Overview of One Belt, One Road Initiative
Discuss about the How Singapore can gain from One Belt, One Road initiative.
The purpose of this task is to provide a brief overview about the initiative led by China namely one belt, one road initiative. This objective of this movement is to provide China a better network by helping them to take part in the global affairs and trading. Further the one belt, one road initiative is also known as 21st century maritime Silk Road and Silk Road economic belt. Under this initiative the country focused on infrastructural investments, building of railways and highway automobile and power grid etc. Further this task explains about the impact of OBOR on the Singaporean companies and it also provides recommendations to the government to act competitively (InterNations, 2017). The later part of the task explains a newspaper article about the issue and its relation to the economic concept. More details about the task are discussed below:
It is a fact that all the organizations will invest in other country’s project only if they see gains in that project. Similarly, Singapore organizations invested in the OBOR project only because they needed raise their gains from the initiative for themselves and the country as well. Initially talking about the opportunity which the companies of Singapore received is that, the businesses will gain more connectivity and collaborations with other countries with whom they have no scope of connection (Liang, 2017). Also it shall be noted that almost 30% of the transactions of OBOR is held in Singapore which gives an advantage to organization to take part in this project and work in broader base of target market. Further there are three ways with which the Singapore companies can take part on the one belt, one road project of China that are, infrastructure, connectivity and financial services. As the Chinese companies majorly aim to expand their region, so the Singaporean companies can assist them in gaining knowledge about the market and it specifications. This will help both the companies of Singapore and the country China with collaboration. Singapore companies are currently focusing in investing their money at places from which they can gain multiple benefit that is good connection along with great returns. Similarly, China needs to expand and has strong economy thus there is less scope of risk and loss. Thus, this collaboration with provide mutual benefits to both the parties (Tremewan, 2016).
Furthermore talking about the capabilities of the Singaporean companies it shall be noted that now these organizations have developed the capabilities in master planning along with infrastructure value chain. Further it shall also be noted that the country has strong pipeline of fresh talent. Thus, Singapore organizations have basically fresh talent who are enriched with the knowledge of planning and investment and the companies also have finance to invest in the OBOR initiatives (Cheah, et. al., 2017). The vision of the OBOR initiative is to make the country geographically strong as infrastructure is one of the most important factors which increases the efficiency of the country and makes its competitive in the target market. The project aims to build paths along with different countries along around the world so that the companies of china can initiate transact with these countries as well. Building of infrastructural network helps the country develop the goal and vision of one belt, one road initiative. Also this project makes the country and its countrymen economically strong as it will get easy for the people to approach more and more products in the country. The opportunity which Singapore receives with this project is that, with the introduction of OBOR the country can now transact with China easily. Apart from that the companies of Singapore can also make profits by investing in the projects of China, also the country will also develop their infrastructure by joining their finance projects with OBOR. Thus, there are many opportunities which Singapore can enjoy by investing in the OBOR project of China (Wei, 2016).
Opportunities for Singaporean Companies
Source: (https://www.eurasiareview.com/13042016-one-belt-one-road-one-singapore-analysis/)
Apart from opportunities there are many risks related to the partnership of Singapore with China’s OBOR. The activities of the country might not be visible to normal people but the country is the master planner and the biggest investor of the initiative. So, investments come with own risks as well, thus the biggest risk associated with the country is that if the project will fail then the whole investments of the companies of Singapore might face loss (Krishnan, & Sriganesh, 2017). As it is a big project which is not just linked to the activities of one country, but the infrastructural projects many countries with each other, resulting to which the rules of one country might conflict with another country. This can lead to failure of the project. Thus, it is recommended to the government of the Singapore to preliminarily sign contract with China which should include the guarantee of the investments made by the people of Singapore. Apart from that, this contract shola d also includes all the terms and conditions of the country China with other countries along with Singapore.
