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Tag: infrastructure

  • Look to Singapore, Sarawak for construction jobs, says HLIB

    Look to Singapore, Sarawak for construction jobs, says HLIB

    Contractors should look to neighbouring Singapore and Sarawak for jobs, as a slowdown in award of contracts is expected in 2019, according to Hong Leong Investment Bank (HLIB). The research house said in a note that contract flows are expected to slowdown on the back of slight year-on-year (y-o-y) decline of 0.4% in development expenditure to RM54.7 billion.

    For the cumulative period of 12 months, domestic and foreign contract awards amounted to RM18.3 billion and RM406 million, representing a y-o-y decrease of 37% and 85% respectively. Contract flows continue to slow down after a brief rebound in Q3 18 as the government re-prioritised major infrastructure projects.

    HLIB said foreign contracts (piling works) from Singapore amounted to RM148 million in Q4 18, which is an indication that civil infrastructure projects remain robust in Singapore. HLIB expect more domestic contractors to bid for foreign jobs especially in Singapore given its geographical proximity and the continued slowdown in the domestic construction landscape.

    It expects contractors under its coverage such as Gamuda, Kimlun and Sunway Construction to compete for jobs there.

    “We expect smallish basic infrastructure projects such as road upgrading, hospital, water, sewerage and rural area development projects will be rolled out by government this year which we believe is insufficient to spark any enthusiasm back towards the sector. However, we do not discount potential events such as award of Phase 2 of Klang Valley Double Track project (RM5 billion) and news flow on ECRL (possible revival) and Pan Borneo Sabah could alleviate the pessimistic sentiment towards the sector,” it added.

    While the job flows in Peninsular Malaysia looks lacklustre following the change in government, Sarawak appears to have prospective jobs offers.

    “We understand that industry players are aiming for jobs in Sarawak as its chief minister mentioned emphasis will be put on state water and rural road projects following the decision to shelve Kuching LRT project,” it said.

    Funding for those projects is expected to come from the Sarawak state reserve of RM31 billion which is likely to insulate the projects from risk of cuts in federal government spending. The call for bids for the Sarawak Coastal Road and Second Trunk Road which has an estimated combined value of RM11 billion are expected in the near term.

    In that light, HLIB maintains a “neutral” call on the construction sector post changes in federal government and the scrapping of mega rail projects.

    “The domestic construction industry landscape is expected to remain challenging and we do not expect a significant improvement in the near term. The 37% decline in domestic contract awards in 2018 supports our view,” it added.

    Nonetheless, high orderbook levels (average cover ratio of 4.5 times) following the robust job flows in the past two years coupled with rock bottom valuation (0.5 times price-to-book ratio) should cushion further downside amid subdued near term industry prospects.

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  • Bullet train to connect Hanoi with HCMC in five hours

    Bullet train to connect Hanoi with HCMC in five hours

    Vietnam’s bullet train will cut travel time between Hanoi and Saigon to five hours from the current 24. The railway project management board has submitted a pre-feasibility study to the Ministry of Transport, which quotes transport consultants’ estimate that if the train travels at 320 km/h, its running time would be from 5 hours 17 minutes to 6 hours 50 minutes depending on the number of stops.

    The route from Hanoi Railway Station to Thu Thiem Station in HCMC’s District 2 will be 1,545 kilometers (960 miles) long and run through 20 provinces.

    Sixty percent of the tracks will be on viaducts, 10 percent underground and 30 percent on the surface, completely protected by fencing and without a single crossing.

    It will have double standard-gauge tracks of 1.435 meters width and 24 stations, according to a consultancy consortium comprising Vietnamese firms TEDI, TRICC and TEDIS.

    It will use the distributed traction technology used by Japanese high-speed trains.

    The project is estimated to cost a total of $58.7 billion, comprising $2.23 billion for land, $43.3 billion for construction and equipment and $4.3 billion for management, consulting and other costs.

    It will be undertaken as a public-private partnership (PPP), with the government accounting for 80 percent of the cost and private investors for the remaining 20 percent.

    Construction will be in two phases, with the 282-km Hanoi-Vinh section and 362-km Nha Trang-HCMC section built first in 2020-2030 at a cost of $24 billion. Commercial operations on these stretches are likely to begin in 2032. The second phase connecting Vinh and Nha Trang is expected to be built in 2030-2045.

    The consultants have estimated the project to cost 0.4 – 0.55 percent of the country’s GDP in 2020-2030 and 0.35 – 0.4 percent in 2030-2040.

    After being reviewed by the Ministry of Transport, the study will be submitted to the State Appraisal Council and the government for review and to the National Assembly for approval next October.

    Vietnam currently has over 3,000 kilometers of railway tracks, none of them high-speed. The railway accounts for just 1.9 percent of the transportation sector in the country, according to the Vietnam Railway Authority.

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  • Vietnam’s four major transport projects on track for completion next year

    Vietnam’s four major transport projects on track for completion next year

    Vietnam is set to complete four infrastructure projects next year, some of them after long delays lasting several years.

    Hanoi’s first metro line 

    The 13-kilometer Cat Linh – Ha Dong metro line is expected to open commercial operations before the Tet Lunar New Year holiday starting February 2, 2019.

    All 13 trains on the route are being trial run every day now, running from Cat Linh Station in downtown Dong Da District to the Yen Nghia Station in the south-west Ha Dong District.The 13-kilometer Cat Linh – Ha Dong metro line is expected to open commercial operations before the Tet Lunar New Year holiday starting February 2, 2019.

