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What do Local and International Businesses Make of The Belt and Road?

Businesses in Myanmar generally welcome the Belt and Road Initiative’s (BRI) investment boost for the country’s infrastructure development.

Some urged Myanmar to be more proactive in navigating its involvement in the scheme. Many emphasised the importance of transparency, public engagement and adhering to international practices. But some have also expressed reservation and scepticism against China’s ambitious scheme.

Last month, the Belt and Road Forum for International Cooperation attracted the largest number of foreign dignitaries to the Chinese capital since the 2008 Olympic Games. Launched by Chinese President Xi Jinping in 2013 as “One Belt, One Road”, the scheme involves China underwriting billion-dollar investments, mainly in infrastructure, in countries along the old Silk Road and new routes, creating an extensive trade network by linking Asia, Europe and Africa. The financial commitment illustrates the ambition: China is spending roughly US$150 billion a year in the 68 countries which have signed on to the project. The China Development Bank alone has earmarked $890 billion for some 900 projects.

The Myanmar Times interviewed Jonathan Woetzel, McKinsey senior partner and McKinsey Global Institute director, as well as Bernard Chan, president of Asia Financial Holdings and grandson of Chin Sophonpanich, on how the BRI will play out in Myanmar and the region.

Political analysts and commentators have argued that China is ready to ensure a politically stable environment for its southwestern region, which is a core part of the BRI. This explains China’s political involvement in Myanmar’s peace process.

Now that the political aspect is unfolding gradually, The Myanmar Times asked businesses from various countries and sectors for their views of the BRI.

Good news for infrastructure but Myanmar should be more proactive

Nick Powell, managing partner of Delta Capital Myanmar and director of Simon Murray & Company (SMC), a pan-Asian investment company, highlighted that projects should be commercially viable and look into precedence in other parts of Asia where those infrastructure projects succeeded.

“China’s BRI is a good opportunity for Myanmar and its infrastructure challenges. China is a leader in financing and building infrastructure across the spectrum. What the government needs to be cautious of are possible political motives and potential leverage this could give China Inc.

“The best way to mitigate this is to make sure these projects stand on purely commercial basis, and that the operators and financiers will be paid back over the agreed term and the assets transferred to Myanmar. There are plenty examples of where it has worked, such as in Asia, and where it has not, such as in Africa,” he said.

Infrastructure is a recurring theme highlighted by many businesspersons, including Khin Maung Win, CEO of Myanmar Shwe Pyi Tractors, who said that Myanmar should be proactive in defining its role in the scheme. He also stressed that public engagement for the projects and transparency were crucial

“The BRI is complementary to Myanmar’s strategic national interests specifically in trade, energy needs and closing infrastructure gap. Myanmar stands to gain greatly from this initiative and should take the lead in defining its role and purpose in the BRI.

“Early public engagement is critical as from past experience, commercial gains from such cooperation, albeit smaller scale, were rarely transparent,” he said.

Tomoaki Yabe, managing director of Daizen Myanmar, said that the BRI represented a boost in investments for the country’s infrastructure development. More notably, he also highlighted how, by building on the experience of Thilawa SEZ, BRI-related investments and projects can genuinely benefit the country and its private sector.

“Better infrastructure is vital for a robust logistics sector. Myanmar needs more investments to get the hardware ready. We have worked with Chinese companies and more collaboration, encouraged by the BRI, is definitely good news.

“Only with the technologies, sufficient investment and a sound framework which aligns with the international standard can Myanmar realise its geographical potential as the regional hub.

“Thilawa Special Economic Zone is a strong example illustrating how foreign direct investments, foreign technologies and local manpower can create employment opportunities and deliver significant economic growth. If Kyaukpyu and other BRI-led projects can build on the lessons of Thilawa SEZ and offer opportunities inclusive of local and international businesses, Myanmar will certainly benefit from the scheme,” he said.

Similarly, William Greenlee, managing director of DFDL’s Myanmar office and also American Chamber of Commerce Myanmar’s legal committee chair, told The Myanmar Times that the financing resulting from the scheme, as long as it was commercially sound and responsible, should be embraced with open arms.