Discussion about the issue
The Straits Times newspaper talks about the terms of the country Singapore with the One belt, One Road initiative led by China. It says that it is not a perfect combination that the country Singapore partner China in building its infrastructure but the country has major role in spending for investments purposes in the project. Singapore’s mathematics decide that how well the project is going to succeed in the international market, and what amount of profits it is going to provide to the country (Du, & Zhang, 2017). Although the railways services are built in Indonesia according to the project but it shall be not be mistake with the role of Singapore in the project. Therefore, Singapore might not build railway and infrastructural services according to the project but it is the master planner behind the whole event, financial and all other services are provide under the surveillance of Singaporean government.
Under the 12th China-Singapore Forum, all the details about the project were disclosed stating how Singapore will co-operate with the China’s initiative. The forum was jointly organized by Chinese People’s Institute of Foreign affairs and the National University of Singapore’s East Asian Institute. One of the four speakers of the forum, Professor Tan spoke China’s multidimensional quality and economic power has helped them to create a trade route between different part of Asia, Africa and Europe (Du, 2016). He says that if the activities of China are linked with other countries with similar or even bigger activities then failure of initiation might adversely affect all the neighboring countries along with the countries involved. But if such activities are initiated by partnering comparatively smaller countries then it issue and its negative outcomes can be calmed to some extent. Relating to the statement Ho Meng Kit, chief of Singapore Business federation stated that around 60 percent of the Asean projects are already financed by the banks of Singapore and the republic has a deep ecosystem of logistics, project development and service firms (Bai, 2017). Further speaker Peng Zhinming stated that the foremost objective of this project is to develop the infrastructure for transportation services. This project is different from all other projects because it does not segregate the business activities initiated in different countries but it centralize and help every organization to contribute their share in the global competition.
Risks Associated with Partnership with China’s OBOR Initiative
Further summarizing the above statements, the article basically stated the interaction of the Singaporean government with the professors of the China. It tells the viewers about the collateral benefit which both the countries while contracting with each other and what role the initiative plays (Herrero, & Xu, 2017).
Source: (https://www.breakbulk.com/one-belt-one-road-expands-influence/)
Economic Analysis of the case
Relating the One Belt, One Road Initiative to the economic concept it shall be noted that the economy of the country increase with such coalition of the country with the OBOR initiative. As noted above, Asean projects are financed by the organizations of Singapore which shows the strategic measures of the country and ways with which people of Singapore wants to double their income with minimum risks. In macro environmental context, the GDP of the country increase by investing in such projects. The GDP of the country is highly influenced to grow due to many factors like, government finances, global talent competitive index and investments made by the country (Winter, 2016). These are the factors which aggressively motivate the economy of the country to grow. Government finances refers to the reserves that are kept with the government, the government of Singapore have health reserves and there is no fiscal deficit linked with the country which gives them advantage to invest more and more to multiply their reserves (Feng, et. al., 2017). Global talent competitive index refers to the index which tells about the talent present n each nation and how it is utilize to gain higher benefits for the country on a whole. The country is ranked first for consecutively four in the Talent Index. This states that the country has talented people who are focused on investing in different fields of the counties so as to increase their profits (Huang, 2016). Lastly, investment is one of the major elements which increase the GDP rate of the country. Similar, investment in One Belt, One Road Initiative will help the country to increase their competitive index along with good return on investments as well.
Source: (https://www.atimes.com/article/beijing-bruneis-new-best-friend/)
Further it shall be noted that this alliances will make the country strong in international market as it is backed by the government of China. Also the opportunity cost in investing funds in China’s OBOR is more as compared to investing in other parts of the world. The Funds of the country are currently segregated worldwide, but this alliance will center the funds of the country and will also provide better opportunity to the Singaporean organization to grow (Crosby, 2016).