    Each train has four coaches, with a total capacity of 1,000 passengers. The stainless steel coaches are approximately 19 meters long. The trains now run at 30-35 kilometers an hour, even though they are designed to reach speeds of 65 kilometers an hour. A complete trip takes about 30 minutes.

    Work on the project is 96 percent complete, officials say, adding that the terminals and depots are “83 percent equipped.”

    Construction of the Cat Linh-Ha Dong elevated railway started in October 2011 and was originally scheduled for completion in 2013. But several hurdles, including loan disbursement issues with China that were only resolved last December, have been stalling the project for years.

    The original cost estimate of $552.86 million has also ballooned to more than $868 million, including $670 million in loans from China.

    Bac Giang – Lang Son expressway

    The expressway connecting Bac Giang Province north-east of Hanoi to the northern Lang Son Province bordering China is expected to be completed next December.

    The four-lane expressway runs 64 kilometers. A 110-kilometer stretch of the existing National Route 1A connecting the two provinces will also be upgraded to be part of the expressway.

    The total project cost has been estimated at VND12.19 trillion ($523.67 million).

    Most of the expressway has been completed. Next year, operators will finish laying asphalt and installing road signs and lights.

    Work on the expressway started in October 2015 and was scheduled for completion last year. However, the  Ministry of Transport had to select a new investor for the project after the original one was found wanting.

    The Bac Giang – Lang Son expressway is part of the Hanoi – Lang Son expressway, connecting the capital with the Huu Nghi International Border Gate in Lang Son Province.

    Cu Mong Tunnels 

    The Cu Mong Pass, lies mostly in Binh Dinh and partly in Phu Yen, is one of the most dangerous passes in Vietnam. The new tunnels are expected to reduce the number of dangerous traffic accidents that the pass has become infamous for. They would also reduce travel time between the two provinces.The Cu Mong tunnels, connecting the southern provinces of Binh Dinh and Phu Yen, are expected to open on January 21, allowing all vehicles to go through free of charge during the February 2-10 Tet holiday.

    The two tunnels are 2.6 kilometers long and 30 meters apart and have a 4-kilometer lead-in road. The tunnels allow a maximum speed of 80 kilometers an hour. For an unspecified first period, only one tunnel will be operated. For now, the second one will be reserved for use in emergencies.

    The tunnels have a total capital of almost VND4 trillion ($171.82 million). Construction started in September 2015.

    Vam Cong Bridge in the Mekong Delta Region

    This is the second bridge over the Hau River after the Can Tho Bridge, which is 48 kilometers away. It is part of the route connecting Can Tho with An Giang Province, built to boost the socio-economic development of the Mekong Delta region.The bridge, which connects the southern province of Dong Thap with Can Tho City, is expected to be operational by next July.

    The bridge was supposed to be completed by November 2017, but authorities found out that a horizonal beam had a crack four centimeters wide and two meters long.

    The Ministry of Transport ordered repairs, and so far 26 out of 38 steps for this process has been completed.

    The bridge’s budget of $270 million was sourced through official development assistance from South Korea and Vietnam’s counterpart funds.

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  • LG U+ CEO says Huawei gear is not a risk

    LG U+ CEO says Huawei gear is not a risk

    LG U+ CEO and Vice Chairman Ha Hyun-hwoi has made it clear that the carrier does not think there are any security threats related to its use of Huawei equipment in its 5G infrastructure. Ha made the statement during a year-end press briefing on Wednesday in Yongsan District, central Seoul, rebuffing claims by some lawmakers that there is a risk of security leaks through the use of the Chinese tech giant’s equipment in the network. LG U+ currently partners with Huawei as well as Samsung Electronics, Ericsson and Nokia for its 5G infrastructure.

    According to Ha, the Chinese IT company has already applied for security certification of its 5G network equipment from an international certifying body in Spain. The CEO added the public will be able to see how secure the equipment is once the evaluations are complete next year.

    “Security concerns apply to every equipment vendor we partner with, not only Huawei, and we need to thoroughly verify all the equipment [we use] is secure,” Ha said. “There are roughly 170 countries that are already using Huawei’s network equipment, and there hasn’t been any security problems reported so far.”

    Locally, Huawei has set up equipment that abides by over 70 security guidelines set by the Korea Internet & Security Agency, according to LG U+.

    The main reason for the carrier taking the risk of using the controversial equipment is because 5G infrastructure needs to be built in conjunction with the existing network equipment for 4G long term evolution (LTE), some of which LG U+ also bought from Huawei. Ha said price, technological competitiveness and the ability to deliver the equipment in a timely manner were also considered when choosing the vendor.

    LG U+ has built 5,500 base stations to service the next-generation 5G network as of Wednesday, while its local competitors have reportedly established less than 1,000 5G base stations.

    On why the mobile carrier is rushing to establish its 5G infrastructure, Ha said, “It is important to have a head start to have a competitive edge in [5G] services considering the quality tests we need to go through before March [when the high-speed network is commercialized for smartphones].”

    Ha said the company invested roughly 4 trillion won ($3.6 billion) to set up its 5G infrastructure, including at 5G spectrum auctions.

    The company said it hopes to take up a larger share of the market, which is dominated by SK Telecom, with 50 percent, and KT, with 30 percent.

    “In July 2011, when we first began the LTE service, our local market share was 17.7 percent, but the share increased to 21.2 percent over time as of the end of October,” LG U+ said in statement. “We think next year could be the best time to shake up the competing structure.”

