ASEAN infrastructure gap turns negatives into positives

By Stuart Tait, Group General Manager and Regional Head of Commercial Banking, Asia Pacific

With protectionism threatening to dim Europe’s economic lights, Southeast Asia – fuelled by its nation-building infrastructure activity - could be the commercial catalyst that European corporates need.

---------

If a spending deficit of US$1.2 trillion in six key Asian economies and a rising tide of protectionist rhetoric in Europe don’t seem the most promising combination of business prospects, think again.

Add in China’s ambitious Belt and Road Initiative, and together they make a compelling case of the potential for a multi-year boom in investment and construction that will create entirely new economic ecosystems.

Belt and Road at its most basic is a strategy to build the transport links and logistics capacity to boost the flow of trade between China and more than 65 countries in Asia, the Middle East, Africa and Europe to an estimated US$2.5 trillion annually in the coming decade, from about US$1 trillion now.

Meanwhile rapidly-growing numbers of increasingly affluent urbanites in the economies of the Association of Southeast Asian Nations (ASEAN) are fuelling demand for housing, schools, hospitals, roads, railways, airports and other facilities.

Meeting that demand in ASEAN’s six biggest economies – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam – means investment of an estimated US$2.1 trillion out to 2030, according to analysis by HSBC.

That same analysis shows governments currently have plans in place to deliver just US$910 billion of it.

Given the right incentives, the private sector can bridge that gap – especially if companies in Asia and Europe can find the right opportunities to work together.

Business connections between ASEAN and Europe are already strong.

Companies from the European Union contribute about a sixth of total foreign direct investment into economies in the 10-nation bloc, according to ASEAN data. The US$20.1 billion worth of EU commitments in 2015 were more than twice those from China.

Europe’s commitment to the growth opportunity in ASEAN in the face of economic uncertainties at home has seen annual trade flows increase to $201 billion in 2015 from $US147 billion in 2010.

Now a new accelerant for economic activity is emerging to drive prosperity for ASEAN’s 625 million inhabitants that could see them grow their consumer spending power to twice that of the UK by 2025.

Nation-building infrastructure investment is providing the fuel.

Infrastructure has been a bug bear in Southeast Asia for decades where hard infrastructure such as roads, railways and ports, and soft infrastructure such as water and sewerage plants, schools and hospitals are in profound need of repair, expansion or development.

With the increasing urbanisation of populations around ASEAN, infrastructure has become an unmistakable priority for countries across the bloc.

And this is where China’s Belt and Road Initiative has added a new dimension to the business possibilities.

More than 300 Chinese-funded enterprises had set up in 26 economic cooperation zones in eight ASEAN countries, investing a total of US$1.77billion, by October 2016 under the auspices of Belt and Road projects.[1]

ASEAN economies including Malaysia, Thailand and Indonesia have already launched Belt and Road-related deals with China, with several projects now entering implementation stage and many more in the pipeline.

The planned high-speed rail line running from southern China through Laos to Thailand’s industrial east coast, and a port in Vietnam are prime examples.

European engineering, construction, maintenance, logistics, architecture and business services firms – still battling economic headwinds at home – could and should be firmly in the mix to pick up the opportunities of the anticipated Asian infrastructure boom.

German companies, well-known for their tunnel drilling machinery, components and maintenance already supply projects in Singapore. Elsewhere, Dutch companies are dredging for land reclamation activity linked to port projects.

These projects are not one-offs, built in isolation. The connected nature and the underlying intent of Belt and Road means that they must be part of a broader, self-sustaining commercial ecosystem.

Getting those economic ecosystems to function at their full potential will need companies able to reach across national borders and with the vision to see the value of building connections between regions to stimulate business activity that does not yet exist.

Research from the economic think tank, Bruegel, concludes that European nations will be big Belt and Road winners from improvements to transport infrastructure and reductions in freight costs.

Bruegel’s analysis finds that all 10 of the top trade beneficiaries would likely be European - Belgium, the Netherlands, Slovakia, Austria, Hungary, Denmark, Moldova, Germany, Bosnia/Herzegovina and Poland – with an annual trade boost of at least 8.2 percent each.

When tied with the development needs of ASEAN, this could be the biggest opportunity to stimulate international trade since the creation of the World Trade Organization, more than 20 years ago.

Perceiving the broader economic opportunities presented by the Belt and Road Initiative will be a crucial differentiator in the decades ahead.

