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Like the size of the country itself, China’s Belt and Road Initiative (BRI) points towards its ‘big’ mindset. A revival of the erstwhile Silk Road, the mammoth project was unveiled in 2013 and will connect countries from Asia, Europe, the Middle East and Africa with China.
BRI is seen as China’s attempt to put into action its master plan for global trade and soft power influence. It has been called everything from “the world’s largest economic co-operation platform” and “a leviathan transnational infrastructure scheme” to “the project of the century”. And given its scope, it may well live up to these expectations – BRI consists of roads and railways, as well as shipping ports, and other infrastructure projects. It will span countries across three continents, and even the Arctic region, but initial reports have named a few countries that will gain the most from the new commercial opportunities BRI opens up. Other than China, the nations that will see significant benefits are India, Indonesia, Iran, Korea, Poland, Russia, Saudi Arabia, Taiwan, Thailand, and Turkey.
Besides these resource-rich nations, however, the tiny island nation of Singapore could also play a significant role in BRI. In Knight Frank’s recently released New Frontiers report, it placed Singapore first in its Belt and Road Index (BARI), giving the country a score of 69.85 out of 100.
BARI assesses factors such as a nation’s market accessibility, economic potential, institutional effectiveness, demographic advantage, infrastructure development, and resilience to natural disasters. The report noted that Singapore had beaten Qatar, the United Arab Emirates, and New Zealand in the rankings. With more than 6,500 Chinese companies and US$3.87b worth of real estate investments by China in the city, it isn’t hard to see that Singapore is clearly an important trade partner for the Asian giant.
With infrastructure and institutional effectiveness getting scores of high 70s and 80s, Singapore only showed lowered scores in demographic advantage (44.90) and economic potential (48.92). However, it scored a perfect 100 in market accessibility, and a near-perfect 98.77 in resilience to natural disasters. This, combined with its fortuitous location at the crossroads between the East and West, makes Singapore an important ally to China in its project.
The two nations have had a long history of trade, and just as China has a strong foothold in Singapore, so does Singapore in China. Already, Singaporean companies have started following BRI-related policies and platforms to gain access to the Chinese market.
However, several large economies are still wary of Beijing’s push to reopen ancient trade routes. Recognising this, key Singapore decision makers have shared their views that Singapore can play a vital role in allaying those fears. Speaking at the World Economic Forum in Davos, Minister Chan Chun Sing called this China’s chance to “allay fears about its rapid economic rise by using its new-found clout in a benevolent manner.” He added that with 33% of all outbound investment under BRI coming through Singapore, and 85% of all the inbound investment to China going from Singapore, the island country plays an important role.
The success of BRI will mean the realisation of Singapore’s role as an enabler. While not a recipient of infrastructure itself, the nation will be the place where such deals are made. Everything from banking to legal documents will be signed on the Little Red Dot, as Singapore is seen as having a strong rule of law. Thus, any resultant disputes will also be arbitrated by Singapore. The country’s role as arbitrator has already been confirmed through the signing of a Memorandum of Understanding between the Singapore International Mediation Centre and the Mediation Center of the China Council for the Promotion of International Trade / China Chamber of International Commerce.
The role of intermediary could mean that financing and legal practices will benefit in the early stages of the project. However, countries that deal with Singapore for BRI may well decide to bring more business to the island later, providing further impetus to trade relations. And given the nature of BRI, this could mean new business from a huge number of countries, and across industries.
Singapore’s role as a trans-shipment hub could also be enhanced by BRI as trade increases as a result of better connectivity. While this could also mean the rise of other nations’ ports, Singapore’s access to cutting-edge technologies could give it an advantage over them if planned well.
From industrial parks in Egypt to the East Coast Rail Link (ECRL) in Malaysia, the benefits of BRI to countries are vast, and they just keep growing each time China adds new countries to the roster. It seems determined to see the project through, and Singapore stands to gain a lot from the opening up of this particular road.