B&R financing channels expand, particularly in Pakistan and India

Updated 2017-11-07 13:30:57 Global Times

Financing for the China-proposed Belt and Road (B&R) initiative is "not without challenges" but increasingly there are more channels of funding that are available, senior executives from the UK-based Standard Chartered Bank said in a note sent to the Global Times on Monday.

Anna Marrs, the bank's regional CEO for South Asia and Southeast Asia, said that financing channels for B&R projects have become increasingly diversified in recent few years, with participation by not only governments but also commercial institutions and private organizations.

Financial institutions in certain B&R markets, such as in Pakistan and India, are especially enthusiastic about providing capital support, said Jerry Zhang, executive vice chairman and chief executive officer at the Standard Chartered Bank (China).

"For example, in Pakistan, lenders are in very fierce competition to win clients," Zhang told the Global Times in an interview in Shanghai on Friday.

But she noted that such popularity does not apply to all B&R markets. In Africa, for example, it is sometimes difficult for Chinese companies to find banks that are willing to give financial support to their expansion.

"At this point, financing for the B&R initiative is mostly via the Chinese government and related Chinese financial institutions," Zhang noted. "However, an initiative as ambitious as this requires collaborative efforts, as Chinese financial institutions alone will not be able to fill the financing gap. Commitments from other countries and the private sector are necessary."

The Standard Chartered Bank in 2016 was involved in more than 40 B&R-related projects in different ways including financing and risk mitigation, according to Marrs.

Marrs also told the Global Times that when she traveled to some of the B&R markets, the business leaders she talked to all said that B&R investment is a "once-in-a-century" opportunity.

"Some of them told me that B&R is not only about importing Chinese money, but also about importing Chinese infrastructure capabilities. They don't believe they can do these things [infrastructure construction] without help from China," Marrs noted.

Zhang said that based on the B&R projects that Standard Chartered Bank has been engaged in, they haven't seen any major issues at this point.

"Those projects are proceeding quite well currently, but they will last many years, say, over 10 years for many projects. It's easy to get the first bucket of gold, but we should also pay attention to risks that will arise later. Risk management is a long-term task," Zhang said.

According to Zhang, risks related to B&R projects include foreign currency risks, operational risks (especially due to lack of understanding of the operating countries) as well as increasing geopolitical risks with the rising level of protectionism.

China's trade with B&R countries and regions reached 6.3 trillion yuan (9 billion) in 2016, up 0.6 percent year-on-year, news website people.com.cn reported in February.

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