ENDS

[1] http://news.xinhuanet.com/english/2016-10/08/c_135737919.htm

更多 Fewer
更多文章
The West finally stands up to Belt & Road … maybe
2022年07月12日
Logie Group Limited
Clear route to recovery
2020年08月03日
香港上海汇丰银行有限公司
Belt and Road Initiative (BRI) as a catalyst for Cambodia regional integration and economy
2020年03月13日
香港柬埔寨协会
2017年对外承包工程行业回顾及展望
2018年07月17日
中国对外承包工程商会
Outcome is more important than output for Belt and Road development
2019年09月04日
奥雅纳
Opportunities from Philippines’ Build Build Build programme
2019年09月04日
奥雅纳

更多文章

Clear route to recovery
2020年08月03日 香港上海汇丰银行有限公司
By Mukhtar Hussain, Head of Belt and Road Initiative and Business Corridors, Asia-Pacific, HSBC Belt and Road Initiative offers solid framework for countries big and small to overcome the economic damage caused by pandemic The Covid-19 pandemic has caused a crisis for every economy. At the same time, it has also created an opportunity for the Belt and Road Initiative to prove its value as an international partnership that serves the international good. Amid a fragmented global response to the virus, this network of 138 countries is uniquely positioned to channel trade and investment to developing countries that lack the resources to revive their own economies. China cannot do this by itself, though: no country can. If the initiative is to deliver on its potential to support global recovery, it must be a collective effort. It must also live up to the high standards it has set itself for transparency and sustainability. The International Monetary Fund estimates that some U
By Mukhtar Hussain, Head of Belt and Road Initiative and Business Corridors, Asia-Pacific, HSBC Belt and Road Initiative offers solid framework for countries big and small to overcome the economic damage caused by pandemic The Covid-19 pandemic has caused a crisis for every economy. At the same time, it has also created an opportunity for the Belt and Road Initiative to prove its value as an international partnership that serves the international good. Amid a fragmented global response to the virus, this network of 138 countries is uniquely positioned to channel trade and investment to developing countries that lack the resources to revive their own economies. China cannot do this by itself, though: no country can. If the initiative is to deliver on its potential to support global recovery, it must be a collective effort. It must also live up to the high standards it has set itself for transparency and sustainability. The International Monetary Fund estimates that some U
Belt and Road Initiative 2.0
2019年07月10日 香港上海汇丰银行有限公司
Peter Wong, Deputy Chairman and Chief Executive, The Hongkong and Shanghai Banking Corporation Limited   Friction over trade between the world’s two largest economies naturally captures the attention of the business and investment community. The fact that cross-border trade within Asia is already much bigger than Asia’s exchange of goods and services with the U.S. or Europe makes fewer headlines, but is no less important.   It begs the question of what kind of networks, relationships and institutions will shape the future of international trade – and the answer to this question is beginning to emerge.   In partnership with China, which we expect to become the world’s biggest economy by 2030, a growing number of countries are rejecting economic isolation and beginning to work together to develop a new kind multilateralism.   While this process is in its infancy, I believe that a more collaborative approach to connecting economies tha
Peter Wong, Deputy Chairman and Chief Executive, The Hongkong and Shanghai Banking Corporation Limited   Friction over trade between the world’s two largest economies naturally captures the attention of the business and investment community. The fact that cross-border trade within Asia is already much bigger than Asia’s exchange of goods and services with the U.S. or Europe makes fewer headlines, but is no less important.   It begs the question of what kind of networks, relationships and institutions will shape the future of international trade – and the answer to this question is beginning to emerge.   In partnership with China, which we expect to become the world’s biggest economy by 2030, a growing number of countries are rejecting economic isolation and beginning to work together to develop a new kind multilateralism.   While this process is in its infancy, I believe that a more collaborative approach to connecting economies tha
Opening up China’s economy
2019年05月24日 香港上海汇丰银行有限公司
15 May 2019   Policies targeting key priority areas have been instrumental in China’s economic transformation over the past 40 years, according to HSBC Group Chairman Mark Tucker. Mr Tucker was speaking at the sixth annual HSBC China conference in Shenzhen – a city that embodies the impact of targeted policies. Shenzhen’s Special Economic Zone was first established in the 1980s to stimulate private-sector businesses. It has helped the city grow from a small fishing village into “a bustling metropolis…and the birthplace and home of China’s leading tech companies,” Mr Tucker said. Other policies supporting the country’s continued development include opening up China’s capital markets, the Greater Bay Area and the Belt and Road Initiative, according to Mr Tucker. The Greater Bay Area is designed to foster closer economic ties between Hong Kong, Macau and cities in mainland China including Guangzhou and Shenzhen. The Belt and Road Initiative supports
