The Belt and Road Initiative in ASEAN - Overview

Abstract

Mainland Chinese foreign direct investment (FDI) and construction projects in countries in the Association of Southeast Asia Nations (ASEAN) have increased by 85% and 33%, respectively, since the start of the Belt and Road Initiative (BRI), with growth concentrated in Indonesia, Malaysia, the Philippines, and Vietnam.Although most countries have effectively controlled the spread of COVID-19, the pandemic has led to recessions in most countries, leading to delays but not cancellation of the Belt and Road Initiative(BRI) projects. Countries in Southeast Asia are part of a large and increasing number of multilateral and bilateral trade and investment agreements that enhance their attractiveness as global value chains are adjusted in response to the US-China trade war and the pandemic.The majority of mainland Chinese greenfield FDI in ASEAN is in the resource sector. In some countries, Chinese companies are increasing both greenfield and brownfield investments in renewable energy projects.In most countries in Southeast Asia, state-owned enterprises (SOEs) play a leading role in large mainland Chinese FDI projects. At the same time, the role of private enterprises is also significant and increasing faster than SOEs in most of the countries studied.Some mainland Chinese projects have been criticised for not complying with local regulations, treating local workers unfairly, or polluting the environment. Mainland Chinese firms can avoid such unwanted outcomes by doing due diligence in evaluating the economic, social and environmental impacts of proposed projects ahead of time, and by improving their engagement with affected groups.