Saturday, March 28, 2020

The Belt and Road gathers steam

Apr 28. 2019
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By Suwatchai Songwanich
CEO Bangkok Bank (China)

Last week I followed with interest the second Belt and Road Forum for International Cooperation in Beijing. The president of Bangkok Bank Chartsiri Sophonpanich joined both the first forum in 2017 and this one and he spoke at the Belt and Road Bankers’ Roundtable (BRBR) on both occasions, which I also joined.

In 2017 the forum was attended by 29 heads of state, along with representatives from many countries, including Thailand. This year nearly 40 heads of state joined, including the leaders of all 10 Asean countries. Clearly, interest and engagement in the BRI has steadily increased. At the time of the 2017 forum there were around 100 participating countries; this had grown by the end of last year to more than 122 nations and 29 international organisations.

There were a number of points of particular interest to me at the forum. One was the strong emphasis on green finance, which was one of the more frequently noted themes during the bankers’ meeting. A working group had prepared ahead-of-time guidelines of Green Investment Principles for the Belt and Road and these stated that “It is a common responsibility of global financial institutions to make green investment, reduce polluting investment and promote green economic transformation and sustainable development of the investment destination.” These guidelines were further endorsed by the BRBR last week.

This endorsement is significant given that the main thrust of the Belt and Road is infrastructure development. To give an idea of how fast things are developing, in 2018 the cumulative number of trips made by China-Europe freight trains exceeded 12,000, with annual shipments reaching US$16 billion. This compared with only 17 trips and less than $600 million in 2011. And it is still only early days as there are many projects in the pipeline, including the high-speed rail link between China, Laos and Thailand. Since these kinds of big projects have high potential for disruption to the environment and local communities the commitment to green investment principles such as proper environmental assessments and responsible lending is encouraging.

In his speech to the BRBR, Chartsiri discussed how improved infrastructure and greater connectivity within Asean and to China would enhance economic development across the region and he welcomed the improved mechanisms for cooperation which will provide support in financing such projects.

Thailand had an important role to play at the Belt and Road Forum since it is the current chair of Asean. Prime Minister Prayut Chan-o-cha met with President Xi Jinping and Premier Li Keqiang to discuss further cooperation between Asean and China and he presented the Master Plan on Asean connectivity. Thailand also signed a Memorandum of Cooperation on the China, Laos, Thailand rail link and requested that Thailand’s initiatives to develop the Eastern Economic Seaboard (EEC) be recognised as part of the BRI.

Many other parts of the world have already dovetailed the Belt and Road with their own development programmes, for example the EU’s Juncker Investment Plan and the Russia-led Eurasian Economic Union. These provide precedents to Thailand’s request. The formal inclusion of the EEC in the BRI would be bound to attract more finance and investment to Thailand and so let’s hope this initiative is successful.

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