China’s ‘Silk Road’ project runs into concerns over debt jam
Pi Pay links up with local bank Sathapana
SATHAPANA Bank has inked a partnership agreement with online payment platform Pi Pay that promises to sync the two companies’ systems.
Sunday saw Sathapana CEO Norihiko Kato and Pi Pay CEO Tomas Pokorny preside over a ceremony marking the deal. It will allow customers to transfer money from their bank accounts to their digital wallets free of charge.
Kato hailed the partnership, saying Pi Pay is a pioneer in the Kingdom’s emerging technology sector.
“We want our customers to enjoy the convenience and benefits of growing technology in the current financial sector. This is why we are collaborating with Pi Pay,” he said, adding that Sathapana has 169 branches throughout the Kingdom.
Pokorny said only around 20 per cent of Cambodians currently utilise banking services. The partnership, he said is aimed at bringing more customers into the fold.
He added that while Pi Pay currently offers services to residents of the capital and Siem Reap only, it will soon expand to the Sihanoukville market as well.
CHINA’S massive and expanding “Belt and Road” trade infrastructure project is running into speed bumps as some countries begin to grumble about being buried under Chinese debt.
First announced in 2013 by President Xi Jinping, the initiative also known as the “new Silk Road” envisions the construction of railways, roads and ports across the globe, with Beijing providing billions of dollars in loans to many countries.
Five years on, Xi has found himself defending his treasured idea as concerns grow that China is setting up debt traps in countries which may lack the means to pay back the Asian giant.
“It is not a China club,” Xi said in a speech on Monday to mark the project’s anniversary, describing Belt and Road as an “open and inclusive” project.
Xi said China’s trade with Belt and Road countries had exceeded $5 trillion, with outward direct investment surpassing $60 billion.
But some are starting to wonder if it is worth the cost.
During a visit to Beijing in August, Malaysia’s Prime Minister Mahathir Mohamad said his country would shelve three China-backed projects, including a $20 billion railway.
The party of Pakistan’s new prime minister, Imran Khan, has vowed more transparency amid fears about the country’s ability to repay Chinese loans related to the multi-billion-dollar ChinaPakistan Economic Corridor.
Meanwhile the exiled leader of the opposition in the Maldives, Mohamed Nasheed, has said China’s actions in the Indian Ocean archipelago amounted to a “land grab” and “colonialism”, with 80 percent of its debt held by Beijing.
Sri Lanka has already paid a heavy price for being highly indebted to China.
Last year, the island nation had to grant a 99-year lease on a strategic port to Beijing over its inability to repay loans for the $1.4-billion project.
‘Ambiguous partner’
“China does not have a very competent international bureaucracy in for- eign aid, in expansion of soft power,” Anne Stevenson-Yang, co-founder and research director at J Capital Research, told AFP.
“So not surprisingly they’re not very good at it, and it brought up political issues like Malaysia that nobody anticipated,” she said.
“As the RMB [yuan] becomes weaker, and China is perceived internationally as a more ambiguous partner, it’s more likely that the countries will take a more jaundiced eye on these projects.”
The huge endeavour brings muchneeded infrastructure improvements to developing countries, while giving Chi- na destinations to unload its industrial overcapacity and facilities to stock up on raw materials.
But a study by the Center for Global Development, a US think-tank, found “serious concerns” about the sustainability of the sovereign debt in eight countries receiving Silk Road funds.
Those were Pakistan, Djibouti, Maldives, Mongolia, Laos, Montenegro, Tajikistan and Kyrgyzstan.
The cost of a China-Laos railway project – $6.7 billion – represents almost half of the Southeast Asian country’s GDP, according to the study.
‘Not a free lunch’
At a daily press briefing on Friday, foreign ministry spokeswoman Hua Chunying denied that Beijing was saddling its partners with onerous debt, saying that its loans to Sri Lanka and Pakistan were only a small part of those countries’ overall foreign debt.
“It’s unreasonable that money coming out of Western countries is praised as good and sweet, while coming out of China it’s sinister and a trap,” she said.
Stevenson-Yang said China’s loans are quoted in dollar terms, “but in reality they’re lending in terms of tractors, shipments of coal, engineering services and things like that, and they ask for repayment in hard currency.”
The head of the International Monetary Fund, Christine Lagarde, raised concerns about potential debt problems in April and advocated greater transparency.
“It’s not a free lunch, it’s something where everybody chips in,” she said.