    The carrier is preparing a 5G-based smart factory service with its affiliates LG Electronics and IT service company LG CNS, targeting enterprise customers. For individual customers, LG U+ is focusing on augmented reality and virtual reality content that can offer an immersive experience of watching sports games and K-pop concerts at home.

    The CEO also commented on speculations that the carrier will acquire paid TV service operator CJ Hello. Ha said it has opened up its options to cable TV operators other than CJ Hello and plans to finalize the deal within the first half of next year. Industry sources, however, still say negotiations between the two parties have nearly come to a close and final results are likely to come out around March.

  • Vietnam’s biggest airport start building in 2020

    Vietnam’s biggest airport start building in 2020

    Work on Vietnam’s biggest airport would start in 2020 and it will become operational in 2025, the Airports Corporation of Vietnam (ACV) says. ACV, which manages and operates civil airports in the country, also says that it will complete business appraisals and feasibility reports for submission to the National Assembly for approval in October 2019.

    Transport Minister Nguyen Van The had told legislators at a meeting late last month that the government was likely to approve land acquisition plans for the project this month, and release funds for it immediately after.

    Situated 40 kilometers east of Ho Chi Minh City, the Long Thanh International Airport is expected to take up overflow from the largest existing airport in the country, the Tan Son Nhat International Airport.

    Tan Son Nhat now receives 32 million passengers a year, far beyond its designed capacity of 25 million.

    The Long Thanh Airport, to be built in three phases over three decades, was recently listed by CNN Travel as one of the world’s 16 most exciting airport projects.

    The first phase is scheduled for completion in 2025 when it will be able to handle 25 million passengers annually. The next two phases will be built in 2030-2035 and from 2040-2050.

    The new airport would have an annual capacity of 100 million passengers and five million tons of cargo when completed.

    The first phase is estimated to cost VND114 trillion ($4.87 billion), and will be raised from public funds, a bond issue and private sources.

    Experts have warned that the cost of the airport could double every five years.

    ACV announced that in its 2019 plan, the company will spend more than VND10 trillion ($432.71 billion) on upgrading and expanding several airports, including Cat Bi in northern Hai Phong City, Vinh in central Nghe An Province, Phu Cat in southern Can Tho City, and Noi Bai in Hanoi.

    Most of these upgrades are expected to be completed by the third quarter of 2019.

    According to a recent announcement by ACV, by the end of October, the total amount of passengers going through airports this year was estimated at 87 million, by 12 percent over the same period in 2017.

    This year, the number of international passengers rose by 23 percent, while the figure for domestic customers increased by 7 percent.

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  • Korea’s KT skips Huawei for 5G

    Korea’s KT skips Huawei for 5G

    KT has chosen Samsung Electronics, Ericsson and Nokia as suppliers of 5G network equipment. As expected, Huawei was excluded from the list.  “In choosing 5G equipment providers, the company considered a wide range of factors: the level of technology, investment costs and management stability based on the compatibility with the existing LTE network,” KT said in a statement.

    The bid results, announced by the company Thursday, come a month after SK Telecom named Samsung Electronics, Ericsson and Nokia as its 5G equipment providers.

    This is the second time Huawei was left out despite having participated in internal tests along with the three selected.

    SKT and KT’s choices were anticipated because both had used equipment from Samsung, Ericsson and Nokia for their 4G LTE networks.

    Compatibility of equipment is an advantage for mobile carriers in terms of cost and maintenance, especially in the early stages when 5G equipment is not fully installed nationwide.

    LG U+ is the only one among Korea’s three mobile carriers that has not yet announced 5G equipment suppliers. The smallest mobile carrier is likely to include Huawei on its list. It partnered with the Chinese company for its 4G LTE network, along with Samsung, Ericsson and Nokia.

    An LG spokesman said Thursday that the company “does not have plans to openly disclose selected bidders for 5G network equipment at the moment,” as it is not mandatory.

    However, LG U+ Vice Chairman Ha Hyun-hwoi gave a strong hint at the parliamentary audit late last month when he gave a positive answer to a lawmaker’s question on whether it was “unavoidable” to use Huawei’s 5G equipment as its 4G equipment was from the same company.

    The biggest advantage of Huawei’s 5G equipment is cost efficiency. The Chinese company is known to charge prices that are 20 to 30 percent lower than other global competitors for high-quality 5G equipment. A factor that argues against Huawei is security concerns.

    Due to its ties to the Chinese government, there have been worries that the company’s equipment is being used for spying. In August, the U.S. and Australian governments banned Huawei from supplying equipment for their 5G wireless infrastructure citing security reasons. Britain said in July it “is less confident” about the integrity of Huawei products.

    The concern is shared by some local customers as well. Online petitions at the Blue House’s official website have been posted since June requesting a stop to LG’s adoption of Huawei’s 5G equipment. Huawei has been denying such allegations.

    In a press release last month, the Chinese tech company highlighted that, despite ongoing security concerns, there has been zero cases of actual information leakage in the past.

    “We have supplied LTE equipment for LG U+ since 2013, and until now, there were no cases of security accidents,” said the statement. “After multiple verifications by the government, it has been proved that there have been no problems.”

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  • US, Japan keen to invest in Vietnam infrastructure

    US, Japan keen to invest in Vietnam infrastructure

    Vietnam’s plans for building and expanding airports and seaports have attracted the interest of companies in the U.S. and Japan.

