The Romans were obsessed with building roads, and rightly so as they ensured the swift movement of goods, people and information and helped unite the Empire.
Fast forward to the 21st century: and governmental focus on infrastructure building hasn’t dimmed, particularly in Singapore.
The soon-to-be-announced tenders for the construction of the North South Corridor (NSC) will signal the beginning of Singapore’s latest big-ticket project.
The NSC is a 21.5 km integrated transport passageway that encompasses express bus, cycling and pedestrian lanes.
It will connect residential towns in the more northern regions, including Woodlands, Sembawang, Yishun and Ang Mo Kio, to Singapore’s city centre, reduce bus travel times to town by up to half an hour, and link commercial activity between the north and south of the island.
While its planned completion date is 20261, the trade and commercial benefits for Singapore will be both far-reaching and immediate.
Build it and more will come
The Land Transport Authority (LTA) has kick-started the process and called for prequalification from potential contractors for ten separate packages to support the construction for the first half of the corridor, with the second half to be announced in due course.
The sectors that will initially gain the most from this project include, construction, architecture, and civil, structural and electrical engineering firms will all be vying for roughly SGD8 billion worth of NSC contracts2.
Once construction begins sometime this year, the project will require significant demand for raw materials, steel, machinery, and components for machinery and maintenance. This means more business for miners and heavy equipment manufacturers which will inevitably open up new channels of trade activity between Singapore and supply countries, like China, Germany, Netherlands, Canada and Australia.
There will also be a swathe of down-stream opportunities for business services like accounting and human resource management which leads to a natural demand for services that support these businesses. And this doesn’t even begin to cover the number of jobs created just in the building of the corridor.
Additionally, the project’s intended objective of opening up transport routes will be the catalyst for the development of new communities and commercial districts along the corridor like Seletar and Mandai. This in turn provides opportunities for commercial and residential real estate development and further encouraging the growth of local SMEs.
When completed, the direct beneficiaries of the corridor are industries and companies that rely on good infrastructure. These include transportation services, wholesalers and retailers, and logistics companies
The corridor will also cut the commute time for people coming into Singapore from Johor. According to Malaysia's immigration data3, over a quarter of a million people use the causeway located in Woodlands daily, making it one of the busiest crossings in Southeast Asia.
A hive of financial activity
That’s a whole lot of economic activity being channeled to the corridor, not to mention the business NSC generates itself.
The NSC’s tender process and subsequent construction will see corporations - both big and small, domestic and international - seeking financing arrangements, banking partners, project specifications, environmental impact studies, sustainability studies and cost-benefit analysis.
Singapore’s capital markets are likely to benefit from corporates looking to raise funds for their ongoing operational needs. This will hopefully attract institutional investors from near and far seeking infrastructure investment for their portfolios.
The commercial opportunities linked to NSC aren’t exclusive to domestic companies. Some of the leading construction, engineering and business services firms in Singapore are multinationals and this means that many of the business services which will support the project are likely to be from international companies.
The hive of activity will also raise the potential for foreign direct investment into Singapore as large international conglomerates seek to get direct exposure to the commercial growth opportunities.
With the presence of foreign companies looking for a slice of the corridor pie, this raises the need for foreign exchange and treasury services.
Finally, property development along the NSC will also spin off a new wave of tendering and financing requirements.
It’s a long term investment
There’s a school of thought that says you cannot build anything in complete isolation. Rather, you have to repair the world around it. And this is what the North-South Corridor means to Singapore’s economy at a macro level.
Infrastructure projects, such as the NSC, have a huge multiplier effect (a dollar spent on infrastructure leads to an outcome of greater than two dollars4). This is evident in the government’s plans for the corridor.
When you build a road like the NSC, you not only generate employment and commercial growth directly through its construction and maintenance, you also create an industrial base of businesses that will both support and benefit from the corridor.
Infrastructure is a long-term and far reaching investment. You’re building and/or improving the environment for businesses, and consequently the economy, to prosper. The NSC is part of a series of infrastructure projects that set about to do exactly that.
Why should we be interested in infrastructure? The creation of physical infrastructure like roads, ports and rail systems spurs the growth of supply chains and in turn leads to the development of financial initiatives like lending and capital raising. This happens in tandem with policy conditions like customs, tax treatises, trade and investment alliances that will facilitate cross-border trade and international co-operation. And all this results in a thriving economy.