a landmark climate change deal in Paris. In the post-Paris world, Australia will need to reduce its 75% reliance on a coal-heavy electricity sector quicker than is happening at present. Overcapacity in the national electricity market is at 4000MW or more - and there is much scope to scale down; however, no one wants to be the first company to go and oversupply is locked-in as new renewables projects struggle to gather momentum. And while the previous administration’s Direct Action Plan (DAP) to reach its emissions reduction target struggled to get off the ground, the trend is heading the wrong way as the new Turnbull government cut $1 billion in the funding for the Australian Renewable Energy Agency in the latest federal budget. 

Mining has long been the driving force of Australia’s economic growth, but the global collapse in commodity prices has forced a distressing readjustment as the country tries to steer its economy to calmer waters, renegotiating its trading partnership with China and the wider Asia-Pacific. Despite being punished by investors, the industry’s big boys such as Rio Tinto and BHP Billiton may weather the storm as their low-cost models provide refuge, but the wider Australian mining industry with its higher-cost models may face the rocks as it is forced to cut costs and lay off staff.

With a federal system of government and eight legal systems -one federal and eight state and territory - each having its own court and parliament -the Australian legal system is complicated. Inevitably, its regulatory approvals process is multi-layered and painstaking and provides much work for the country’s law firms. “The regulatory process can take up to five years from the start of applications to approvals,” one practitioner says, “and in the last five years there has been a revolution in the amount of regulations—an increase in layering and steps involved in approvals and stages.”

In the infrastructure space, it has been a different story to energy, depending on which territory is in focus. According to the 2016 federal budget - dubbed the beige budget because of its safe election-friendly content - it seems Queensland infrastructure will miss out to New South Wales (NSW) and Victoria because it is not open to selling its assets and privatisation and there has been much talk about the privatisation of the country’s water supplies, which has traditionally been government run, with access regulated. “Everyone would love privatisation in the water supply sector in Australia,” says one partner.

More generally, the country will likely see steady privatisation through large infrastructure sales in the transport, healthcare, prisons and social housing areas. Australia is in the middle of a long phase of infrastructure growth, especially in NSW, utilising the PPP (public-private partnership) model, with two of the country’s most significant projects being the A$8 billion North West Rail Link (NWRL) and the A$7 billion East West Link – Stage One (EWL). “NSW has wholly embraced PPPs, and has taken infrastructure to a new level,” says one partner. 

Adam Majeed – Editor Asia-Pacific



Traditionally, China’s insatiable appetite for energy has been dominated by coal and oil. In the past two decades there was a huge increase in coal-burning for power and industry but the country suffered serious air pollution as a result. China has made efforts to move away from coal and diversify its supply to include nuclear power, natural gas, hydroelectricity and other renewables. Under its thirteenth five-year-plan, the government offers no hope for coal markets, looking to further suppress CO2 emissions and the results of this are starting to become apparent.

Despite scepticism around the accuracy of China’s official figures, a report from its National Bureau of Statistics (NBS) says coal use in the country is in significant decline, which is bad news for the struggling global coal industry. Coal use fell in China by 3.7% in 2015 compared to 2014 levels, which showed a 2.9% decline on the previous year. There were similar decreases in coal-intensive heavy industry such as iron, steel and cement, and coal imports plummeted alongside a ban on new coal mines. It seems that China is sending a strong signal of the clear acceleration of its energy transition as large economies move rapidly to even exceed stipulations in the Paris agreement.

Moving on to oil, China holds 24.6 billion barrels of proven reserves,the highest in Asia-Pacific. But, while =domestic production has grown by more than 50% in the past two decades, it has not been able to match its consumption, which increased dramatically in line with the country’s economic growth. However, the slowdown in China’s economy and its determined efforts to move away from manufacturing-oriented towards a service-driven economy - using a less energy intensive approach to growth - has reduced demand for oil.

As the world’s largest polluter continues its transition to clean energy, renewables investment in China hit an all-time high in 2015 of $110 billion, and the low-carbon electricity generation—hydro, wind, nuclear and solar—increased more than 20% that year.