15 May 2019   Policies targeting key priority areas have been instrumental in China’s economic transformation over the past 40 years, according to HSBC Group Chairman Mark Tucker. Mr Tucker was speaking at the sixth annual HSBC China conference in Shenzhen – a city that embodies the impact of targeted policies. Shenzhen’s Special Economic Zone was first established in the 1980s to stimulate private-sector businesses. It has helped the city grow from a small fishing village into “a bustling metropolis…and the birthplace and home of China’s leading tech companies,” Mr Tucker said. Other policies supporting the country’s continued development include opening up China’s capital markets, the Greater Bay Area and the Belt and Road Initiative, according to Mr Tucker. The Greater Bay Area is designed to foster closer economic ties between Hong Kong, Macau and cities in mainland China including Guangzhou and Shenzhen. The Belt and Road Initiative supports
Belt and Road to Bring Mutual Economic Benefits for Southeast Asia and China
2017年09月01日 香港上海汇丰银行有限公司
Peter Wong, Deputy Chairman and Chief Executive, The Hongkong and Shanghai Banking Corporation Limited In the wake of more isolationist political thinking in the West, with many developed economies turning inward, China is reaching out, seeking stronger trade and investment links with its economic partners. China’s Belt and Road initiative (BRI) is a prime example of this reaching out policy. Under the initiative, China aims to trigger demand for materials and goods at home by investing in strategic infrastructure projects abroad, growing economic ties along its old Silk Road to Europe and along newer maritime links in and around Asia and as far away as Africa, covering all potential points in-between. At its heart, the plan is to enhance global supply chains primarily through debt-financed infrastructure projects, across more than 60 countries. China expects annual trade with these countries to be worth US$ 2.5 trillion within a decade [1] – up from US$ 1 trillion in 2015
Peter Wong, Deputy Chairman and Chief Executive, The Hongkong and Shanghai Banking Corporation Limited In the wake of more isolationist political thinking in the West, with many developed economies turning inward, China is reaching out, seeking stronger trade and investment links with its economic partners. China’s Belt and Road initiative (BRI) is a prime example of this reaching out policy. Under the initiative, China aims to trigger demand for materials and goods at home by investing in strategic infrastructure projects abroad, growing economic ties along its old Silk Road to Europe and along newer maritime links in and around Asia and as far away as Africa, covering all potential points in-between. At its heart, the plan is to enhance global supply chains primarily through debt-financed infrastructure projects, across more than 60 countries. China expects annual trade with these countries to be worth US$ 2.5 trillion within a decade [1] – up from US$ 1 trillion in 2015
The Belt, the Road and the Bonds
2017年07月21日 香港上海汇丰银行有限公司
By Gordon French, Head of Global Banking and Markets, Asia Pacific, HSBC Perhaps it’s inevitable that interest in China’s Belt and Road Initiative tends to revolve around the railway lines, ports and highways that will be constructed in its name. These are the most visible manifestations of the “Belt and Road,” and they evoke beguiling images of the ancient land and sea routes along which silk was once transported from Xi’An to St Petersburg, or tea from Guangzhou to Rotterdam. But sometimes it is the financial dimension of infrastructure in Asia that stands out – because of the sheer scale of what is required. The Asian Development Bank expects emerging Asia to need about US$26 trillion of infrastructure investment between 2016 and 2030. That amounts to US$1.7 trillion a year – and that’s just in Asia, while the Belt and Road encompass Africa and Europe as well. [1] Financing this colossal need for transport, telecoms and energy infrastructure across more t
By Gordon French, Head of Global Banking and Markets, Asia Pacific, HSBC Perhaps it’s inevitable that interest in China’s Belt and Road Initiative tends to revolve around the railway lines, ports and highways that will be constructed in its name. These are the most visible manifestations of the “Belt and Road,” and they evoke beguiling images of the ancient land and sea routes along which silk was once transported from Xi’An to St Petersburg, or tea from Guangzhou to Rotterdam. But sometimes it is the financial dimension of infrastructure in Asia that stands out – because of the sheer scale of what is required. The Asian Development Bank expects emerging Asia to need about US$26 trillion of infrastructure investment between 2016 and 2030. That amounts to US$1.7 trillion a year – and that’s just in Asia, while the Belt and Road encompass Africa and Europe as well. [1] Financing this colossal need for transport, telecoms and energy infrastructure across more t
“一带一路”铺开金融大道
2017年05月15日 香港上海汇丰银行有限公司
王冬胜 香港上海汇丰银行有限公司副主席兼行政总裁   要真正理解国家“一带一路”战略，我们不能只着眼于基础建设，而应以更广阔的视野去看这个宏大的蓝图。 “一带一路”无疑涉及大量基础建设，例如高速公路、铁路、大桥等等，这些建设将促进中国与邻近国家，以至欧洲、非洲及中东国家的贸易。 “一带一路”借着促进国际货物和服务流通，推动区域贸易和合作。预料于未来十年，中国与沿线逾六十个国家的年贸易额将由2015年的约1万亿美元，跃升至超过2.5万亿美元。 现时环球贸易增长乏力，“一带一路”犹如一枝强心针，也符合国家致力推动人民币国际化，以及行之已久的鼓励中国企业「走出去」的政策。 “一带一路”不单关乎中国，对其他国家也将带来深远影响。庞大的基建投资对没有足够资金和技术自行发展�
王冬胜 香港上海汇丰银行有限公司副主席兼行政总裁   要真正理解国家“一带一路”战略，我们不能只着眼于基础建设，而应以更广阔的视野去看这个宏大的蓝图。 “一带一路”无疑涉及大量基础建设，例如高速公路、铁路、大桥等等，这些建设将促进中国与邻近国家，以至欧洲、非洲及中东国家的贸易。 “一带一路”借着促进国际货物和服务流通，推动区域贸易和合作。预料于未来十年，中国与沿线逾六十个国家的年贸易额将由2015年的约1万亿美元，跃升至超过2.5万亿美元。 现时环球贸易增长乏力，“一带一路”犹如一枝强心针，也符合国家致力推动人民币国际化，以及行之已久的鼓励中国企业「走出去」的政策。 “一带一路”不单关乎中国，对其他国家也将带来深远影响。庞大的基建投资对没有足够资金和技术自行发展