Foreign Investment Opportunities For International Belt and Road Project Operational Contractors

Op/Ed by Chris Devonshire-Ellis

• Shortage of management and operational skills
• China is now having to provide project in addition to policy financing
• Opportunities for foreign banks, operational contractors and management training institutes to get involved

The business, financing and operational model for China’s Belt and Road Initiative is having to change due to unforeseen difficulties in procuring localized talent to run and manage completed projects.

This has been one of the developing issues for example with CPEC, where despite massive Chinese financing and infrastructure build, Pakistan lacks the management and contractual expertise to operate some of the developments. This is creating new financing issues which China will have to solve and is changing the operational nature of some of China’s banks from policy lenders to project financiers – which was not the original intention.

This is creating financing opportunities to work together with some of China’s banks to spread the risk and provide capital. It also creates a rare opportunity for international banks to impose certain criteria on loans – such as insisting that client project contractors are offered the opportunity to participate in management joint ventures.

These opportunities exist due to a shortage of the operational expertise in operating infrastructure for Ports, Airports, Traffic Control, Rail, in addition to new digital and health technologies being introduced as part of the Digital and Health Silk Roads. Maintenance, QC and supplies to keep infrastructure operational is also an on-going issue. There is simply not enough local and regional management expertise available – not even in China.

This means that global and regional banking and financing institutions should be looking at how they can participate in providing project financing in partnership with some of China’s policy banks and drag along clients as part of the deal. I suspect it may take up to two decades to develop the local technical expertise to the sustainable standards required – during which technical education and qualification needs will also become apparent. That means opportunities for engineering and related technical management training in English, French, Arabic, Spanish and other languages will all be required.

Understanding how to participate in China’s Belt & Road means thinking outside the box and understanding where the opportunities are. For assistance with developing these concepts, please get in touch.

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• Managing Pitfalls When Handling Belt & Road Initiative Project Contracts
• Opportunities, Risks & Potential Within the Belt & Road Initiative 2021