China’s Belt and Road initiative gains momentum in Southeast Asia

Opens investment opportunities in Cambodia

President Xi Jinping’s One Belt One Road initiative aims to promote economic development in the countries along the belt, including the Southeast Asian region. China Minsheng Investment Group’s US$1.5 billion investment in Cambodia ignited investor interest and could pave the way for more investment in the country

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26 Jan 2017

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In December China Minsheng Investment Group (CMIG) announced a US$1.5 billion investment in

Cambodia, marking a major deal under China’s Belt and Road initiative.

The deal was sealed during the first “Cambodia-China Business and Financial Development Forum”.  The project, the Cambodia-China Friendship City, will be built in partnership with Cambodian conglomerate Ly Yong Phat Group (LYP Group).

The new investment in Cambodia marks an achievement of a Chinese private enterprise looking to diversify its overseas portfolio to gain exposure in regions like Southeast Asia through the Belt and Road initiative.

The project, expected to begin in 2017, is an industrial park that will house a convention centre, hotels, a golf course, schools, logistics centres and amusement parks.

“CMIG will follow the belt and road initiative and assist Chinese leading enterprises to “go abroad”(走出去) by developing an overseas industrial park-based business strategy. The strategy can output the quality capacity to foreign countries and realize a win-win result,” says Li Huaizhen, president and CEO of CMIG in an interview with The Asset.

Developing countries such as Cambodia may not have a financial infrastructure as sophisticated as China’s, yet according to Li, Cambodia is transitioning from an agricultural to an industrial economy that creates demand and opportunities for financial institutions. “Our management team participated in the reforms in China over the past 30 years. They have in-depth industry experience in macroeconomic policies and economic cycles, which can help us capture investment opportunities and deal with the uncertainty in Cambodia,” he adds.

Established in 2014, the CMIG was founded by 59 renowned private enterprises and the All-China Federation of Industry and Commerce. It draws its expertise from its management team whose members have been among top officials of companies across new energy, IT, finance and real property sectors.

Another Chinese investment into Cambodia was the US$2.7 billion 133-storey twin commercial skyscrapers in Phnom Penh, a five-year project that would rank amongst the world’s tallest buildings. The consortium led by Sino Great Wall International won the project in January 2017.

Cambodia, a neighbour to China, has maintained rapid economic growth in recent years. The Belt and Road initiative provides new opportunities for cooperation between the countries via bilateral economic and trade ties.

Li Huaizhen

After Chinese President Xi’s visit to Cambodia, Chinese businesses have become increasingly enthusiastic toward investing in Cambodia. In preparation for cooperation with China, Cambodia introduced a three-year multi-entry visas for Chinese investors, with the aim to become a strong partner of China in the Belt and Road Initiative.

“Endowed with abundant resources, political stability, and rapid economic growth, Cambodia provides opportunities and potential for development, as well as easy external environment, creating enabling conditions for making investments and starting businesses,” says Hun Sen, Prime Minister of Cambodia in a speech during the China-Cambodia business forum. “The reliance of the economic growth in Cambodia on traditional industries highlights the necessity and the urgency of diversified development of emerging sectors. It will undoubtedly arouse a deep response and the strong support of investors both in China and this region.”

China has been actively seeking investment opportunities in Asian countries. Besides Cambodia, China invests in Pakistan, a favoured country for its Belt and Road scheme. In November 2016, Shanghai Electric purchased a controlling stake in Pakistan power generation and distribution company K-Electric for US$1.77 billion.

CMIG continues to pursue investment opportunities along the belt region that includes Europe. In mid-November its investment arm, China Minsheng Financial Holding Corp, was scouting for potential acquisitions in the financial services sector including European banks.

“We will continue to participate in the One Belt One Road initiative and to boost the economy of countries along the belt,” says Li.

Date

26 Jan 2017

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