S-E Asia promising for Chinese firms seeking infrastructure projects

SINGAPORE — South-east Asia offers promising opportunities for Chinese companies to invest in infrastructure as the region’s rapid urbanisation calls for greater transport, healthcare, water and sanitation needs, Minister for Trade and Industry (Trade) Lim Hng Kiang said yesterday.

Despite the potential, infrastructure projects are seen to be riskier and require longer loan tenures.

This is where Singapore, as an infrastructure development and financing hub, can facilitate the entry of Chinese companies into the region, Mr Lim said as he urged more partnerships between businesses in the two countries to ride on these opportunities.

His comments came as the Industrial and Commercial Bank of China (ICBC) signed five Memoranda of Understanding (MOUs) yesterday to strengthen its support for infrastructure projects and enhance collaboration between Singapore and China on the One Belt, One Road initiative.

“More Chinese companies are now expanding beyond China into South-east Asia and the world. In the first half of 2016 alone, China invested about US$7 billion (S$9.55 billion) worth of non-financial Overseas Direct Investment into over 60 countries along the ‘Belt and Road’. Of these, Asean (the Association of South-east Asian Nations) was a key investment destination,” Mr Lim said at the inaugural Infrastructure Partnership and Financing in One Belt, One Road — Challenges and Opportunities forum hosted by ICBC and Surbana Jurong.

The five entities that signed the MOUs with ICBC are Singapore Business Federation (SBF), Singapore Exchange (SGX), Surbana Jurong, Sinochem and Singapore Press Holdings (SPH).

ICBC will extend up to 50 billion yuan (S$10.2 billion) to SBF member companies in project financing and other related professional services in One Belt, One Road infrastructure investments.

The lender will also extend financial services including trade financing and foreign exchange to Sinochem and Surbana Jurong, encourage its clients to tap Singapore’s capital markets through SGX, as well as partner SPH to develop a bilingual e-commerce platform to facilitate cross-border trade and cooperation in the region.

Besides Singapore’s good track record and expertise across the infrastructure value chain, businesses from both countries also share complementary strengths, Mr Lim said.

There are currently more than 7,500 Chinese companies based in Singapore, with some such as Lenovo and China Minsheng Investment Corp setting up regional finance and treasury centres here to support their expansion.

“Singapore and Chinese companies can build on existing strong relationships to foster partnerships and tap infrastructure opportunities in ASEAN and beyond,” he added.

The Asian Development Bank and the Asian Development Bank Institute estimate that Asia would require US$8 trillion worth of infrastructure investments from 2010 to 2020. In Asean, around US$60 billion will be needed annually till 2022 to fulfil its infrastructure needs.

Mr Liew Mun Leong, chairman of Surbana Jurong and Changi Airport Group, said One Belt, One Road is one of the stimuli with the potential to reignite economic momentum at a time when global growth is slowing and uncertainties are rising.

“It is difficult and too early to size up the cost of this mammoth infrastructure programme but McKinsey estimates that roughly it could be as much as between US$2 trillion and US$3 trillion a year. It could power the world’s economy to grow extensively and exponentially,” said Mr Liew, who was the keynote speaker at yesterday’s forum.

Proposed in late-2013 and unveiled last year, the ambitious Chinese project aims to connect 65 countries, covering about 65 per cent of the world’s population, one-third of the world’s gross domestic product, 40 per cent of world trade and one-quarter of all goods and services the world produces.

ICBC chairman Yi Huiman said that as of end-June this year, the bank has supported 95 One Belt, One Road-related projects with total financing amounting to US$22 billion.

There are 211 prospective projects in the pipeline with total investment amounting to US$213.2 billion.