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Belt and Road

Vietnam and Indonesia stand out as Belt and Road bets, reports show

Southeast Asia draws flurry of investment but concerns over China linger

A freight train departs from Henggang in China on its way to Vietnam. In one survey, a leading 66% identified Vietnam as a place with BRI opportunities.   © Reuters

SINGAPORE -- Southeast Asia is becoming ever more of a hotbed for investment related to China's Belt and Road Initiative, two separate reports issued this month show.

Chinese investment and construction contracts in the region almost doubled to $11 billion in the first half of 2019, from $5.6 billion in the last six months of the previous year, one report issued by Maybank Kim Eng's research arm says.

Within Southeast Asia, Indonesia drew the lion's share of new BRI contracts, valued at $3 billion in the first half. It was followed by Cambodia at $2.5 billion, Singapore at $1.9 billion and Vietnam at $1.6 billion. Most of the projects were in transport and energy, the report notes.

These numbers reflect thriving interest in BRI participation in the region, also captured in the other report by PwC and the Singapore Business Federation, which represents more than 25,000 companies' interests in the city-state.

Their report, released at a mid-August conference in Singapore on infrastructure development, named Vietnam, Singapore and Indonesia as the top countries where organizations see BRI opportunities.

The report cites a survey of about 50 public- and private-sector leaders in the region -- from industries like financial services, energy and construction -- which found that 66% of respondents identified Vietnam as a place with BRI opportunities, followed by Singapore and Indonesia at 57%. Countries like Bangladesh and Sri Lanka drew less interest at 30%, while Pakistan was near the bottom at 18%.

Three-quarters of those polled cited political risk as a top concern associated with BRI projects -- a sentiment echoed by private-sector representatives who spoke at the Singapore conference.

"Infrastructure projects are long term," said Boon Chin Hau, managing director of Singapore sovereign wealth fund GIC, during a panel discussion on inbound investment. "They are there to serve the country, the people. They have social needs and therefore they are very long term. So having very stable government is quite critical to create an environment for private investors to come in."

The China-led Asian Infrastructure Investment Bank has lauded the role that the Association of Southeast Asian Nations has played in realizing development opportunities. At the conference, AIIB President Jin Liqun noted that while progress varies within the bloc, ASEAN nations are becoming better connected with the rest of the world.

"The vision of a seamless and integrated ASEAN that examines institutional connectivity alongside the physical infrastructure provides common frameworks that can remove trade barriers and maximize the infrastructure investment, and bring benefit to the people," Jin said.

He noted that ASEAN countries were among the first to help form the AIIB when it was established in 2016, even as others viewed the institution with wariness. "The Asian Infrastructure Investment Bank was conceived and born with the birthmark of China. But it is not China's bank. It's an international development institution. It's been brought up in the international community," Jin emphasized at the conference, as he addressed over 600 government officials and industry leaders.

But Beijing's specter looms over BRI ventures, even as businesses demonstrate interest in associated infrastructure projects. A report published in January by the ASEAN Studies Centre highlighted suspicions about China's presence.

In a survey which included public officials and businesspeople in the region, 47% of about 1,000 respondents said they think the BRI "will bring ASEAN member states closer into China's orbit." The report noted that this finding "may have profound implications for Southeast Asia given the region's concern that China will become a revisionist power."

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