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China’s One Belt, One Road Initiative And Asia Is A Crucial Trade Route Starting Point, Part 3, Indonesia, Kazakhstan, Kyrgyzstan, Laos And Malaysia

ArmchairTechInvestor, May 29, 2018, by Brad Peery

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Below are summaries of the OBOR initiatives in the countries covered in the Asia Part 3 Region.

Indonesia

One Belt, One Road Network
ArmchairTechInvestor, May 27, 2018, by Brad Peery

“Indonesia is the largest economy in the 10-nation ASEAN followed by Thailand. Service and industry are Indonesia’s main economic drivers, accounting for 46% and 40% of GDP respectively, with the remaining 14% attributable to agriculture. Major sectors include manufacturing (tobacco, food and beverages, transport equipment and machinery), mining, construction, transport and communication, finance and real estate.”

Indonesia’s major trading partners include China, Japan, Singapore and the U.S.
Chinese enterprises are actively participating in Indonesian infrastructure projects. A Sino-Indonesian joint venture was formed in 2016 to build the 142km high-speed railway between Jakarta and Bandung. CAMC Engineering Company is participating in the re-development of container facilities on Batam Island, a free trade zone of Indonesia just to the south of Singapore.

Indonesia has an ambitious infrastructure building plan and President Joko Widodo in May, 2017 attended an international forum in Beijing to promote the One Belt, One Road Initiative.

****“Chinese Premier Li Keqiang has said his country wants to work closely with Indonesia to better link its Belt and Road Initiative to the South-east Asian nation’s development strategy. Xinhua news agency quoted Mr Li as saying: ‘The economies of the two countries are highly complementary and the potential for economic and trade cooperation is huge.’ He added that China attaches great importance to developing ties with Indonesia.”
****China wants closer ties with Indonesia, says Premier Li Keqiang, The Straits Times, Feb 9, 2018. Goh Sui Noi

Kazakhstan

One Belt, One Road Network
ArmchairTechInvestor, May 27, 2018, by Brad Peery

*“Kazakhstan is an important world energy supplier due to its significant reserves of oil natural gas and coal. It is estimated that proven reserves in Kazakhstan account for some 3% of world oil reserves, 1% of world gas reserves and 4% of the world coal reserve. It is also endowed with some other mineral deposits like chrome, lead, tungsten, copper, zinc, iron and gold.”

****A visit by Chinese Premier Li Keqiang led to economic deals totaling $14 billion. This was followed by China officials announcing that Kazakhstan would launch more than 20 joint projects with Chinese companies, focusing on priority sectors in the Kazakh manufacturing industry, such as mining, oil and gas, construction, chemical and light industry, and transport. “In March 2015, the two countries signed a series of cooperation agreements worth of $23.6 billion, on closer co-operations in various sectors such as railway, electricity, nuclear energy and agriculture.”

An oil-and-gas development project in Aktyubinsk region of Kazakhstan involved oil pipelines being built to allow direct oil exports to China, including the pipeline running from Kazakhstan’s Caspian shore to Xinjiang of China. Major participants in the projects include the China National Petroleum Corporation and the Kazakh oil company KazMunayGas.

****Kazakhstan needs to find alternates for growth, by diversifying and innovating, itself instead of relying solely on natural resources. The OBOR Initiative provides an opportunity for Kazakhstan to attract Chinese money and technologies, and become one of the largest transit hubs in Eurasia.
Practitioners’ perspectives, Kazakhstan and the Belt and Road, GRATA Law Firm, Shaimerden Chikanayev, April 27, 2017

Kyrgyzstan

One Belt, One Road Network
ArmchairTechInvestor, May 27, 2018, by Brad Peery

“Kyrgyzstan is a mountainous country located at the crossroads of Asian cultures. Its economy relies heavily on the exploitation and export of gold, mercury, natural gas and uranium, along with agricultural products such as cotton, meat, tobacco, wool and grapes,. Due to its mountainous landscape, livestock farming dominates its agricultural economy, while aluminium production represents the bulk of its industrial production. Meanwhile, the service sector, including banking and tourism, has become an increasingly important growth driver.”

Business ties are improving. Bilateral trade is also looking better, with
Russia being the largest trading partner, followed by China. “There are now more than 250 Chinese companies registered in Kyrgyzstan, including Zhongda China Petrol Company and Zijin Mining Group, and covering various industries such as mining, trading, construction, telecommunications, agriculture and metallurgy.”

