The ongoing Belt and Road Initiative (BRI) that’s taking place all over the world has got investors excited. A survey by London based international tax and law firm, CMS, reveals that there is a growing sense of confidence among Chinese and international investors about the future of the BRI.
Titled “Above and beyond: Belt and Road Initiative investment and risk outlook”, the study surveyed over 100 senior executives 60 from non-Chinese multinational corporations (MNC) and 40 from Chinese state-owned enterprises (SOE) & privately owned corporations to gauge their views on investing opportunities and risks in the year ahead in countries along the trade corridors of the Belt and Road Initiative (BRI).
The survey revealed positivity toward deal sourcing and overall increasing investment in BRI projects, as well as further involvement from international participants.
23 percent of investors expect it to become easier to identify and source BRI investment opportunities in the year ahead as opposed to only five percent now.
The shifting attitudes towards the BRI is likely due to the previous perception that projects under the initiative needed Chinese capital or required a Chinese partner to happen. However, the understanding among investors now is that BRI projects do not require a Chinese partner, support or approvals from the Chinese government.
More investors however show interest in the soft infrastructure aspects of the BRI such as IT services instead of the heavy projects such as building highways, airports and railways. This could also be due to the extra regulations that are usually present in such projects.
Many investors are also saying that MNC’s are likely to play a major role in the BRI. Their role is expected to be mostly joint partnerships as they build ties with Chinese investors. This approach is seen as a win-win as it helps mitigate risks on both sides as well as bring various project experience to help navigate the many potential challenges of the BRI.
In fact, many MNCs are already cashing in on the BRI. For instance, General Electric increased its BRI order book from approximately US$400 million in 2014 to US$2.3 billion in 2016 and is expected to further jump to US$7 billion.
Likewise, the CMS study also shows that Caterpillar is reaping revenue by meeting the demand for construction equipment while financial institutions such as Citibank and Zurich have also increased their participation in BRI projects.