Belt and Road Initiative and Infrastructure Funding

Belt and Road Infrastructure Funding
Taschkent UZ – Barak-khan Medrese, on the old Silk Road

Vancouver Intercontinental Consulting Group (VICG) is a team of seasoned financial professionals that specialize in introducing infrastructure funding projects to engineering and constructions companies in Beijing. Contractors have excess capacity of equipment and manpower, to construct every imaginable type of infrastructure, and they are seeking large infrastructure projects.

VICG have direct access to China’s largest builders, we can have a response from China lenders, on a project of any size, within 72 hours.

Today I came across this excellent article that explain about the global need for infrastructure funding. Also, find below a description of Belt and Road Initiative from Wikipedia.

Belt and Road delivers crucial capital

One Belt One Road

Initiative’s infrastructure boost parallels 1930s New Deal

by Yaseen Anwar in Singapore – Tue 16 Apr 2019 – OMFIF

A grim outlook for corporate earnings in 2019, increased country debt, the US-China trade war, Britain’s exit from the European Union, and challenges to the independence of the Federal Reserve and other central banks are but a few of the dire issues weighing on policy-makers, and provide a compelling backdrop to a possible global economic recession. But several measures could be adopted to protect countries from these vulnerabilities and accumulate the necessary resources to stimulate sustainable growth.

US financier Michael Milken created the ‘junk bond’ market in the 1980s to enable smaller, non-rated companies to access capital. Besides triggering novel capital market opportunities for investors, this stimulated overall economic growth through new jobs and increased consumer purchasing power. The rise of the risk-reward ratio added another dimension to asset allocation strategies, as improved availability of data gave added comfort to investors when increasing their risk appetite in the search for higher returns.

Analogous to Milken’s strategy, China’s Belt and Road infrastructure initiative gives access to capital for those connected emerging markets that have not had the necessary investment grade ratings to tap international bond markets. These economies have never had the opportunity to attract offshore investors who require ratings dictated by their corporate policies. Nor do those investors have a high enough risk appetite to venture into uncharted emerging markets.

Infrastructure, the core of Belt and Road funding, is and has been the engine of growth for most economies. The 19th century industrial revolution transformed agrarian-based economies into technological and manufacturing-based ones. In the case of the US, this shift, accelerated again in the 1930s by President Franklin Roosevelt’s New Deal and the expansion of the domestic transportation network, made the country the leading global economy in the 20th century.

The lack of quality infrastructure has hampered the economic development that many Belt and Road-related countries sorely need. For example, the shortage of power in Pakistan has impaired GDP growth rates of up to 3%. The absence of a developed transportation network for refrigerated trucks for distribution of agricultural products results in a 50% loss of perishable products. The Belt and Road initiative can play at least a key role in filling these economies’ substantial financing gap. The collective resources of multilateral institutions can also be leveraged to fill financing gaps and alleviate the concerns of risk-averse private sector participants.

Certain countries have already felt the benefits of new employment opportunities and improved productivity thanks to Belt and Road projects. In 2017, the Greek port of Piraeus handled more than 4m containers for onward distribution to Europe, Germany’s Duisburg Inner Harbour has become the world’s largest inland port, and more than 10,000 companies are now operating across Africa through an expanding transportation network of rail and roads. More than $60bn of new business has been generated across a range of operations, including: increased investment and tourism into Africa; new housing in Indonesia; power projects in Bangladesh; roads in Pakistan and Kazakhstan; and rising global and intraregional trade in the Association of Southeast Asian Nations.

The Belt and Road makes available ample resources and opportunities to stimulate production and inclusive growth, as well as to preserve regional economic stability. Payments settlement risk can also be reduced by using the renminbi as an alternative currency. Exogenous shocks remain a risk, and regional economies must install policies and systems to mitigate such threats.

The Belt and Road offers the necessary ingredients to restore confidence and some stability in the international monetary system, while simultaneously generating new jobs and reducing poverty in many emerging markets.

Yaseen Anwar is Senior Adviser at ICBC Singapore and former Governor of the Central Bank of Pakistan.

Belt and Road Initiative

The Belt and Road Initiative (BRI), also known as the One Belt One Road (OBOR) (Chinese: 一带一路) or the Silk Road Economic Belt and the 21st-century Maritime Silk Road (Chinese: 丝绸之路经济带和21世纪海上丝绸之路), is a development strategy adopted by the Chinese government involving infrastructure development and investments in 152 countries and international organizations in EuropeAsiaMiddle EastLatin America and Africa. The paramount leader of the People’s Republic of ChinaXi Jinping, originally announced the strategy during official visits to Indonesia and Kazakhstan in 2013. “Belt” refers to theoverland routes for road and rail transportation, called “the Silk Road Economic Belt”; whereas “road” refers to the sea routes, or the 21st Century Maritime Silk Road. Until 2016 the initiative was officially known. in English as the One Belt and One Road initiative but the official name was changed as the Chinese government considered the emphasis on the word “one” as being prone to misinterpretation.

The Chinese government calls the initiative “a bid to enhance regional connectivity and embrace a brighter future”. Some observers see it as a push for Chinese dominance in global affairs with a China-centered trading network.

Infrastructure Funding Photo credit: Daniel Mennerich on Visual Hunt / CC BY-NC-SA

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