FOR GREATER CO­OP­ER­A­TION

Asian busi­nesses will ben­e­fit tremen­dously from the link­ages formed, says HSBC chief

New Straits Times - - Business / News -

KUALA LUMPUR

CHINA’S in­au­gu­ral Belt and Road Fo­rum this month comes at an his­toric in­flec­tion point. China will show­case ma­jor in­fra­struc­ture projects to ad­vance this am­bi­tious ini­tia­tive, but the tone world lead­ers adopt in their di­a­logue on trade could prove to be just as sig­nif­i­cant.

“While rapid in­creases in the com­plex­ity of global sup­ply chains may have peaked, what we’re now see­ing is grow­ing in­ter­est in in­ter- and intra-re­gional trade.

“China’s role in driv­ing these flows is in­creas­ingly im­por­tant, and nowhere is this role more vis- ible than through the One Belt One Road (OBOR) ini­tia­tive,” said Mukhtar Hus­sain, chief ex­ec­u­tive of­fi­cer of HSBC Bank Malaysia Bhd.

He said China sought to stim­u­late cross-bor­der trade by in­vest­ing in rail­way tracks, ports and power plants along cen­turies-old silk routes.

“This isn’t just trade with China’s neigh­bours, but with re­gions as far afield as Europe, Africa and the Mid­dle East,” said Mukhtar.

The com­mer­cial ben­e­fits of this ini­tia­tive are al­ready be­com­ing ap­par­ent. In the first nine months of last year, China com­pa­nies signed 4,000 en­gi­neer­ing con­tracts un­der the Obor um­brella, with a com­bined value of nearly US$70 bil­lion (RM304.4 bil­lion).

Look­ing ahead, HSBC said, the com­ple­tion of new in­fra­struc­ture would sim­plify sup­ply chains, ac­cel­er­ate phys­i­cal trade and push down the cost of do­ing busi­ness.

“Com­pa­nies will adapt their man­u­fac­tur­ing and dis­tri­bu­tion strate­gies to cap­i­talise on these new op­por­tu­ni­ties, with the net re­sult that the vol­ume of trade will grow.”

China an­tic­i­pates its trade with coun­tries along the land “belt” and marine “road” will sur­pass US$2.5 tril­lion an­nu­ally in the next decade.

HSBC fore­casts that about three bil­lion peo­ple in to­day’s emerg­ing mar­kets will join the mid­dle classes by 2030, a so­cial change that will pull the cen­tre of grav­ity of hu­man con­sump­tion to­wards Asia.

“Pre­par­ing for this growth, China has pledged to help Laos build a US$6 bil­lion rail­way link­ing Vi­en­tiane to China’s south­ern Yunnan prov­ince. Mean­while a 7,000km Sin­ga­pore-Kun­ming Rail Link is al­ready tak­ing shape, and Bei­jing has won the con­tract to build In­done­sia’s first high­speed rail link — a US$5.1 bil­lion, 150km project con­nect­ing Jakarta to Ban­dung, In­done­sia’s third­largest city.”

Mukhtar said Obor, as a state­ment of in­tent, was am­bi­tious and pos­i­tive.

“It says that by boost­ing in­vest­ment, we can boost trade, be­cause this in turn will boost gross do­mes­tic prod­uct. Given the uncer­tain­ties we face to­day, we should cel­e­brate that world lead­ers are gath­er­ing in Bei­jing and ex­hort them to use Obor as a cat­a­lyst for even greater in­ter­na­tional co­op­er­a­tion to­mor­row.”

Mukhtar Hus­sain

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