In the infrastructure space, a lot of the talk has surrounded One Belt, One Road (一带一路), China’s development strategy focused on Eurasia through the land-based Silk Road Economic Belt (SREB) and sea-based Maritime Silk Road (MSR). The strategy underlines the country’s desire for a bigger role in global affairs and to improve exports in areas such as steel manufacturing where there is currently overproduction. “It’s a massive government policy programme to incentivise Chinese banks and companies to invest in infrastructure projects,” one partner says. “China has about 300 million tonnes of surplus steel; think of how many bridges that can build.”

Another major recent policy development in China is the government’s pivot towards PPPs (public-private partnerships) to bridge the financing shortfall in infrastructure, which - in light of the property downturn - is considered integral to the government's bid to cobat the economic slowdown. “PPPs are hot right now as the state moves work to the private sector,” says one practitioner. “There’s a lot of talk about it and how it translates to business and then legal business. Infrastructure related work will increase a lot.”

The state has announced the details of 1043 projects needing private investment of $322 billion. These PPPs will be in infrastructure, public services such as water conservation, transport and environmental protection.

Adam Majeed – Editor Asia-Pacific



India’s energy and infrastructure sectors are becoming increasingly active, with major projects like the Delhi-Mumbai Industrial Corridor (DMIC), Navi Mumbai International Airport (NMIA), Gujarat International Finance Tec-City (GIFT), SmartCity Kochi beginning to take shape and the government implementing investor-friendly policies in both sectors. In 2016, new projects in transport and, after the new land acquisition bill was passed, rural development are expected.

Under the incumbent government’s ‘Made in India’ initiative steps have been taken to encourage private sector investment into Indian infrastructure projects. A significant move was shifting from the traditional government-funded EPC model for developments to BOT (build, operate, transfer). The government has also introduced a new hybrid annuity model for new projects, which dictates costs will be split 40:60 between government and developers respectively. Another recent notable development in the area was the new land acquisition bill. It is hoped the bill will help expedite projects, although there are concerns it gives the government overriding powers.

Moving on to energy, the coal sector is expected to sees significant changes after the Supreme Court has cancelled 214 coal block contracts, breaking the 40-year monopoly of state-owned Coal India and a small government-owned company had over mining and selling coal in the country. The move is expected to encourage coal block bids from the private sector, with Indian conglomerates Adani Group and GVK both reportedly interested.

In oil and gas, the government has introduced initiatives like Help (Hydrocarbon Exploration Licensing Policy) to boost the petroleum and hydrocarbon sector. It is also promoting marketing and pricing freedom for new gas production and PSA contracts.

Candy Chan – Journalist Asia-Pacific



The Indonesian government has pledged, and is planning, to improve the country’s infrastructure, with the lack of roads, airports and electricity supply a long-standing barrier to increased economic growth.
A total of 73 projects have been targeted for development this year. These include power plants, toll road developments in Sumatra and Java islands and rail projects. One example of the latter is the Jakarta-Bundung high speed train which will be built by a consortium of Indonesia state-owned companies and a Chinese rail company.

Finding funding for infrastructure has been a problem for the government in the past but the state-owned investment company, Sarana Multi Infrastruktur (SMI), has promised to expand its loans to finance the works and, on evidence, has been true to its word. SMI extended Rp13 trillion in 2015, higher than the company’s original target of Rp9.7 trillion. The Asian Development Bank has also committed to expand lending to Indonesia to $2 billion per year.

Despite these positive developments, some commentators are not optimistic about the prospects for future projects. “A traditional problem in Indonesia is bureaucracy. It not uncommon to see projects delayed,” said an experienced infrastructure partner at one firm.

Meanwhile, coal mining is a relatively prosperous industry in the country despite the sluggish global demand. Two coal-fired Banjarsari power plants in South Sumatra, which started commercially operation in 2015 are producing at a rate of around 1.4 million tonnes per year. Another plant, the Banko Tengah power plant, is currently being planned and should be open in 2021.

