UOB-HKUST IEMS Study Reveals Growing Need for Sharper Focus on Sustainability In Belt and Road Initiative Projects In ASEAN
By : Krishna Anindyo | Tuesday, December 08 2020 - 20:25 IWST
Ilustration Belt and Road Initiative Projects in ASEAN (Photo by HKUST Institute for Emerging Market Studies)
INDUSTRY.co.id - Hong Kong – There is a growing need for a sharper focus on sustainability in Belt and Road Initiative (BRI) projects in ASEAN, as a recent research, The Belt and Road Initiative in ASEAN , has shown.
Jointly conducted by UOB and the Hong Kong University of Science and Technology’s (HKUST) Institute for Emerging Market Studies (IEMS), the research also found that Chinese companies see the importance of drawing on the diverse strengths of the ASEAN markets and the need for collaboration for continued success.
The Belt and Road Initiative in ASEAN researched Chinese companies with BRI investments in six key emerging ASEAN markets, namely Indonesia, Malaysia, Myanmar, the Philippines, Thailand and Vietnam.
The study was designed to provide insights into the political, institutional and environmental factors that affect BRI project design and implementation, the potential for BRI investments to spur private investment and foreign direct investment (FDI) opportunities in ASEAN.
As part of the BRI, many Chinese state-owned and private companies have been implementing large-scale infrastructure and FDI projects in the region to promote greater connectivity between mainland China and ASEAN.
The Chinese government has recognised the need to place greater priority on promoting green and sustainable BRI projects, calling for Chinese companies to take active steps to ensure that their projects comply with regulations such as environmental standards and labour laws.
This addresses the criticism levelled at projects which had not adequately considered social and environmental issues.
“The research has shown that Chinese companies are becoming more aware of the importance of good environmental, social and governance (ESG) standards to create a more positive and sustainable impact through their investments. It is encouraging to know that some companies are making efforts to address the concerns of and to create more benefits for the local communities in ASEAN,” said Mrs Christine Ip, CEO – Greater China, UOB.
“We are pleased to partner the HKUST to conduct the research on the emerging markets in ASEAN in which UOB has an extensive presence. The findings will help companies gain a better understanding of what it would take to build sustainable businesses and operations in ASEAN. For example, ASEAN comprises highly diverse markets with different languages, cultures and business environments. UOB has been operating in the region for more than 80 years and has deep local presence in ASEAN’s key markets. Coupled with our sectoral expertise, we provide companies with the market-entry support and holistic banking solutions they need for their business expansion,” Mrs Christine Ip added.
To help Chinese companies tackle ESG challenges in ASEAN, the UOB-HKUST IEMS research suggests that they reach out to local consultancies and civil society or community-based groups to understand specific dynamics and to establish a meaningful dialogue.
Companies can also consult potentially-affected communities regarding planned projects and work out appropriate compensation with them.
For instance, one real estate company involved in land reclamation in Malaysia stepped up its efforts to address the affected community’s environmental concerns and is now also providing support to local villages and their educational programmes. Navigating market diversity through collaboration for long-term success.
The research also highlights that the six ASEAN countries have unique political, social and cultural landscapes, with historical developments and leadership changes that have shaped their growth trajectories.
To navigate the market diversity for long-term success, communication with local communities and collaboration with local partners are essential. These are aligned to the BRI’s goals of promoting connectivity in policy coordination, facilities, trade, financial integration and people-to-people bonds.
“At UOB, we have been connecting companies from across our network to regional opportunities by helping them appreciate the nuances of doing business in ASEAN. The UOB FDI Advisory team, since 2011, offers a dedicated, one-stop service for companies seeking to expand in the region. To date, we have helped more than 2,800 companies, of which about one-third are from mainland China, to seize opportunities in what is one of the world’s most diverse and progressive regions. With the implementation of the Regional Comprehensive Economic Partnership and rising affluence in ASEAN, we expect to see more cross-border investments as China and ASEAN become more integrated economically,” said Mr Sam Cheong, Managing Director and Head of Group Foreign Direct Investment (FDI) Advisory and Network Partnerships, UOB.
The implementation of the BRI in 2013 has driven strong FDI from Chinese companies to ASEAN. The value of annual FDI from mainland China to ASEAN jumped 85 per cent in the five-year period from 2014 to 2018, when compared with the four-year period before the implementation of BRI (2010 - 2013). Chinese investments into ASEAN continues to grow strongly, rising 53 per cent year on year in the first half of 2020. The HKUST research team spent 25 months from 2018 to 2020 to conduct The Belt and Road Initiative in ASEAN study.
“The Institute has been leading an interdisciplinary research programme on trade and investment under the BRI since 2017. As such, we welcomed the opportunity to collaborate with UOB Hong Kong to study in-depth how the BRI is being implemented in the key emerging markets of ASEAN and what it means for the business community. We hope the evidence-based insights can help business and government leaders take full advantage of the opportunities created by the BRI to catalyse economic development in the region,” said Professor Albert Park, Head and Chair Professor of Economics, Chair Professor of Social Science, and Professor of Public Policy, HKUST, and Founding Director of IEMS.