    Joel Szabat, deputy assistant secretary in the U.S. Department of Transportation’s Office of Aviation and International Affairs, said his country wants to strengthen ties with Vietnam in the transport infrastructure area, especially airports and seaports.

    He told Deputy Minister of Transport Le Dinh Tho at a meeting Tuesday that his department would facilitate U.S. investment in Vietnam’s infrastructure projects in the form of public-private partnerships (PPPs).

    But Vietnam needs to have more policy consistency and open policies, Szabat said.

    Last month Japan’s Secretary of State Tsukasa Akimoto told Deputy Minister of Transport Nguyen Ngoc Dong that many Japanese investors are eyeing key transport projects in Vietnam.

    They are interested in the Long Thanh International Airport and high-speed north-south railway, he said.

    At the meeting with Szabat, Tho said Vietnam is focusing on five areas of transport infrastructure: roads, aviation, waterways, railways, and network connections to boost logistics.

    One of its national infrastructure projects is the north-south expressway measuring over 2,100km in length, of which “650km will be built in 2017-2020 under the PPP model,” he said.

    With the country’s railway network being obsolete, there is need for an upgrade to both its long-distance and inner-city railways, he noted.

    “Our ministry is considering feasibility studies for the north-south high-speed railway.”

    The transport ministry is set to report on the high-speed railway to the National Assembly next year.

    It is now consulting various agencies for a feasibility study for the Long Thanh airport in the southern Dong Nai Province, which is expected to be approved by the government at the end of next year.

    Vietnam has 21 airports, eight of which receive international flights. Given the rapid rise in traffic, it plans to build, expand or upgrade several including Noi Bai in Hanoi and Tan Son Nhat in HCMC.

    The ministry this month approved changes to the upgrade plans for Tan Son Nhat Airport, including the addition of a third terminal and a 250-hectare expansion of the airport.

    Besides building a new terminal, T3, to the south with a capacity of 20 million passengers a year, the ministry also seeks to expand the two existing terminals to increase their capacity to 30 million passengers a year.When the work is complete, the airport’s size will increase from the current 545 hectares (1,350 acres) to 791 ha.

    The airport currently handles 36 million passengers a year against a designed capacity of only 25 million.

    Tho said Vietnam has two major ports, Lach Huyen in the north and Cai Mep-Thi Vai in the south, which can accommodate ships of up to 100,000 DWT.

    “However, network connections for logistics in ports remain underdeveloped.”

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  • Indonesia Improves in Getting Private Money for Infrastructure

    Indonesia Improves in Getting Private Money for Infrastructure

    President Joko “Jokowi” Widodo must have felt relieved and proud when the presidential airplane touched down at Kertajati International Airport in Majalengka, West Java, to inaugurate its service last week.

    The president can now showcase the airport as a successful and punctual public-private partnership (PPP) for infrastructure development.

    Initiated by the provincial government of West Java in 2009, the $800 million airport project was initially marred by land-clearing and financing problems. In 2015, Jokowi decided to step in with a state fund for the airport’s runway, taxiway and air navigation system.

    The move allowed Bandarudara Internasional Jawa Barat (BIJB), a state-owned enterprise, to concentrate on developing the terminals.

    Since then the project has become more attractive to investors, who saw a much lower risk. A syndicate of local Islamic banks injected $68 million into the airport last year. And soon BIJB will sell multimillion-dollar asset-backed mutual funds to investors.

    “The Kertajati airport is an example of successful cooperation between the central government, provincial government and the private sector. We will replicate this business model in other regions to accelerate development,” Jokowi said at the airport’s taxiway on Thursday (24/05).

    Second Best

    Indonesia was second after China in terms of attracting private funds to infrastructure projects last year, according to the World Bank’s Private Participation in Infrastructure (PPI) report released in April.

    It showed Indonesia attracted $15.4 billion to 11 projects. Of that amount, about $6 billion alone was used to build the Jakarta-Bandung high-speed railway, which is in 60 percent funded by a consortium of Indonesian state-owned companies and in 40 percent by Chinese enterprise China Railway Construction Corp.

    Among 304 projects considered in the report, 58 percent of the world’s PPI was in China, Indonesia, Mexico, Brazil and Pakistan, amounting to $93.3 billion, a 37 percent increase from 2016.

    Indonesia’s infrastructure push started under President Jokowi, who in 2015 said that more than $400 billion will be spent to accomplish 247 national strategic projects by 2019. Since 2014, when he took office, 30 of the projects, worth Rp 94.8 trillion ($6.7 billion) have been completed.

    Stronger Mechanism

    Since its implementation in the 1990s, private participation has been limited to the sectors of transportation and energy infrastructure. Having realized that the state budget simply cannot bear the costs of its infrastructure projects, the government has broadened the scope of public-private partnerships. Health care, telecommunications and water treatment projects have also been included.

    A 2015 presidential regulation, which expanded these financing possibilities, also set up a guarantee mechanism to fix the rate of return for investors in such projects. It also established Sarana Multi Infrastruktur (SMI) to help channel private funds into ready-to-built projects, and Penjaminan Infrastruktur Indonesia to provide guarantees for investors.

    “Over the past few years, the Indonesian government has considerably strengthened the legal and institutional frameworks for PPPs,” ADB country director for Indonesia, Winfried Wicklein, said last week.

