Impacts of obstacles in East Asian cross-border construction

Abstract

In the light of the rapidly growing investment in infrastructure over the past 10 years, East Asia has developed into one of the most dynamic construction markets in the world. Despite progress in market-oriented reforms in some countries of this region, considerable obstacles in the form of varying technical standards and local preference policies still can lead to significant cost increases. Five categories of obstacles are identified in this paper: business environment risk, regulatory restrictions, contractual arrangements and differences in standards and in culture. The likelihood of occurrence of these obstacles as well as their impact on the profitability of cross-border construction are uncertain. The degree of their effect also varies across East Asian countries. Through an industry survey of top international construction firms based in Singapore, the significant obstacles or cost growth factors and their impact on cost growth in tendering, construction, and overheads are determined. In particular, the risk situations in China and Singapore are compared.