Primary Obstacles for Asian Private Capital in the BRI

Abstract

The year 2023 is poised to mark a momentous juncture for investments pertaining to the Belt and Road Initiative (BRI) in the Asian region. As China celebrates the milestone of the 10th anniversary of its prominent BRI this year, it is expected that Asia, as a major recipient of investment inflows from China, will witness a revitalization of BRI projects as the Chinese economy gradually resumes its operations. Amidst the progressive recuperation of the global economy subsequent to the unparalleled disruptions triggered by the COVID-19 pandemic, there is an escalating emphasis on the prospects for economic expansion. Given all this, Asian Financial Cooperation Association Think Tankers Committee invited Mr. Mohd Sedek Jantan to discuss the formidable challenges and potential opportunities faced by Asian financial enterprises under the Belt and Road Initiative, and launched three articles successively, focusing on the following three opportunities and challenges: first, information asymmetry, which is the primary obstacle preventing Asian financial institutions from offering private capital for participation in the BRI project. The second is that inadequately implemented infrastructure projects have the potential to fall short of their expected returns, thereby exposing financial institutions to the risk of non-performing loans. The third is ecological risks associated with the BRI, such as the potential for societal disruption due to construction practises or environmental pollution. This is the first article.

Keywords: BRI, Belt and Road, Financial, Public Economics

JEL Classification: H00, H52, H30, F13, F34