    “By improving the quality of project preparation, ensuring competitive, fair and transparent procurement processes, and complying with obligations under existing long-term PPP contracts, Indonesia can deepen private sector interest in its PPP program,”  he said.

    There are 12 ongoing PPP infrastructure projects, including the Jakarta-Cikampek II Elevated Toll Road.

    The National Development Planning Agency (Bappenas) said that in 2018 there will be at least 15 new public-private projects, including the $1 billion, 71-kilometer Yogyakarta-Bawen Toll Road.

    Of these 15, only the $34-billion West Semarang Water Supply has been tendered, the rest are still being prepared.

    Benefits, Costs

    The most common form of public-private partnership is called “build, operate, transfer.” With this model, a public facility is built and operated by a private enterprise for a longer time, after which its ownership returns to the government.

    With this scheme, the government can refrain from taking in more loans or save the money for social programs.

    “However, when a toll road is built under a PPP scheme, it means the private operator would charge higher prices [to obtain profit]. When this happens, people may have to bear the higher price, which also means lower social benefits of the projects,” said Ahmad Mikail, an economist at Samuel Sekuritas Indonesia.

    The government should take this into consideration.

    “Whether a PPP has gone effectively is when people are satisfied with the facility built under the scheme,” Ferdinand Pecson, head of PPP Center of the Philippines, said earlier this month.

  • Thailand to invest in infrastructure development

    Thailand to invest in infrastructure development

    Thailand’s strategically important geographic location gives it ample advantage to become a primary regional economic hub, not only in trade, investment and tourism, but also in communication and transportation networks that connect to other regions around the world. And the government has in recent years made investment in domestic infrastructure its top priority.

    The Thailand infrastructure action plan for 2017 is worth US$25.2 billion and includes 36 projects, covering rail, roads, air transport and ports around the country. The government plans to begin selling Thailand Future Fund investment units in October as an infrastructure investment alternative. It’s a way of raising liquidity from the public for the construction of massive state infrastructure projects. The unit sales are expected to reap $1.1 billion.

    The Industry Ministry recently revealed that Thailand’s emerging Eastern Economic Corridor (EEC) is expected to see investment in infrastructure projects reach $43 billion in the next five years — for airport expansion, new railways and cities, port development and spurring modern industry.

    Helping ensure the success of its infrastructure development, the government will provide full support, including eliminating barriers, rules and regulations in order to generate real, high-value investments, as well as a one-stop service to facilitate investment in the EEC. The Board of Investment of Thailand (BOI) in turn offers enticing and competitive privileges, including a corporate tax holiday for up to 15 years, exemption from import duties on machinery and raw materials, 17% personal income tax credits for executives, experts and researchers working in designated zones, grants to support investments in R&D, innovation and human resource development, permission to own land for promoted activities, and one-stop service to facilitate business operations.

    An integrated local and cross-border transportation network

    Fast-paced development of a comprehensive network of interconnecting transport routes across the country will accommodate rapidly surging demand for both domestic and cross-border transportation. Government agencies are expediting efforts to call for bids on several new mass-transit routes and an expressway system throughout Greater Bangkok, and motorway, double-track rail and high-speed train projects across the nation.

    Prime Minister Prayut Chan-o-cha has made a personal appeal for public support for the Thai-Chinese high-speed railway planned to link Bangkok to the northeastern province of Nakhon Ratchasima. The same railway is envisioned as connecting with Chinese high-speed trains in Laos traveling to China, as part of a joint Chinese-Thai effort which forms part of Beijing’s vast infrastructure drive known as the “One Belt, One Road” initiative.

    Another high-speed train project, the 193.5-kilometre Bangkok-Rayong route, which will link the Eastern Economic Corridor to Suvarnabhumi, Don Mueang and U-tapao international airports, is in now undergoing a feasibility study and preparations for a public private partnership (PPP).

    Elsewhere in Thailand, a Bangkok-Hua Hin high-speed railway and a mass-transit rapid monorail system for Phuket are currently being assessed for feasibility.

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  • Massive shift towards hybrid infrastructure underway

    Massive shift towards hybrid infrastructure underway

    By 2020, enterprise spending on cloud, hosted and traditional infrastructure services will be more or less on par, Gartner has predicted.

    The research firm said the growth of cloud and industrialized services and the decline of traditional data center outsourcing (DCO) indicate a massive shift toward hybrid infrastructure services.

    “As the demand for agility and flexibility grows, organizations will shift toward more industrialized, less-tailored options,” said DD Mishra, research director at Gartner.

    “Organizations that adopt hybrid infrastructure will optimize costs and increase efficiency. However, it increases the complexity of selecting the right toolset to deliver end-to-end services in a multi-sourced environment.”

    Gartner predicts that by 2020, 90% of organizations will adopt hybrid infrastructure management capabilities.

    The traditional DCO market is shrinking, according to Gartner’s forecast data. Worldwide traditional DCO spending is expected to decline from $55.1 billion in 2016 to $45.2 billion in 2020. Cloud compute services, on the other hand, are expected to grow from $23.3 billion in 2016 to reach $68.4 billion in 2020.

    Spending on colocation and hosting is also expected to increase, from $53.9 billion in 2016 to $74.5 billion in 2020. In addition, infrastructure utility services (IUS) will grow from $21.3 billion in 2016 to $37 billion in 2020 and storage as a service will increase from $1.7 billion in 2016 to 2.7 billion in 2020.

