Financing of OBOR projects

HONG Kong has been quick at identifying financing opportunities since the launch of the Belt and Road initiative.

On April 17, the island announced the easing of listing conditions for companies involved in the infrastructure-building economic initiative.

This could provide a massive boost to the city’s standing as a fund-raising hub, according to analysts. But they also warned that risk levels of such projects could be high. By 2020, belt-road projects could be worth some US$8 trillion (RM35 trillion) .

Currently, the policy banks involved in the financing of belt-road projects are China Development Bank and Export-Import Bank of China.

Belt-road investments could also turn to three special financial institutions initiated by China. These institutions are:

Silk Road Infrastructure Fund

Launched in February 2014, this China-led US$40bil (RM173bil) Silk Road Infrastructure Fund invests in OBOR infrastructure projects. The fund is capitalised mainly by China’s forex reserves and is intended to be managed like China’s sovereign wealth fund.

Asian Infra Investment Bank (AIIB)

Founded in October 2014, the AIIB aspires to be a global development bank with 21 Asian member countries (China, India, Thailand, Malaysia, Singapore, the Philippines, Pakistan, Bangladesh, Brunei, Cambodia, Kazakhstan, Kuwait, Laos, Myanmar, Mongolia, Nepal, Oman, Qatar, Sri Lanka, Uzbekistan and Vietnam). It has a registered capital of US$100bil (RM434bil) .

New Development Bank (NDB)

The NDB is a multilateral development bank set up on July 15, 2014, by Brazil, Russia, India, China and South Africa (BRICS). The bank was seeded with a US$50bil (RM217bil) initial capital, with the intention to increase it to US$100bil (RM434bil). The bank is headquartered in Shanghai.