Candy Chan – Journalist Asia-Pacific



Japan is the fourth largest energy consumer in the world despite a population of just 120 million that occupies 2.1% of the world’s population. It is a developed economy and its energy and infrastructure players are highly visible on the global stage, working on a host of outbound matters, exporting expertise to emerging markets in South East Asia, Africa and the Middle East.

Nevertheless, it is a country deprived of natural resources, and so it has always been vulnerable to energy supply concerns. Comprising over 60% of total energy usage in Japan, oil and coal are the most widely used energy sources in the country, of which 80% of its oil is imported from OPEC: especially, Saudi Arabia, Kuwait, United Arab Emirates, and Iran; and most of its coal comes from Australia and the United States.

There is no doubt that using large amounts of oil and coal for energy affects the environment negatively as fossil fuels emit carbon dioxide, and Japan occupies a relatively high proportion of global emissions. In recent decades, people started being concerned about environmental issues and the 2011 Fukushima nuclear disaster only intensified such concerns. Because of this renewable energy is considered to be one of the solutions to reduce environmental pollution, and the government responded by enacting an attractive feed-in-tariff regime in August 2011 that aggressively encouraged the development of renewable energy resources, bringing in a lot of investment and work for law firms.

But despite the inevitable halt to new applications because of utilities’ struggle to accommodate newcomers to the clean energy business, Japan uses renewable energy for only 1.3% of its total energy usage and so the country will be looking to accelerate further renewable energy development. “The Japanese government’s attitude is that the volume of solar projects is too many, and it would like to emphasise other renewable energy projects such as geothermal, wind, and biomass,” says one practitioner. So while renewable energy may be the long-term solution, the Fukushima fallout also had another short-term effect prompting the government to allow the construction of new coal-fired plants.

In April 2016, the long-awaited liberalisation of the electricity and gas markets came into effect to facilitate the entry of new businesses into the markets, but at the same time the Abe administration is now pushing for the reactivation of the idled nuclear power plants. However, increased competition through deregulation can raise the cost of nuclear power relative to other sources of electricity. “It’s a huge electricity market in Japan and the liberalisation of the retail market is going live with 132 companies registered to be retailers,” one partner says.

On the infrastructure side, in recent years the government has undertaken initiatives to improve the legal and regulatory framework of PPPs (public-private partnerships), and this resulted in special legislation to adopt a new type of PPP to privatise infrastructure, such as airports, water supply and sewage facilities and toll roads by way of concession. “The government’s policy to expand PPP/PFIs is gearing up for the Tokyo Olympics, and local governments need to consider this,” one practitioner says. Apart from the privatisations that are underway to award rights to operate and improve facilities at airports such as Haneda, Sendai, Kansai and Osaka, the government hopes that Tokyo 2020 will act as a trigger for a new wave of infrastructure investment.

Adam Majeed – Editor Asia-Pacific



Malaysia had a bad year in 2015, overshadowed by an overall lack of confidence in the economy after a three-way $22.3 billion merger between Malaysian Bank CIMB, RHB Capital and Malaysia Building Society collapsed at the beginning of the year, and the state development fund, 1Malaysia Development (1MDB), was hit by scandals relating to its debts and financial irregularities.
The government had announced a number of infrastructure projects to support growth, including public transportation projects such as the Light Rail Transit (LRT) 3 project, Mass Rapid Transit (MRT) and High Speed Rail (HSR). The Pan-Borneo Highway and Vision Valley are two other high profile projects.

A recent trend has seen China making large investments in Malaysian energy and infrastructure. The $2.3 billion purchase of Edra Global Energy - an asset of 1MDB - by China General Nuclear gives the country a 14% stake of Malaysia’s total power assets. Other projects with Chinese participation are the $1.1 billion Second Penang Bridge built by China Harbour Engineering Company, the $1 billion construction of the 944MW Murum Dam by Three Gorges Development Company, and, the $2 billion Gemas-Johor Bahru electric double-track rail by China Railway Construction Corporation (CRRC).
Another highly anticipated project is the Kuala Lumpur-Singapore high-speed rail line, expected to cost $9.7 to $14.5 billion and to be completed in 2023.