    In 2016, traditional worldwide DCO and IUS together represented 49% of the $154 billion total data center services market worldwide, consisting of DCO/IUS, hosting and cloud infrastructure as a service (IaaS). This is expected to tilt further toward cloud IaaS and hosting, and by 2020, DCO/IUS will be approximately 35% of the expected $228 billion worldwide data center services market.

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  • M1, StarHub may share more mobile infrastructure

    M1, StarHub may share more mobile infrastructure

    Singapore’s M1 and StarHub are considering expanding their mobile infrastructure sharing arrangements to gain a greater competitive edge against new market entrant TPG Telecom.

    The companies announced they have signed a memorandum of understanding covering the evaluation of potential further collaboration in network infrastructure sharing.

    M1 and StarHub have been sharing infrastructure including combined antenna systems, in-building fiber and tunnel cables for many years.

    Now the operators are exploring a deeper collaboration focused on sharing radio access network, backhaul and access assets.

    The collaboration is aimed at enabling both operators to optimize the use of a number of network elements while improving coverage and capacity for customers. The companies plan to continue to manage network traffic independently.

    StarHub CEO Tan Tong Hai said pooling network resources will allow both operators to roll out more cost effective next-generation networks to manage the exponential growth in demand for mobile data.

    “We are cooperating to bring the Singapore infocomm industry to the next level, to compete not on pure infrastructure ownership, but at a higher level of customer service and innovative value creation,” he said.

    “Sharing mobile network radio elements with M1, but keeping our individual mobile core networks, will allow StarHub to provide better mobile service (in particular, mobile coverage) and still be able to differentiate ourselves.”

    M1 CEO Karen Kooi added that the agreement could lower both operators’ operational and capital expenditures, allowing them to invest in the future technologies needed to keep Singapore at the forefront of the ICT industry.

    Singapore recently granted a fourth mobile license to TPG Telecom, after the Australian fixed line operator won a new entrant spectrum auction with a bid of S$105 million ($72.8 million).

    The terms of the allocation call for TPG to provide nationwide street level 4G coverage within 18 months of the license coming into effect, meaning the company will soon be a competitive threat for StarHub, M1 and incumbent Singtel.

  • DHL Express invests in infrastructure in Chandigarh

    DHL Express invests in infrastructure in Chandigarh

    Aimed at supporting the growth of export and import demands of customers especially SMB’s in the Northern region,  logistic service provider-DHL Express India, opened its new modern service facility in Chandigarh. The new facility will serve as a pick-up, delivery, sorting center etc., with a shipment handling capacity of over 100,000 shipments a year and will cater to the logistics needs of customers-based at Chandigarh and its vicinity namely Dera Bassi, Mohali, Panchkula, Zirakpur, Baddi, Parwanoo etc.

    Speaking to Business Standard, RS Subramanian, Senior Vice President & Managing Director, DHL Express said, “In the recent past, due to rapid industrialization, the tricity namely Chandigarh, Mohali, Panchkula and nearby areas like Zirakpur, Baddi, Parwanoo etc. has grown in prominence as an industrial hub. Through the service center facility, we are strengthening our infrastructure and capabilities to support our customers’ growing business. We will now be able to move shipments faster and with greater efficiency, providing superior service quality.

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  • Germany To Help Iran’s Port Infrastructure

    Germany To Help Iran’s Port Infrastructure

    Germany, which has been aggressively pushing for closer economic ties with Iran following the lifting of international sanctions against the latter, wants to play a pivotal role in the modernizing and upgrading of Iran’s dilapidated infrastructure and transport system. Germany signed six memoranda of understanding (MoUs) aimed at boosting transport cooperation following a late October meeting between Abbas Akhoundi, Iran’s minister of roads and urban development, and Alexander Dobrindt, Germany’s minister of transport and digital infrastructure, who led a delegation of major German shipping, port and marine companies.

    Iranian and German sources said that a German company is participating in a tender for completing two terminals at Chabahar Port in southeastern Iran, which was recently in the news because India is keen to develop it for strategic and trade reasons. German multinational Siemens is holding talks with Iran for developing suburb transport in Tehran and Tabriz, as well as the rail lines between Tehran and Tabriz.

    The lifting of sanctions against Iran has led German business executives and the shipping industry to tap what they describe as “huge business potential.” Hamburg Port, for example, has been trying to identify areas and ways to establish and upgrade ties with that country’s port facilities.

    Since the imposition of sanctions, Iran has struggled to have a normal trading relationship with the outside world. While the German industry has been euphoric – and this applies particularly to Hamburg, whose port prides itself as the “gateway to Asia” – the realities are different; indeed, access to Iran’s lucrative market is not an easy undertaking.

    Strategically located at the crossroads between the Arabian Peninsula and Central Asia, with ports in the Caspian Sea and the Gulf region, Iran is interesting for shipping lines. Iran also offers opportunities for foreign investment in important sectors such as oil and gas, electricity production, air, sea and road infrastructure, telecommunications, etc.

    Described as part of the “Axis of Evil” in 2002, Iran’s breakthrough came on January 16, 2016, when the first of the multiple layers of trade sanctions were removed, breaking the shackles that badly inhibited that country’s shipping and trade, and giving it access to huge sums of money that had been frozen under the sanctions regime.

    However, experts at a special event in Hamburg a few months back told shippers and others that only part of the sanctions had been lifted on January 16. While the ban on imports of Iranian oil and gas products, and against the country’s ship-building and shipping sectors, had been lifted along with restrictions on bank remittances, the situation remains complex in the sector of so-called “dual use” goods, which can be used both for civilian and military purposes.

