27 Apr Setting the Record Straight – Singapore’s Role in the BRI
A year ago, Singapore’s role in the Belt and Road Initiative (BRI) appeared tenuous at best. Prime Minister Lee Hsien Loong’s absence from the May 2017 BRI Summit fuelled speculation that the city-state would be bypassed in China’s grand strategy.
However, PM Lee’s visit to China last year, followed by his recent attendance and meeting with PRC President Xi Jinping at the Boao Forum for Asia in April 2018, suggest that cooperation between the two countries is alive and well. Singapore has re-emerged as a valuable partner for China in two areas: as a financing hub for the BRI, and a source for third-country partnerships.
Singapore as a Financing Hub for BRI
Singapore’s value is not just a matter of geography. The city-state is famed for transparent business dealings and stable governance, is one of the largest offshore Renminbi centres, and is home to several international banks. It also boasts an array of companies to support infrastructure projects, including infrastructure developers and legal service providers. In January 2017, the Monetary Authority of Singapore launched an Asian Bond Grant Scheme in a bid to attract first-time Asian bond issuers, offsetting up to 50 percent of one-time issuance costs such as international legal fees. Indeed, a statistic that is often repeated by Singaporean and Chinese leaders is 33-85 – 33 per cent of outward BRI investments and 85 per cent of China-bound inward investments use Singapore as a nexus.
Singaporean agencies and firms have also strived to improve Singapore’s status as a financing hub. Local banks such as the Development Bank of Singapore and Oversea-Chinese Banking Corporation Limited have signed MOUs with Chinese banks to cooperate in trade finance and cross-border financing. Building upon its inherent advantages, Singapore is well-positioned to act as a financing hub for regional infrastructure projects.
Singapore as a Source of Third-Country Partnerships
Singaporean firms have already been proactive in exploring new opportunities under the BRI, particularly infrastructure consultancies. Surbana Jurong is involved in master-planning and urban development studies for Myanmar’s Kyauk Pyu Special Economic Zone and Port, as well as projects in Laos. Another consultancy, Meinhardt, signed an MOU with the Xi’An Trade Investment and Exhibition Company in June 2017 to participate in infrastructure projects being developed by the latter’s parent company, the China Council for the Promotion of International Trade.
Small and Medium Enterprises (SMEs) with less capital have not been left out. Singapore’s Ministry of Trade and Industry and Enterprise Singapore recently signed an MOU with China’ National Development and Reform Commission, to offer services such as business matching activities for local and Chinese firms. Previous MOUs have also offered financial support for SMEs. As of 2016, some US$100 billion in funding was available to Singapore firms participating in the BRI, under various agreements inked with Chinese banks.
With these efforts, Singapore stands ready to secure its role as a financing and third-country partnership hub in the BRI, and reinforce its bilateral relations with China in the long term.
China’s Belt and Road Can Win World’s Trust, Singapore Minister Tells Davos [South China Morning Post, 25 Jan 2018]
OCBC Bank inks agreement with Bank of Shanghai to capture Belt and Road Opportunities [Business Times, 2 Apr 2018]
Singapore and China sign deal to boost cooperation on Belt and Road Initiative [Straits Times, 8 Apr 2018]
Photo Credit: Ministry of Foreign Affairs, People’s Republic of China / News.cn