Candy Chan – Journalist Asia-Pacific



Mongolia is a vast land expanse that is largely undeveloped. Sometimes referred to as the Saudi Arabia of coal, it holds 10% of the world’s coal reserves, and mining is crucial to the country’s economy. However, 2015 was a tough year for the industry, and so for the Mongolian economy as mining’s continued slowdown led to an increase in restructuring work, liquidation, employment concerns and disputes. It is a far cry from the heady days of 2011 when the country was driven by a mining boom, and concerns will not abate as 80% of the country’s electricity comes from coal-fired power plants.

Last year was not all doom and gloom for Mongolia though. Despite corruption being a continuous concern and a cocktail of bureaucracy, uncertainty and trial-and-error approaches from the state leading to stalled activity, Rio Tinto struck a deal with the Mongolian government after two years of tense negotiations, clearing the way for a $5.4 billion expansion of the Oyu Tolgoi copper and gold mine, opening a vast trove of resources that may account for a third of the country’s economy.

Moreover, despite the tough conditions there are still a number of landmark capacity-building projects in progress. Shearman & Sterling, Ince & Co and White & Case advised on the $1 billion CHP5 heat and power project, which is Mongolia’s first independent power producer (IPP) project being developed under a PPP (public-private partnership) programme. Elsewhere Sidley Austin advised on the development, construction and financing of the $6 billion 1800 km freight rail network that’s meant to be the main transport for Mongolia’s rich mineral resources to international markets.

Adam Majeed – Editor Asia-Pacific


New Zealand

New Zealand is blessed with some of the most cost-effective renewable energy sources in the world. It is heavily invested in renewable energy, with 40% of its primary energy needs met by clean sources and 70% of its electricity coming from hydro-power, geothermal power and wind. The country has five major generators that produce 95% of New Zealand’s electricity: Meridian Energy, Genesis Energy, Mighty River Power, Contact Energy, and TrustPower.

Similar to its neighbours across the Tasman, New Zealand has an oversupply of generation capacity. In fact, in the past few years the very competitive electricity sector has been marred by uncertainty and the government forged ahead with the partial privatisation of three state-owned generators and retailers under its mixed ownership model (MOM). “We’ve reached the point of oversupply in electricity,” one partner says. “Four to five years ago big energy projects moved from fossil fuel to renewable energy and plants have been shutting down.” The country has set itself a target of being powered by 90% renewable energy by 2025, and will shut down its last two coal-fired power generators by December 2018. “The demand for electricity is flat and there are not a lot of new projects going on, “ one partner says. “Climate change is rearing its head in New Zealand, and people are more interested.”

Despite these developments, New Zealand has not been insulated from the impact of the low commodity prices, and law firms have seen an increase in demand in the areas of litigation, employment, regulatory and M&A – a shift from the development and project work undertaken in recent years. For example, in response to falling oil prices and struggling margins, Chevron’s downstream operations offloaded its assets in New Zealand to petrol retailer Z Energy for $556 million.

Infrastructure has been very active in New Zealand, particularly in the transport and social housing sectors in Auckland, under the region’s Unitary Plan. Projects include the City Rail Link, which is the largest project for New Zealand’s largest city. The government is gearing up for a fresh wave of PPPs (public-private partnerships). Major projects include the government’s Roads of National Significance (RoNS) programme, which includes the Transmission Gully project and the project to extend the state highway network north of Auckland as part of the Upper North Island Strategic Alliance. There are also projects in social infrastructure including PPPs involving prisons and, in Auckland, Christchurch and Queenstown, schools. There is also work in Christchurch, which is now designated as a rebuild zone following the 2011 earthquake, and the city is experiencing a construction boom on a vast scale, at an expected cost of NZ$40 billion. “Christchurch is still very much rebuilding and it’s only 20% complete,” one practitioner says.