“The BRI is a great opportunity for Myanmar. At this nascent stage of infrastructure development, I would think all financing assistance would be welcome. Organisations like Asian Infrastructure Investment Bank [AIIB] and China Development Bank will be able to provide inexpensive financing to large and expensive projects. This is a huge benefit as, of course, financing such projects is the first big hurdle.

“And like such financing from other countries, as long as the relevant projects are commercially viable and environmentally and socially responsible, financing from China under this initiative should be welcomed with open arms,” he said.

Others echoed the need for Myanmar to take an active part of the collaboration, instead of being reactionary. Ken Tun, chief executive officer of Parami Energy, said the country should realise its strategic importance in both land and maritime aspect of the BRI and be quick to act.

“Myanmar signed five agreements during the Beijing summit including the Belt and Road framework on cooperation and the issue of border trade. Myanmar plays a strategic role in both the land and maritime part of the BRI.

“It is important that Myanmar should push for proactive policies for BRI collaboration, particularly when other countries have already geared up to benefit from being part of the BRI,” he said.

Aye Thiha, the head of Thiha Group who is also chair of government affairs committee at the American Chamber, said the BRI would unlock Myanmar’s geographical advantage.

“I would very much welcome the BRI as it would unlock the full potential of Myanmar’s ideal geographic location between the economic powerhouses, China and India.

“Once clearly defined with a specific timeline, the Initiative will also fill up the much needed infrastructure gap and provide Myanmar better connectivity with the rest of the world.

“In my humble opinion, the risks of such an initiative are overshadowed by the economic benefits,” he said.

Foreign chambers weigh in

When asked about whether the BRI is a valuable opportunity for Myanmar to fill the infrastructure gap, Paul Wilson, president of American Chamber of Commerce Myanmar and managing director of US-owned investment company Four Rivers, said, “As a country with significant development needs, we think it reasonable for Myanmar to explore multiple options of investment and partnerships.”

In terms of the reaction of American businesses in the country, Mr Wilson was keen to raise the issue of business ethics and labour standards.

“The US business community in Myanmar is committed to supporting inclusive economic growth and responsible investment. US companies are proud to bring the highest standards of business ethics and labour standards to emerging markets.

“Our expectation is that these high standards raise the bar for other international businesses and investors, which we believe is positive for the Myanmar government and people,” he said.

Katsuji Nakagawa, chair of Japan Chamber of Commerce and Industry in Myanmar and country head of Sumitomo Corporation Group in Myanmar, conceded that Myanmar had to depend on China for both the economy and national peace. Japanese businesses will be observing how the dynamics change and will also take into account other factors, such as US policy toward China.

“China has now expressed their policy to positively get involved in the peace process between Myanmar’s national armed forces and ethnic armed groups. Daw Aung San Suu Kyi seems to have no other choices but to depend on China to stabilise the long-continued conflict in northern Myanmar.

“Under the BRI, Myanmar will rely on China not only for their economic growth by China’s development assistance, but also for solving their internal affairs. Japanese businesses will continue to carefully observe how China and Myanmar relationship would be strengthened.

“In addition, we, Japan, think it is necessary to closely watch the future direction and movement of the BRI, including the ramification caused by the possible shift of the US policy toward China and we will need to plot our business strategy properly,” he said.

In contrast, Peter Beynon, chair of British Chamber of Commerce Myanmar, sounded more upbeat and less circumspect, highlighting the necessity for Myanmar to carve out its part in the BRI.

“My thoughts are generally positive as long as Myanmar is able to retain value within its economy.

“In the short term, this will mean its ability to negotiate a significant portion of an involvement in the construction of the BRI.

“In the medium to long term, there will be increased trade volumes, investment and business potential for the country. This should be significant.

“There is a concern at the impact on communities who will be moved and livelihoods altered, but this is inevitable and people resist change. I am positive,” he said.

 

Source: The Myanmar Times

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