November 14, 2018 / 5:25 AM / 2 months ago

Collaboration is key for the Belt and Road Initiative

The Belt and Road Initiative (BRI), China’s modern-day revival of the ancient Silk Road, aims to connect Asia, Europe and Africa through more than 60 countries, which collectively account for over 30% of global GDP.(1)

Watch interviews from the inaugural Singapore-China Belt and Road Initiative Investment Forum, where Omar Shahzad, Group CEO, Meinhardt Group; Goh Chye Boon, Regional CEO (China), Mapletree Investments; and Marie Lam-Frendo, Regional Director, Atkins Acuity, discuss opportunities along the Belt and Road.

At the first Singapore-China BRI Investment Forum on 25 October 2018, senior government officials and industry practitioners from across the region shared their insights on this gargantuan project via panel discussions on the third-party market collaborations, and the demand for professional advisory services along the BRI.

Ning Jizhe, Vice-Chairman, National Development and Reform Commission (NDRC), China, discussed that the impetus of BRI is to contribute to the global economy. China and Singapore’s cooperation will create a greater and more open world economy, pushing towards greater cooperation and peace.

Mr Ning Jizhe, Vice-chairman, National Development and Reform Commission (NDRC), China, emphasised the importance of third-party market collaboration at the Singapore-China Belt and Road Initiative Investment Forum.

In its simplest form, the BRI is about improving collaboration and connectivity within the region. But when one considers the sheer size and scale of this trans-continental initiative, it is anything but simple, and the ambition behind the project is obvious. 

In his speech, Mr Ning spoke about cooperation as the precursor of development for many projects. Therefore, China and Singapore should look towards sharing the risk of projects.

Mr Chan Chun Sing, Minister for Trade and Industry, Singapore, continued with the theme of collaboration, recognising that “the success of the BRI will depend on how we, as partners and stakeholders, work together to shape this initiative going forward.”

“Protectionism will result in fragmentation and isolation of production and value chains,” continued Mr Chan. “Instead, we should work together towards a more, not less, integrated and inter-dependent ecosystem...[that] encourage[s] stronger partnership with shared ownership of the global system.”

Singapore was an early supporter of the BRI when it was first introduced by China’s President Xi Jinping in 2013. One-third of all Chinese outward investments to Belt and Road countries flows through the city-state, and Singapore has now overtaken the US as the most attractive destination for Chinese overseas direct investment, according to a 2017 study by the Economist Intelligence Unit.(2) 

Listen to the interview with Omar Shahzad, Group Chief Executive Officer, Meinhardt Group

With almost 62% of the global population affected by the BRI(3), industry practitioners at the BRI Investment Forum 2018 highlighted language and cultural divides, with many asserting that a local partner can help bridge these differences, and the importance of trust between partners.  

“It’s very important to have a local power to lead investors through the difficulties of land acquisition, building infrastructure and cultural differences,” said Setyono Djuandi Darmono, Founder and Chairman of Jababeka Group. Dr Ruan Qiantu, Chairman of State Grid Corporation of China and Singapore Power-backed Jemena Group, which owns energy and water transportation assets across the east coast of Australia, added that “mutual respect and patience is imperative.” 

Yet with over 1,500 Chinese investment-backed infrastructure projects(4) in Belt and Road countries underway since 2013, speakers on the Financing Projects and Safeguarding Businesses Along the Belt and Road panel flagged concerns about financing such a breadth of projects.

“For us, the infrastructure financing gap is a big one and we see the quality of the projects as a major challenge,” said Pang Yee Ean, Director-General of Investment Operations at Asian Infrastructure Investment Bank (AIIB). “This situation is challenged by rising interest rates. We will see more and more projects not being able to fund the gap. But there is a light at the end of the tunnel, because there will be some projects that don’t make the cut and it will differentiate the good projects from the others.”

Listen to the interview with Marie Lam-Frendo, Regional Director, Atkins Acuity

With its unique multicultural and multilingual background, Singapore is an ideal launchpad for many BRI initiatives, particularly when one considers the close socio-cultural ties the city-state enjoys with many of its neighbouring countries in Southeast Asia and beyond.

“The strength of Singaporean companies is that they understand the Chinese way of working,” said Omar Shahzad, Group Chief Executive Officer, Meinhardt Group. “Plus, they can speak Mandarin and communicate in the local context – that’s really the value add.”

Singapore’s reputation as one of the region’s top financial and trading hubs also means the city-state can offer top-notch talent from a diverse pool of industries, be it in finance, legal, advisory or infrastructure. Many international banks, law firms and multi-national corporations have set-up their regional headquarters in Singapore, making it an ideal springboard for BRI projects around the region. 

“The whole value chain – be it legal, financial, technical – can be structured from here,” says Meinhardt’s Shahzad. “In some ways, this also de-risks Belt and Road projects by adding a Singapore component to it, and jointly those projects have a better chance of succeeding.”

This piece of content is brought to you by Enterprise Singapore and Infrastructure Asia

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(1) Belt and Road Initiative, The World Bank, March 29 2018, https://www.worldbank.org/en/topic/regional-integration/brief/belt-and-road-initiative
(2) China Going Global Investment Index 2017, Economist Intelligence Unit, December 2018, http://pages.eiu.com/rs/753-RIQ-438/images/ODI_in_China_2017_English.pdf
(3) Belt and Road Initiative, The World Bank, March 29 2018, https://www.worldbank.org/en/topic/regional-integration/brief/belt-and-road-initiative
(4) Kynge James, China’s Belt and Road Difficulties are Proliferating Around The World, July 2018, https://www.ft.com/content/fa3ca8ce-835c-11e8-a29d-73e3d454535d

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