Belt and Road worth going the extra mile
Singapore businesses need to know how to pick their battles to benefit from China's mega project
China's Belt and Road Initiative (BRI) has the potential to reshape the global economy and transform world trade.
Many governments, multinational development organisations and corporations welcome the chance to fill the infrastructure gap and strengthen the value chain network. With more than 60 countries and 4.4 billion people included in the route passing from Asia to Africa, the benefits are likely to be great.
Singapore has been proactive in seeking BRI opportunities.
The Government has encouraged Singapore enterprises to engage in this vision but many are waiting on the sidelines.
Citing lack of details, they are either unsure of how they can be involved or are doubtful this is relevant for organisations not in the business of building airports and constructing roads.
Others are concerned about the risk-return trade-offs.
These concerns are not without merit. However, it is critical that businesses proactively seek BRI opportunities or risk being left behind.
For companies to maximise opportunities offered by the BRI and demographic trends, two key elements must be fulfilled.
One is partnerships and the other is competitive differentiation. They call for collaboration and strategic competition.
Businesses need to first understand foreign markets and their local needs, and to gain access to financing solutions.
They also need to know how to pick their battles. That means Singapore businesses should focus on areas related to intellectual capital and leave the capital-intensive construction-type projects to the Chinese.
Singapore companies are not only well placed to offer capabilities in the planning, execution, and operation of infrastructure assets, they can also provide infrastructure-related consultancy services.
China's plan of a digital Silk Road will also provide opportunities for online retail and digital businesses.
This is in line with Singapore's aim to tap into the digital economy for regional growth as it assumes the Asean chairmanship next year. It would be opportune for Singapore exporters to explore digital opportunities and embed new technologies into their business model.
Singapore's goals for greater Asean integration are also reflected in its BRI support. The Republic has committed about $90 billion worth of financing services for BRI projects.
Given its financial shipping hub status, Singapore can also broker both capital and trade deals between China and Asean.
As long as they are able to identify their strengths, partner the right people and leverage Singapore's well-developed financial system, the BRI will present more opportunities than can be imagined.
The writer is managing director and head of global banking of Singapore at Standard Chartered Bank. This article appeared in The Business Times on Tuesday.