    One of the first to take advantage of the lifting of sanctions was European aerospace company Airbus, which has bagged aircraft orders from Iran Air to replace its outdated A340 aircraft. The city of Hamburg, experts say, could flank trade with Iran by providing expertise in several areas, including modernization of Iran’s fleet of mercantile ships.

    US companies are not, yet, permitted to have dealings with Iran, although their associate companies in Europe can do so. However, weapons and certain police equipment are still prohibited. Also prohibited are deals with companies that are controlled by Iran’s revolutionary guards or those that have supported Iran’s atomic programme.

    Iran has been trying to recruit German companies to set up operations, particularly in the seven free trade zones in Iran for which the government has been dangling carrots in the form of incentives, including a 20-year tax holiday. Since Iran is keen to join the World Trade Organization, it has been trying to highlight the fact that many of its old agreements on trade and legal protection are in force. However, new companies to be established in Iran will be governed by certain religious laws and, as such, are required to have a Persian name or title, as Iranian legal experts have been saying during meetings with German companies. “Such a requirement can be a deterrent because many German companies are unsure what the implications would be on their business. I would suggest that companies do their homework before moving large-scale investments to Iran,” one German-Iranian told on the condition of anonymity.

    Meanwhile, Iran is in a rush to catch up with the rest of the world by modernizing its infrastructure and its economy.

    Hamburg and its port stand to benefit immensely from Iran’s opening. In 2014, German exports to Iran amounted to some €2.4 billion (approximately US$3.1 billion, in 2014 dollars), while imports from Iran were about €300 million, according to numbers from the German Statistics Bureau. Hamburg’s two-way trade with Iran amounted to roughly €214 million in the same year. International trade experts at Hamburg’s Chamber of Commerce are optimistic that German trade with Iran would double from its present level after all sanctions are lifted.

    Some 353 companies based in Hamburg already have business connections with Iran. Despite sanctions, some of these companies maintained business ties with Iran even during the embargo period. Hamburg, which is by far the world’s leading trading hub for Iranian products, including carpets, has the largest concentration – about 20,000 – of Iranian nationals or people of Iranian origin in Germany; the city hopes to resume its once flourishing trade and shipping through the Iranian diaspora.

    Another important German state interested in trade with Iran after the lifting of sanctions is Hesse, which recently sent a 40-member delegation led by Hesse minister for economics, energy and transport Tarek Al-Wazir to Iran. The trade volume between Hesse and Iran was around €212 million in 2015 (US$230 million), according to the state’s economics ministry.

    “The reputation of products and services offered by Hesse is traditionally good in Iran,” Al-Wazir said. There is huge potential in the expansion of the processing industry, the transport infrastructure and in urban development.

    During German minister for economic affairs and energy Sigmar Gabriel’s visit to Iran in early October, Gabriel’s second visit to Iran within 14 months, Iran’s oil minister had said that German banks were becoming a hindrance. “We have billions (of dollars) with which we could do good business with the Germans,” Bijan Namdar Zangeneh, the oil minister, was quoted as saying after his meeting with Gabriel in Tehran.

    The money cannot be transferred due to problems with the banks. Iran’s minister told journalists that that “is bad for us, but also bad for the Germans.”

    Germans say that although the sanctions against Iran were lifted in January, trade has not made much headway. A precluding factor is that part of the punitive measures – the so-called secondary sanctions – imposed by the United States are still in force. German and European banks are, consequently, dissuaded from financing Iran deals. In 2015, for example, Germany’s Commerzbank paid a hefty US$1.45 billion fine to US authorities because of violating American sanctions in deals with Iran. France’s large bank BNP Paris also had to pay a billion-dollar penalty.

    Iran’s economy has not done badly, with the International Monetary Fund forecasting an average growth rate of 4% for the next five years. Official Iranian projections suggest a GDP growth rate of 5% for 2016.

    Iran’s neighbour Turkey is also eyeing the opportunities unfolding in Iran; Turkey offers itself as an ideal transit point for German and other western companies wanting to enter Iran. Turkey trumpets its “manifold advantages,” particularly, for SMEs which can enjoy customs duty benefits. Turkish experts, who say that all the machinery and production tools in Iran are outdated, believe that German companies, with their past trade relationship with Iran, can look forward to a welcoming market with huge investment needs.

    Some German companies are looking at using Turkey to tap Iran’s huge business potential. Since 2014, Turkey has a preferential trade agreement with Iran. This agreement eliminates many customs duties. German companies can save customs duty twice because Turkey, a member of the European Customs Union, exempts German products from customs duty on exports to Turkey. All products shipped from Turkey to Iran are treated as Turkish products and thus spared the customs duties.

  • BT to build cloud infrastructure for Randstad

    BT to build cloud infrastructure for Randstad

    HR services provider Randstad Group has contracted BT to build a new global IT infrastructure providing cloud connectivity to more than 3,500 sites worldwide.

    The network will connect 37 countries in Europe, North- and South-America, Middle East and Asia-Pacific.

    BT will consolidate, centralize and standardize Randstad’s network infrastructure, currently sourced from multiple domestic and regional providers. The new infrastructure uses BT’s IP Connect and Internet Connect services to combine the reliability and security of IP-based VPNs with the flexibility of internet connections.

