There is a growing need for a sharper focus on sustainability in Belt and Road Initiative (BRI) projects in ASEAN, as a recent research, The Belt and Road Initiative in ASEAN, has shown. Jointly conducted by UOB and the Hong Kong University of Science and Technology’s (HKUST) Institute for Emerging Market Studies (IEMS), the research also found that Chinese companies see the importance of drawing on the diverse strengths of the ASEAN markets and the need for collaboration for continued success.
The Belt and Road Initiative in ASEAN researched Chinese companies with BRI investments in six key emerging ASEAN markets, namely Indonesia, Malaysia, Myanmar, the Philippines, Thailand and Vietnam. The study was designed to provide insights into the political, institutional and environmental factors that affect BRI project design and implementation, the potential for BRI investments to spur private investment and foreign direct investment (FDI) opportunities in ASEAN.
As part of the BRI, many Chinese state-owned and private companies have been implementing large-scale infrastructure and FDI projects in the region to promote greater connectivity between mainland China and ASEAN. The Chinese government has recognised the need to place greater priority on promoting green and sustainable BRI projects, calling for Chinese companies to take active steps to ensure that their projects comply with regulations such as environmental standards and labour laws. This addresses the criticism levelled at projects which had not adequately considered social and environmental issues.
To help Chinese companies tackle ESG challenges in ASEAN, the UOB-HKUST IEMS research suggests that they reach out to local consultancies and civil society or community-based groups to understand specific dynamics and to establish a meaningful dialogue. Companies can also consult potentially-affected communities regarding planned projects and work out appropriate compensation with them. For instance, one real estate company involved in land reclamation in Malaysia stepped up its efforts to address the affected community’s environmental concerns and is now also providing support to local villages and their educational programmes.
NAVIGATING MARKET DIVERSITY THROUGH COLLABORATION FOR LONG-TERM SUCCESS
The research also highlights that the six ASEAN countries have unique political, social and cultural landscapes, with historical developments and leadership changes that have shaped their growth trajectories. To navigate the market diversity for long-term success, communication with local communities and collaboration with local partners are essential. These are aligned to the BRI’s goals of promoting connectivity in policy coordination, facilities, trade, financial integration and people-to-people bonds.
The implementation of the BRI in 2013 has driven strong FDI from Chinese companies to ASEAN. The value of annual FDI from mainland China to ASEAN jumped 85 per cent in the five-year period from 2014 to 2018, when compared with the four-year period before the implementation of BRI (2010 – 2013). Chinese investments into ASEAN continues to grow strongly, rising 53 per cent year on year in the first half of 2020.
The HKUST research team spent 25 months from 2018 to 2020 to conduct The Belt and Road Initiative in ASEAN study.
“The Institute has been leading an interdisciplinary research programme on trade and investment under the BRI since 2017. As such, we welcomed the opportunity to collaborate with UOB Hong Kong to study in-depth how the BRI is being implemented in the key emerging markets of ASEAN and what it means for the business community. We hope the evidence-based insights can help business and government leaders take full advantage of the opportunities created by the BRI to catalyse economic development in the region,” said Professor Albert Park, Head and Chair Professor of Economics, Chair Professor of Social Science, and Professor of Public Policy, HKUST, and Founding Director of IEMS.
To download the reports of The Belt and Road Initiative in ASEAN, please visit Foreign Direct Investment (FDI) Advisory Unit page at UOB website. — Construction+ Online