The Belt and Road Initiative’s (BRI) development throughout Southeast Asia is expected to contribute significantly to the economic and infrastructural development of the region. However, a perceived lack of transparency in China’s initiative compounds existing fears around rising debt and sovereignty over projects. Several Southeast Asian and Pacific think tanks have collaborated on a BRI monitor, aiming at evaluating levels of transparency and holding projects accountable. If successful, this could minimise issues of governance and implementation associated with the BRI to the benefit of recipient countries. Whether this success extends to other social and political issues associated with the initiative is unclear.
China’s BRI is one of the most highly debated development initiatives in recent history, stirring both criticism and admiration from international stakeholders, policy makers, and other various onlookers. Beijing’s multibillion-dollar foreign policy ambitions comprise overland and Maritime infrastructure projects, stretching from East Asia to Europe, that increase economic connectivity, trade, and China’s foreign direct investment into countries in these regions.
Whilst the BRI is often examined as a geopolitical struggle for influence within US-China relations, its implications go far beyond these two actors. Concerns of neo-mercantilism, geopolitical calculation, debt trap diplomacy, and spheres of influence, are shared by many other Indo-Pacific oriented powers, such as India, Japan, and Australia. Regions like Southeast Asia stand to benefit economically from BRI and are therefore less sympathetic to the geopolitical fears shared by the above-mentioned Indo-Pacific powers. However, there are substantive concerns in Southeast Asia around the domestic impact of Chinese investments and infrastructure projects, including debt, social instability, corruption, and environmental degradation.
The BRI has already suffered reputational damage in recipient countries due to a perceived lack of transparency and heavy debt. Central Asia in particular has seen emerging anti-China sentiment: Public resentment in countries like Kazakhstan and Kyrgyzstan has grown into anti-China protests and violence, largely caused by social unrest between ethnic Kazakhs and the influx of Chinese workers. Southeast Asia has also had their share of pushback due to a lack of transparency from Chinese investments. In 2018, then Malaysian Prime Minister Mahathir Mohamad announced the cancellation of three BRI projects, following corruption and fiscal mismanagement allegations.
BRI in Southeast Asia
Southeast Asian nations, whilst still wary of the initiative, are somewhat buoyed by the vast regional economic benefits participation could produce. According to a report by the Asian Development Bank, Southeast Asia needs investment equal to 5% of their GDP to cover infrastructure growth between 2016 and 2030, a funding gap that Chinese investments could significantly reduce. Southeast Asian nations see the initiative, and its synergies with their own Master Plan on ASEAN Connectivity (MPAC), as facilitative of infrastructural development and strong economic connectivity. As such, Southeast Asian governments have generally adopted a cooperative and constructive attitude to the BRI. Malaysia, Brunei, Cambodia, Indonesia, Laos, Myanmar, Philippines, Thailand, Vietnam, Timor Leste, and Singapore all joined the BRI by signing a Memorandum of Understanding (MoU) with China. These MoUs are government-level bilateral agreements, which promise cooperation within the framework of BRI, reaching an understanding on policy coordination and cooperation priorities.
However, this should not be misconstrued as Southeast Asia’s ‘total dependence’ on China. The region acts as a major economic corridor and vital maritime intersection of sea lanes, making it a strategic centre for China’s global rise and indispensable to the initiative’s success. China sees Southeast Asia as part of a land bridge connecting China to Southeast Asia, South Asia, the Indian Ocean, and the China-Indochina Peninsula Corridor. China has been financing and developing pipelines, highways, high-speed rails, industrial parks, and digital connectivity centres across the region. New maritime infrastructure initiatives, such as the building of ports in Indonesia, Malaysia, Singapore, and the Philippines, is another avenue through which Beijing is expanding. Therefore, Southeast Asian nations hold some leverage over BRI projects, which could provide additional bargaining power to have China tailor projects to their demands and a safer level of agency in governance and implementation.
However, there are still notable economic and political concerns tied to these projects, including increasing national debt, loss of sovereign rights dealing with Chinese companies, and unfair financial terms. Sovereign debt risks in particular appear to be a more severe consequence of economically weaker countries over-borrowing. A 2017 example, threatening national sovereignty in Sri Lanka, resulted in the indebted government handing over control of the Hambantota ports to a state-owned Chinese enterprise to reduce debt burdens. It has since been reported that $385bn of BRI spending has been hidden from the World Bank and IMF as a result of the structuring of loans. The report claims that China systematically underreports its debt by lending to private companies in middle income countries rather than state enterprises, making it more difficult to assess potential risks. While the considerable consequences of nations over-borrowing cannot be placed squarely on China, a perceived lack of transparency throughout projects and investments is likely contributing to the risks faced by recipient countries.
The BRI Monitor
The BRI Monitor is a collaborative project between Southeast Asian and Pacific think tanks, including the Institute of Democracy and Economic Affairs IDEAS (Malaysia), the Institute of National Affairs (Papua New Guinea), the Future Forum (Cambodia), the Stratbase Del Rosario Institute (Philippines), and the Sandhi Governance Institute (Myanmar), with support from the Centre for International Private Enterprise. It marks a concerted effort by sub-state actors to make information around BRI projects publicly accessible and transparent in order to aid and inform policy.
The project assesses publicly available data to identify implementation and governance gaps in major infrastructure projects funded through BRI in the region. Studies carried out on the regulatory environments of BRI projects aim to identify domestic and Chinese actors involved, as well as evaluate the level of transparency. The website launched alongside the project acts as a knowledge repository for all findings, informing advocacy for better governance of these major infrastructure projects.
For example, on two separate Malaysian projects, the Gemas-Johor Bahru Electrified Double-Tracking Project and the East Coast Rail Link, BRI monitor case studies showed that governance gaps centred around issues of transparency in disclosure of feasibility studies and the non-competitive awarding of contracts to Chinese construction companies. Additionally, their transparency ratings were particularly low with regard to estimated project costs, scopes, timelines, environmental impacts, and land and settlement impacts. These issues all pose risks of diminishing public sentiment towards China’s implementation of these projects.
IDEAS CEO, Tricia Yeoh, advocates the monitor’s necessity, remarking, “we have seen a number of these large infrastructure projects tied to the BRI court controversy due to issues of lack of transparency and public engagement, risks of corruption, and constantly shifting details.” The BRI monitor could serve as a necessary public resource for increasing information accessibility around regional BRI projects, highlighting areas for improved governance and implementation, and ensuring optimum economic returns.
This development in collaborative advocacy demonstrates an attempt to regulate and ‘better’ the BRI project’s mechanisms and functions. Having faced the public speedbumps of cancelled projects in Malaysia around issues of perceived fiscal mismanagement, greater transparency from the BRI monitor could minimise disputes via a higher coordination of policy and thus positively impact Sino-ASEAN relations with regard to future investment.
A successful level of BRI implementation in Southeast Asia would likely spell significant mutual benefits. The World Bank sees considerable promise for BRI to create positive impacts on regional trade, flexible cross-border investment, poverty alleviation, and addressing infrastructure deficits.
The BRI monitor as a resource for governments and institutions, could be mutually beneficial in contributing to policy reform. Access to relevant information provides concerned stakeholders with increased ability to advocate or implement policies to correct governance gaps, providing host governments with a potentially increased level of sovereignty over these projects. Successful utilization would facilitate holding China to a certain standard of transparency and subsequently allow for improved policy coordination.
It is not yet clear however, how effective the monitor will be in assuaging the public’s fears around the BRI in Southeast Asia. While increased transparency across projects will benefit governance and implementation, it may take longer to change negative public perceptions as a result of previous opacity and ambiguity.