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«Infrastructure projects can also open up greater economic development for rural areas»

The opportunity for impact investment and microfinance is to support the micro-entrepreneurs and SMEs to participate in the flow on effect and opportunities that arise from these projects both directly and indirectly. The multiplier effect of the expenditure and impact to smaller levels with the overall supply chain and value chain of these projects will be interesting to look at as they develop. Infrastructure projects can also open up greater economic development for rural areas which could impact positively lower economic areas within Asean.

Given that local workers will be hired and paid fairly, these projects could furthermore create new jobs for the local population and hereby contribute to alleviating poverty in Asean countries. Whether the BRI’s spending also «crowds in» further development capital and financing will be interesting to watch as this could also increase the impact of the aforesaid projects.

«The other side of the coin is that Asean countries need to accept some of China’s conditions»

This said, there are also important challenges associated with the BRI for Southeast Asia. The other side of the coin is that Asean countries need to accept some of China’s conditions in order to receive the investments. For instance, only Chinese technology and equipment can be employed for the infrastructure projects financed by the BRI, which could be detrimental to the expected economic benefits of Southeast Asian countries. Also, the competition caused by BRI investments between recipient countries could harm the stability of the Asean organization.

Patrick Scheurle is CEO of BlueOrchard Finance. Prior, he acted as Chief Operating Officer and Chief Financial Offier of the company. His experience in finance includes senior positions at Bank Vontobel and Credit Suisse. He holds a PhD in finance from the University of St. Gallen.

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