Two areas providing regulatory work for New Zealand’s lawyers are environmental law and resource management. Environmental concerns are integral to most deals in the country, and the Resource Management Act (RMA), passed in 1991, is a significant piece of legislation that promotes the sustainable management of natural and physical resources such as land, air and water. “There are changes to the Act considered by parliament,” one partner says. “For the first time last year, offshore oil is now subject to its own specific regime.” Water and irrigation may also be an area of growth down the line, and one project in development is the Ruataniwha water storage facility, New Zealand’s largest freshwater project for a number of years.

Adam Majeed- Editor Asia-Pacific



The Philippine presidential election in May 2016 has caused delays to projects. “The election led to the suspension of a number of projects, and I think they will not resume construction until the new administration has reviewed all the planned and ongoing development projects,” one infrastructure partner commented. “In fact, the government was banned from awarding any public works contracts since the end of March due to the approaching presidential election in May,” she said.
The elections eventual winner, Rodrigo Duterte, is expected to invest in infrastructure development through PPP (public-private partnership) projects. The former Davao City mayor vowed to boost infrastructure in the country, promising he would build major roads, bridges and other lines of communications to push Philippines’ economic potential.
In 2010, the Asian Development Bank estimated the country needed to spend $127 billion on roads, airports and other infrastructure in the decade leading to 2020, and PPP is the obvious model of choice for these projects for a country without the necessary capital to fund such an extensive programme.
Meanwhile, the country has made a significant energy discovery. Philippine National Oil Company-Exploration Corporation (PNOC-EC) discovered natural gas field in Santiago City in 2015, which could contribute 60 MW for to the country’s grid for the next 15 years.

Candy Chan – Journalist Asia-Pacific



When compared to other countries in Southeast Asia, Singapore has highly developed infrastructure but the government has pledged to commit S$26 billion to public transport projects in the next five years. The last time Singapore made such a significant investment in infrastructure was the 1990s. Spending on infrastructure will be increased by around 50% to about S$30 billion by the end of this decade, the government has said.

Expanding the country’s airport capacity is one item on the government’s agenda. This will be achieved in part by developing Changi Airport. A new terminal, which will be able to process up to 50 million passengers a year - more than the combined capacity of terminals 2 and 3 - is being discussed. Terminal 4 is already under development and should be operational by 2017. Another airport project is the Jewel Changi Airport, The mixed-use S$1.7 billion project is expected to open in 2018.

Sea ports are another area the government is addressing. Seeking to enhance Singapore’s influence as a logistic hub in the region it is in the process of building the Tuas port.

Other transport projects in the pipeline include new MRT lines, trains and bus networks. Building and Construction Authority (BCA) expects contract values to range from between $26 billion and $37 billion per year.

In oil and gas, Singapore has suffered during the oil price slump. Oil companies like Keppel Corporation have cut workforces worldwide including in its Singapore office. Other oil giants like McDermott, Technip and Subsea have also moved their offices from Singapore to Malaysia to reduce expenses on commercial property and staff housing.

Candy Chan – Journalist Asia-Pacific


South Korea

South Korea possesses virtually no natural resources to meet its strong demand for energy. The country is constantly balancing its need for energy security with environmental concerns, and most of its electricity comes from thermal, accounting for more than two thirds of production, and nuclear power. It is also a major energy importer, buying nearly all its oil, and is the second-largest importer of liquefied natural gas (LNG) in the world.

Looking at recent legal work in South Korea, some of the largest energy deals in the country have involved acquisitions of coal-powered IPP (independent power producer) projects. Renewable energy and nuclear power, however, have been generating the most activity. Domestic companies of all sizes - from chaebol (a South Korean form of business conglomerate) to smaller firms - have been showing interest in investing onshore and offshore in nuclear, hydro, solar, wind, and bio-fuel power plants and in overseas mining ventures.

Another area of growing interest among investors is the waste-to-energy sector, and there have been a growing number of waste disposal transactions in this research period. “Other than big standard IPP projects and renewables there are new transactions developing in waste,” one practitioner says. “There’s a realisation that projects like solar and wind are mature industries and the players are settled. Waste is a new area dominated by local players but no one has gone up the value chain and they’re looking to do that now.”

