Asia today can be likened to Europe after the Second World War. Then, Europe had a significant infrastructure requirement, but needed capital from the US in the form of the Marshall Plan. Fast-forward to the present day: while China will not be able to finance Asia’s infrastructure need all on its own, with its significant savings surpluses and capital, it can catalyse a similar kind of Marshall Plan for Asia.
BRI also opens up significant opportunities for Asian companies, with the most obvious industries standing to benefit being power, transportation, water and infrastructure. Commercial banks as well as debt and equity capital markets also have a role to play in complementing policy banks like AIIB in greasing the wheels of commerce, financing trade, enabling working capital efficiencies and providing hedging solutions.
Closer to home, I believe Singapore has a number of intrinsic strengths that it can leverage on, allowing it to seize the many opportunities afforded by BRI.
- Singapore is a very important financial hub. Singapore is one of the places where large amounts of capital gathers: it is the second-largest wealth management centre in the world, the third-largest financial market centre, and perhaps the number one commodities hub. As much as 60% of all project finance in Southeast Asia is arranged by Singapore domiciled banks. As a global financial centre, Singapore is able to intermediate both capital and trade as it goes out from China into the rest of the world. Singapore also does the reverse. It is an extremely good hub to raise capital back into China. As Chinese capital markets open and Chinese companies are able to access global bond markets, Singapore is extremely well-positioned to facilitate that process.
- Singapore has a role as honest broker. The fact is, geopolitics sometimes comes along with economic and commercial considerations. In several markets and several countries, the ability for Chinese investment to go independently is often challenging. Being able to partner with Singapore, and being able to use Singapore as a conduit for their investments often makes those investments and projects a lot more palatable.
- Singapore has a lot of world-class companies that can partner with Chinese companies. With BRI, there are opportunities and projects in the port, construction and offshore marine sectors for example. In a range of different industries, there are world-class Singapore companies which can prove to be extremely useful partners in being able to drive joint activity with Chinese collaborators around the region.
Excerpted from Article by Piyush Gupta, Group CEO of DBS Bank, titled ‘Belt and Road Initiative: implications for Asia and Singapore‘.