The development of the Belt and Road Initiative (BRI) across Southeast Asia is expected to contribute significantly to the region’s economic and infrastructural development. However, a perceived lack of transparency in China’s initiative exacerbates existing fears about rising debt and sovereignty over projects. Several think tanks from Southeast Asia and the Pacific have collaborated on a BRI monitor, aimed at assessing levels of transparency and holding projects accountable. If successful, this could minimize the governance and implementation issues associated with the BRI for the benefit of recipient countries. It is not known whether this success extends to other social and political issues associated with the initiative.
China’s BRI is one of the most debated development initiatives in recent history, stirring both criticism and admiration international stakeholders, policy makers and other diverse spectators. Beijing’s multibillion-dollar foreign policy ambitions include Land and maritime infrastructures projects, stretching from East Asia to Europe, that increase China’s economic connectivity, trade and foreign direct investment in countries in these regions.
While the BRI is often examined as a geopolitical struggle for influence in US-China relations, its implications go far beyond these two actors. Concerns about neo-mercantilism, geopolitical calculus, debt trap diplomacy, and spheres of influence are shared by many other Indo-Pacific-oriented powers, such as India, Japan and the ‘Australia. Regions like Southeast Asia are expected to benefit economically from the BRI and are therefore less susceptible to the geopolitical fears shared by the aforementioned Indo-Pacific powers. However, there is substantive concerns in Southeast Asia around the domestic impact of Chinese infrastructure investments and projects, including debt, social instability, corruption and environmental degradation.
The BIS has already suffered reputational damage in recipient countries due to a perceived lack of transparency and heavy debts. Central Asia in particular has seen the emergence of anti-chinese feeling: Public resentment in countries like Kazakhstan and Kyrgyzstan has turned into anti-China protests and violence, largely caused by social unrest among ethnic Kazakhs and the influx of Chinese workers. Southeast Asia has also had its share of decline due to the lack of transparency of Chinese investments. In 2018 Malaysian Prime Minister Mahathir Mohamad announced the cancellation of three BRIs projects, following allegations of corruption and tax mismanagement.
BRI in South East Asia
Southeast Asian countries, while remaining wary initiative, are somewhat supported by the vast regional economic benefits that participation could produce. According to a report According to the Asian Development Bank, Southeast Asia needs investments equivalent to 5% of its GDP to cover infrastructure growth between 2016 and 2030, a financing gap that Chinese investments could significantly reduce. Southeast Asian countries see the initiative and its synergies with their own ASEAN Connectivity Master Plan (MPAC), as a facilitator of infrastructure development and strong economic connectivity. As such, governments in Southeast Asia have generally adopted a cooperative and constructive attitude towards the BIS. Malaysia, Brunei, Cambodia, Indonesia, Laos, Myanmar, Philippines, Thailand, Vietnam, Timor Leste and Singapore all joined the BRI by signing a memorandum of understanding with China. These MoUs are government level bilateral agreements, which promise cooperation within the framework of the BRI, reaching agreement on policy coordination and cooperation priorities.
However, this should not be interpreted as Southeast Asia’s “total dependence” on China. The region acts as a major economic corridor and a vital maritime intersection of sea lanes, making it a strategic center of China’s global development and essential to the success of the initiative. China sees Southeast Asia as part of a land bridge connecting china to Southeast Asia, South Asia, the Indian Ocean and the China-Indochina Corridor. China was financing and development pipelines, highways, high-speed railways, industrial parks and digital connectivity hubs across the region. New maritime infrastructure initiatives, such as the construction of ports in Indonesia, Malaysia, Singapore and the Philippines, are another avenue through which Beijing is developing. Therefore, Southeast Asian countries hold some influence over BRI projects, which could provide additional negotiating power for China to tailor projects to their demands and a more secure level of agency in the area. governance and implementation.
However, there are still notable economic and political problems. concerns linked to these projects, including the increase in national debt, the loss of sovereign rights to Chinese companies and unfair financial conditions. Sovereign debt risks in particular, appear to be a more serious consequence of the over-indebtedness of economically weaker countries. An example from 2017, threatening national sovereignty in Sri Lanka, led the indebted government to cede control of the Hambantota Ports to a Chinese state-owned enterprise to reduce the debt burden. It has since been reported that $ 385 billion in BIS spending has been hidden from the World Bank and IMF due to the structuring of loans. The report says China routinely undervalues its debt by lending to private companies in middle-income countries rather than state-owned enterprises, making it harder to assess potential risks. While the far-reaching consequences of countries’ excessive borrowing cannot be blamed directly on China, a perceived lack of transparency in all projects and investments likely contributes to the risks faced by recipient countries.
The BRI monitor
The BRI Monitor is a collaborative project between Southeast Asian and Pacific think tanks, including the Institute of Democracy and Economic Affairs IDEAS (Malaysia), the Institute of National Affairs (Papua New Guinea), the Future Forum (Cambodia), the Stratbase Del Rosario Institute (Philippines) and the Sandhi Governance Institute (Myanmar), with the support of the Center for International Private Enterprise. It marks a concerted effort by sub-state actors to make information on BRI projects publicly available and transparent in order to help and inform policies.
The project assesses publicly available data to identify implementation and governance gaps in large BRI-funded infrastructure projects in the region. The studies carried out on the regulatory environments of BRI projects aim to identify the national and Chinese actors involved, as well as to assess the level of transparency. The website launched alongside the project acts as a knowledge repository for all findings, informing advocacy for better governance of these large infrastructure projects.
For example, on two separate Malaysian projects, the Gemas-Johor Bahru double-track electrified project and the East Coast Rail Link, BRI Monitor case studies showed that the governance gaps centered on transparency issues in the disclosure of feasibility studies and the non-competitive award of contracts to Chinese construction companies. In addition, their transparency scores were particularly low with respect to estimated project costs, scope, timelines, environmental impacts, and impacts on land and settlements. These problems all present risks of diminishing public sentiment towards China’s implementation of these projects.
IDEAS CEO, Tricia Yeoh, advocates the need for a monitor, noting that “we have seen a number of these large infrastructure projects linked to the BIS tribunal controversy due to issues of lack of transparency and public engagement, corruption risks and ever-changing details “. The BRI Monitor could serve as a necessary public resource to increase the accessibility of information around regional BRI projects, highlighting areas for improved governance and implementation, and ensuring optimal economic returns..
This development of collaborative advocacy demonstrates an attempt to regulate and “improve” the mechanisms and functions of the BRI project. Having faced the public slowdowns of canceled projects in Malaysia over perceived fiscal mismanagement issues, greater transparency of the BIS Monitor could minimize disputes through better policy coordination and thus have a positive impact on Sino-ASEAN relations by regarding future investments.
A successful level of BRI implementation in South East Asia would likely result in significant mutual benefits. The World Bank sees considerable promise for the BRI to create positive impacts on regional trade, flexible cross-border investments, poverty reduction and reduction of infrastructure deficits.
The BRI Monitor, as a resource for governments and institutions, could be mutually beneficial in contributing to policy reform. Access to relevant information provides relevant stakeholders with an increased capacity to advocate or implement policies aimed at correcting governance gaps, providing host governments with a potentially increased level of sovereignty over these projects. Successful use would make it easier to keep China at a certain level of transparency and subsequently allow for better policy coordination.
However, it is not yet clear how effective the monitor will be in allaying public fears about BRI in Southeast Asia. While increased transparency between projects will benefit governance and implementation, it may take longer to change negative public perceptions due to previous opacity and ambiguity.