    The network infrastructure will use BT’s Cloud Connect service to deliver high performance connectivity to multiple Amazon Web Services locations. In addition, BT One Cloud will deliver cloud-based voice services for Randstad’s 33,000 employees, hosted from data centers in Europe, North America and Asia. BT will also standardize Randstad’s in-office – fixed and wireless – networks.

    “We were looking for a global network and cloud services integration partner to help us gain more control over our network estate, increase efficiencies, maximize the benefits of the cloud and help accelerate our digital transformation,” said Bernardo Payet, general manager of Randstad Global IT Solutions.

    Payet said BT will take away the burden of managing a multitude of different suppliers and make it easier for us to implement new services for our employees and customers.

    “Our ambition is to be the leading global cloud services integrator, offering customers unparalleled choice, security, resilience, speed, flexibility and agility on their digital transformation journey,” BT Global Services president of Europe and global telecom markets  Corrado Sciolla said.

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  • Changi Airport Infrastructure Aimed at Competitiveness

    Changi Airport Infrastructure Aimed at Competitiveness

    Singapore’s Changi Airport is already one of the leading aviation hubs in the world, but to help keep it competitive against the current backdrop of sluggishness, overcapacity and decreased yields, the airport has several large-scale infrastructural upgrades in the pipeline, in both the short and the long term.

    “We look forward to two new facility openings – the DHL Express South Asia Hub and the SATS eCommerce Hub in the fourth quarter of 2016,” says Hui Hoon Phau, assistant vice president of the cargo and logistics development division at Changi Airport Group. “DHL’s 24-hour express facility will be able to support five times more flights in Singapore and three times more tonnage per day with their new hub. SATS will be the first ground handler in the world to own such an airside facility, with automated processes for single scanning and sorting to save cargo-processing time and increase efficiency.”

    Announced in March 2015, DHL’s new €85 million (US$94.8 million) express facility occupies a total land area of approximately 26,000 square metres. It will also feature DHL’s first fully automated express-parcel sorting and processing system in Singapore and South Asia.

    CAG also announced in March 2016 that it was launching a cargo community which would pursue the International Air Transport Association’s Center of Excellence for Independent Validators on Pharmaceutical Handling certification, similar to the approach adopted by Amsterdam and Brussels. Changi will be the first airport in Asia to implement such a community.

    According to CAG, it will support six companies from different parts of the supply chain to undergo the certification process: Singapore Airlines Cargo, dnata Sinagpore, Global Airfreight International, Expeditors Singapore, CEVA Logistics Singapore and Schenker Singapore.

    The Civil Aviation Authority of Singapore and the Singapore Development Workforce Agency will also jointly provide assistance grants to the company for the certification process, which includes training and independent assessments of requirements such as the capability of maintaining a cargo hold temperature range of 10-25°C, and the execution of appropriate temperature-controlled handling.

    Phau says that the pioneer group of companies is on track to complete the IATA CEIV Pharma certification by next year.

    Self Photos / Files - SIN

    Overall, air cargo traffic at Singapore has been relatively stagnant of late, at 1.83 million tonnes in 2012, 1.84 million tonnes in 2013 and 2014, and 1.85 million tonnes in 2015.

    But that could change this year. “Although cargo traffic at Changi has remained stable over the past few years, this should be viewed against the backdrop of a slowing global economy which had in turn depressed air cargo demand,” says Phau. “That being said, air cargo volume at Changi had a healthy performance in the first six months.”

    Boosted by strong performances in March, April and June, Changi handled 950,250 tonnes of air freight in the first half of 2016, a 4.2% increase compared to the same period in 2015.

    “Double-digit growth was recorded by niche cargo segments such as perishables and pharmaceuticals, continuing the strong growth from previous years,” says Phau. “With Changi’s excellent facilities and connectivity in the region, there remains potential for carriers to tap into the global demand for such niche cargo by leveraging on Changi as a transhipment hub.”

    Despite the sluggish growth of the global air freight market, the airport still managed to attract the arrival of two new freighter operators in June 2016, which saw the launch of K-Mile Air’s five-times weekly services between Bangkok and Singapore using a Boeing 737-400F, as well as Silk Way West Airlines’ commencement of twice-weekly 747-400F services between Singapore and Baku, with stopovers in Kuala Lumpur and Dubai.

    There have been new passenger flights with bellyhold cargo too, such as United Airlines’ launch of a non-stop from San Francisco with a 787-9 in June and Singapore Airlines’ launch of Airbus A350-900 flights to Dusseldorf in July 2016.

    “We remain confident in the long-term potential of the cargo business at Changi Airport,” says Phau. “To support the long term growth of Singapore’s cargo and logistics sectors, dedicated facilities for air freight and air express services, as well as MRO activities, will be developed as part of the Changi East development.”

    According to CAG, the project involves the development of a 1,080-hectare plot of reclaimed land to the east of the current airport. It will include a fifth passenger terminal, a large air freight centre and a third runway, which is currently used by the military and is to be repurposed for civilian use. The entire project is estimated to be completed in the second half of the 2020s.

    With all this investment, CAG feels that the airport is in a solid position to solidify its status as one of the major aviation hubs not just in the region, but across the world.

    “Notwithstanding the healthy air cargo performance at Changi during the first six months, we remain cautiously optimistic in the short term, given the sluggish economic growth of world trade and the uncertainty of the Brexit impact on the air freight industry,” she says. “We continue to work with our partners to strengthen Changi’s capabilities, such as our pharmaceutical handling capabilities, and pursue growth in niche segments to ensure that we are well-positioned for future growth.”

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