B&R faces ASEAN uncertainty
More government support needed: experts
“Overseas countries should realize that B&R projects are based on business. They bring economic returns to both sides; they are not political missions.” Bai Ming Senior trade expert
Projects under the China-proposed Belt and Road (B&R) initiative are encountering obstacles in Association of Southeast Asian Nations (ASEAN) countries, but experts noted that the experience can help domestic companies improve their international business abilities and further develop cooperation.
“Overseas countries should realize that B&R projects are based on business. They bring economic returns to both sides; they are not political missions,” Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Thursday.
The Malaysian government has suspended the building of a 688-kilometer railway project led by China Communication Construction Company (CCCC), a flagship project for the B&R, the Nikkei Asian Review reported on Thursday. And two pipeline projects financed by the Export-Import Bank of China have also been halted.
CCCC confirmed to the Global Times on Thursday that the railway project had been suspended following a request from the Malaysian partners. The company said it was “deeply concerned” about the situation, and about the 2,250 local employees.
CCCC also said the Malaysian government had previously asked to renegotiate a high-speed railway project that the company has participated in, which connects Kuala Lumpur and Singapore.
“I believe the government of Malaysia will carefully evaluate local B&R projects, not only in terms of the investment amount, but also in terms of the impetus those projects give to Malaysia’s modernization,” Zhou Hanmin, a standing member of the National Committee of the Chinese People’s Political Consultative Conference, said on Thursday during a conference on Chinese companies’ activities in ASEAN countries via B&R projects.
“For projects like high-speed railways, Malaysian people will benefit the most,” he said.
Myanmar is also reconsidering some Chinese investments in the country. Myanmar’s Planning and Finance Minister Soe Win told the Nikkei Asian Review on Wednesday that the country has drawn lessons from neighboring countries such as Sri Lanka, which have found that overinvestment can bring problems.
Xu Ningning, executive president of the China-ASEAN Business Council, said that for Chinese companies, the biggest hurdle when entering ASEAN markets is that they are too high-profile, which greatly hinders further progress in the B&R projects.
“For example, Chinese investors love to organize project signing ceremonies or cornerstone laying ceremonies, or take high-profile actions like hanging publicity posters on overseas architecture. These gestures cause a certain degree of discomfort in local markets,” he told the Global Times on Thursday.
But Bai said that short-term obstacles are not that important. “Even if overseas countries have doubts in a certain period, our advantage is there: We offer reasonable prices for projects that will give them benefits. So they will work with Chinese investors in the end,” he said.
Assistance needed
According to Xu, another problem is that Chinese companies don’t get enough support from the government or commercial organizations to help them explore overseas markets.
“The government needs to set up more commercial centers in ASEAN countries that specifically serve Chinese companies investing there, by helping them with registering companies, legal consulting and industrial recommendations,” he said.
Xu said that many Chinese companies are blindly entering ASEAN countries. “When they enter the ASEAN markets, they don’t know their industrial policies or market trends. They also lack enough connections in those economies to pick good business partners,” he said, adding that commercial organizations should also help build industrial parks for Chinese businessmen to source accessories.
Yang Chonghui, vice chairman of the China Economic and Social Council, said that in terms of political changes in overseas markets, the most important thing is for domestic companies to implement the B&R projects well. “The better they implement the projects, the better the reputation they will have in local markets,” he told the Global Times Thursday.
Xu said that increasing debt levels in ASEAN countries is also a reason why B&R projects are encountering obstacles.