At a meeting in May, 2017, the Kyrgyz President praised the OBOR Initiative. According to the head of the foreign policy department of the Kyrgyz president’s office, Aizada Subakozhoeva, Atambayev “noted the importance of expanding fiber-optic communication lines from China to Europe via Kyrgyzstan, e-commerce, and the creation of logistics centers. The project of construction of the China-Kyrgyzstan-Uzbekistan railway was noted as promising.”

Central Asia, especially Kazakhstan, may be a bridge between markets but are there benefits beyond transit fees? As Fallon pointed out in her RFE/RL interview, “China’s investment in [rail links and connectivity] could be beneficial for connecting these various economies. But some are concerned that the trains will just go through Central Asia and bring these goods to Europe and not really help Central Asian economies as much.”
*****Majlis Podcast: What Does China’s One Belt, One Road Project Mean For Central Asia?, OBORwatch, December 6, 2016
*****What’s Next for the Belt and Road in Central Asia?, Three regional presidents attended the Belt and Road Forum in Beijing last weekend. By Catherine Putz, May 17, 2017

Laos

One Belt, One Road Network
ArmchairTechInvestor, May 27, 2018, by Brad Peery

*“Laos is the only landlocked ASEAN country, bordering Myanmar, Thailand, Vietnam and Cambodia, as well as China. With GDP growth averaged about 7.7% over the past decade, Laos is one of the fastest growing economies in ASEAN. The economy of Laos is heavily reliant on the mining and hydropower sectors.”

Thailand, China and Vietnam are the largest trading partners of Laos. Laos has entered free trade agreements with China, India, Japan, Korea, Australia and New Zealand under the ASEAN agreement. Laos has signed bilateral investment agreements with 25 countries, including China, Japan, Korea and UK. It has also concluded a bilateral trade agreement with the U,S., which includes some investment requirements.

China’s OBOR railroad with Asean linking China’s border to Vientiane has started. Construction in Laos has progressed to more than 10 per cent of the project. Daochinda Siharath, deputy director of the Lao National Railway State Enterprise and deputy general manager of the Laos-China Railway Co, said that the Laos section of the China-Laos-Thailand railway is about 13.5 per cent built after construction began in January, 2017. The five-year project runs until December 2021, It has an estimated total cost of $5.9 billion. Laos owns 30% of the company while China is owns the rest. The Export-Import Bank of China is the main source of loans for the project, in which debt financing accounts for 60 per cent of the total cost.

“The Chinese government’s initial 2013 OBOR Initiative vision dared to imagine a network covering 65 countries with 4.4 billion people and aggregate economic value to $21 trillion or 29 per cent of global GDP. The Asian Development Bank estimated that to bring it to reality, Asia would need to invest about $26 trillion between 2016 and 2030 in order to maintain growth momentum. For Asean infrastructure alone, the investment would need to be about $3.2 trillion.”

Malaysia

*Malaysia’s economy expanded by 4.2% in 2016, slowing from 5% in 2015. The IMF expects GDP growth at around 5.4% in 2017. Major Malaysian exports include electronics and electrical products (E&E), palm oil and palm oil-based products and refined petroleum products. Major export markets include Singapore, China, the U.S., EU and Japan.”

Malaysia’s major imports were intermediate goods and capital goods, including electronics, machinery and petroleum products. The major imports came from China, Singapore, EU, Japan, and the U.S.

*****“The Belt and Road Forum (BRF) held in Beijing in May 2017, yielded a total of nine memorandums of understandings (MoUs) and agreements signed between Malaysian and Chinese companies. Among the major projects under the initiative is the Malaysia-China Kuantan Industrial Park in Pahang, Melaka Gateway, East Coast Rail Link and Xiamen University Malaysia.”

******These agreements were mostly trade based and boasted a total value of US$7.22 billion or RM31.26 billion. Prime Minister Datuk Seri Najib Razak met with his Chinese counterpart President Xi Jinping in May, 2017. “Najib said the ‘One Belt One Road Initiative’ would derive massive benefits to Malaysia in terms of excellent infrastructure, connectivity, social facilities, better living standards and abundant business opportunities.”

A digital free trade zone was set up by Alibaba Group Holding Ltd (Alibaba Group), is expected to begin at the end of 2019.

“In Malaysia the effect has also been observed as OBOR-related projects such as the Melaka Gateway deep-sea port have faced heavy criticism in regards to its necessity, contract awards and funding.”
******China’s Belt and Road: What’s in it for Malaysia? The Borneo Post, September 3, 2017, Sunday Rachel Lau

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