As South Korea is a developed country with technologically advanced companies, a healthy amount of outbound work in emerging markets is available to law firms. One active jurisdiction for the domestic legal market is Iraq.

Until South Korea can increase its nuclear power production to reach its target of meeting 56% of the country’s electricity needs by 2020, it will continue to seek fossil fuels internationally. In 2009 the country signed a $3.5 billion agreement to develop an oil field in southern Iraq as it looked to secure supplies, and this could be a potential win-win for both sides as Iraq needs capital to improve the nation after years of war and economic sanctions.

An ancillary requirement for Iraq is the need to enhance social capital and South Korean law firms have been acting on the largest new city construction project ever won by a Korean construction company overseas. Hanwha Engineering & Construction Corporation is undertaking the development of the $8 billion Iraq Bismayah New City development project, which includes 100,000 residential units, water and sewage facilities, roads and other infrastructure.

Other outbound projects are generally in hard infrastructure, including toll roads, bridges, ports and railways, in part thanks to the country possessing strong experience in implementing PPP (public private partnership) projects.

Domestically, not far from Seoul, a development in line with South Korea’s history in high-tech has begun; that of a new smart city, Songdo. This $40 billion project is the largest private real estate development in the country’s history and has been hailed as the city of the future, where cutting-edge infrastructure will be part of day-to-day life.

Adam Majeed – Editor Asia-Pacific



In Thailand in 2014, as the political environment stabilised, the country approved a budget of $75 billion for infrastructure, with major developments planned for roads, rail and airports.

Proposed projects for 2015 include railways (expanding the intercity network and mass transit system in Bangkok); airports (enhancing domestic capacity so the country can serve as a regional hub); seaports (improving connectivity on both the Gulf of Thailand and Andaman Sea in West Thailand); and, roads (linking cities and the border regions with neighbouring countries).

In the energy sector, the Electricity Generating Authority of Thailand has encouraged private investment through two schemes, namely the independent power producer (IPP) and the small power producer (SPP) programmes. To date, the authority is expected to purchase power from seven IPP projects, with a total capacity of 5944MW, and from approximately 55 SPP projects.

Candy Chan – Journalist Asia-Pacific


The Mekong region

Connected by its eponymous river, the Mekong region, which includes Cambodia, Laos and Myanmar, is rich in natural resources, with the Mekong River alone generating vast amounts of hydropower.
Laos remains a country with underdeveloped infrastructure, particularly in rural areas. It has a basic road system and limited external and internal fixed telecommunications networks. It is dependent on imports for all of its petroleum and the electricity grid does not yet extend to the whole country. Highlight projects in the country last year include the Laos government’s deal with a Thailand-based renewable company, Impact Energy Asia, for the construction of Southeast Asia’s largest wind farm.

In Cambodia, most infrastructure and energy projects are backed by the Asian Development Bank or the World Bank. Recent projects supported by the ADB include the $10.3 million southern coastal corridor. The country’s oil and gas industry is still young, and its first agreement for commercial extraction is yet to be signed. The sector holds considerable promise for both potential investors and the Cambodian Government.

Myanmar has about 53 onshore oil blocks and 51 natural gas blocks. As of March 2016, China is the largest investor in Myanmar’s oil and gas sector, accounting for nearly 35% of the total investment. Mega projects in other sectors like electric power, mining, telecommunications and infrastructure have also seen substantial foreign direct investment.

Candy Chan – Journalist Asia-Pacific



Vietnam has good prospects for economic growth but needs significant investment in infrastructure, and spending in the area is expected to top $56 billion by 2025, according to PwC.

Vietnam has been heavily dependent on government spending to build roads, waterways and railways, but Prime Minister Nguyen Tan Dung has pledged to encourage private and foreign investment in infrastructure projects in the future, especially into its underdeveloped transport and waterway systems.

The government is pushing for a $31 billion high-speed railway to run through the country from north to south. Other upcoming projects include a $16.5 billion project to build a new airport in Ho Chi Minh City, a $9 billion railway master plan and a $1.8 billion project to build a fifth subway line in the capital.

Candy Chan – Journalist Asia-Pacific