Experts warn of problems lurking in Belt, Road investment

Experts on Monday suggested that companies investing in countries and regions along the route of the “One Belt, One Road” initiative pay more attention to risks, including political and geopolitical problems.

Some countries’ lack of legal protection for investors, local regulations that favor local workers and lack of financing are barriers for companies, according to Dai Guanchun, a partner of the Jingtian & Gongcheng law firm.

Also, culture shock and terrorism should be taken into consideration when exploring overseas markets, Dai told a media briefing on Monday in Beijing.

Sean Prior, counsel from law firm Mayer Brown JSM, said that “certain- ties” and “predictability” are the two points that should be known by companies when making investments in these countries and regions.

According to Prior, investments can be divided into two categories: energy and resources ( including fuel, gas and mining) and infrastructure ( such as high- speed railways and other modes of transportation).

Data from the Ministry of Commerce showed that in 2016, Chinese companies signed 8,158 contracts worth $ 126.03 billion in 61 countries and regions along the route of the “One Belt, One Road,” accounting for more than half of all the contracts signed overseas and 36 percent more than the previous year.

Dai said that most companies now investing are State- owned enterpris- es, but as conditions in these markets mature, more private companies will follow.

In 2016, aabout $ 494 billion worth of projects and deals were announced in the infrastructure sectors across the 66 countries that fall under the Belt and Road initiative, according to a report released by consultancy firm PwC in February.

The size of capital projects also grew fast, with data suggesting the average value of projects was 47 percent higher than in 2015. The increase in China was 14 percent, the report said.