As stated above, investment in OBOR will center all the funds invested by the country at one place. So, failure in that project can lead heavy losses for the country. Apart from the China’s economy is now linked by the economy of Singapore so little change in the economy of China will direct affect the trade market of Singapore. Thus, it shall be recommended to the government that they shall build their strategy in such a way that they don’t receive any loss in case of failure of the project. Also the talent of the country shall focus on implementation of the OBOR project according to the plan. Furthermore talking about the organizations of Singapore who are a part of OBOR, they shall also take calculative risk to secure their position in the market. They shall also aim high to participate in the international market and make more profit (Lau, Chan, & Nguyen, 2017).
Recommendations for the Government of Singapore
Conclusion
Thus, in the limelight of above-mentioned events, it shall be noted that the One Belt, One Road Initiative might provide advantage to both the country if Singapore makes investment in them. The One Belt, One Road Initiative is led by China which aims to build a route of transportation worldwide to enhance trade services. This initiative will help the organizations to transact in the international market and earn higher profits; also it gave an advantage to the countries to enjoy good infrastructural facilities as well. This initiative is different from all other initiatives as it adjoins the motives of countries and collectively helps them to gain profits. Also Singapore is chosen to invest in the OBOR initiative because more 60% of Asean events are financed by the companies of Singapore, so the companies there have adequate knowledge about fields in which they shall investment to maximize earnings. Apart from that governments of both the countries have good relations which each other which will motivate the growth of the project resulting in profit for both China and Singapore
References
Bai, Y. (2017). Prospect Analysis of China-UK Financial Cooperation Under One Belt One Road Initiative. Journal of Chinese Economics, 5(2).
Cheah, Y.W., Kugaan, S., Gopalan, O., Min, Y., Yuan, W. and Chua, J.P.X., (2017). An introduction to China s new trade policy-The One Belt One Road initiative.
Crosby, M. (2016). China’s Rise and Its Impact on South East Asian Businesses. In Doing Business in ASEAN Markets (pp. 65-72). Palgrave Macmillan, Cham.
Du, J., & Zhang, Y. (2017). Does One Belt One Road initiative promote Chinese overseas direct investment?. China Economic Review.
Du, M. M. (2016). China’s “One Belt, One Road” Initiative: Context, Focus, Institutions, and Implications. The Chinese Journal of Global Governance, 2(1), 30-43.
Feng, G. F., Sui, B., Dong, M. Y., Jiang, C. X., & Chang, C. P. (2017). Border is better than distance? Contagious corruption in one belt one road economies. Quality & Quantity, 1-20.
Herrero, A. G., & Xu, J. (2017). China’s Belt and Road Initiative: Can Europe Expect Trade Gains?. China & World Economy, 25(6), 84-99.
Huang, Y. (2016). Understanding China’s Belt & Road Initiative: Motivation, framework and assessment. China Economic Review, 40, 314-321.
InterNations, (2017). The Economy of Singapore. Viewed on December 29, 2017 from < https://www.internations.org/singapore-expats/guide/29457-economy-finance/the-economy-of-singapore-16045>
Krishnan, R., & Sriganesh, B. (2017). One Belt One Road–Opportunities and Risks for Singapore.
Lau, Y. Y., Chan, M. H., & Nguyen, H. O. (2017). Assessing the displacement effect of exports with gravity trade model: China’s textile and clothing case and OBOR implications. Journal of International Logistics and Trade, 15(1), 19.
Liang, L. Y., (2017). Singapore can ‘partner China in One Belt, One Road initiative’. Viewed on December 29, 2017 from < https://www.straitstimes.com/asia/singapore-can-partner-china-in-one-belt-one-road-initiative>
Tremewan, C., (2016). The political economy of social control in Singapore. Springer.
Wei, S. (2016). Rising Renminbi and the Neo-Global Financial Governance in the Context of’One Belt One Road’Initiative: A Changing Game or Minor Supplement?.
Winter, T. (2016). Heritage diplomacy along the one belt one road. The Newsletter of Association of Critical Heritage Studies
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