The connectivity brought about by the "One Belt, One Road" initiative, which seeks to link 65 countries across 3 continents, will spur further industrialisation and greater demand for goods and services across the newly connected economies. China's determination to see through the ambitious "One Belt, One Road" initiative is evidenced by China establishing three finance-related initiatives to help finance infrastructure projects (the AIIB, Silk Road Fund, New Development Bank), all within three years of announcing the "One Belt, One Road". When asked if the "One Belt, One Road" initiative was merely a geopolitical strategy, aimed at influencing the trading partners, panellists believed that the claim is largely overstated, if not untrue. It is more likely that the initiative is aimed at solving the issue of China's excess capacity, and to improve links with their trading partners.
In order to succeed, infrastructure projects require proper financial structuring. Banks, insurance companies, and institutional investors can be complementary partners in financing projects. Banks can provide medium term capital, provide structuring advice, and bring along complementary partners like export banks, multilaterals and development banks. On the other hand, insurance companies could be long term providers of capital. However, they may have a lower risk appetite and would more likely be able to provide financing on suitable projects with stable cash flows.
In order for projects to be bankable, it is important for projects to be properly conceived and managed, with the necessary professional advice. Many infrastructure projects are un-bankable because they are poorly conceived by the government, and poorly managed thereafter. Since some governments may not have the necessary professional expertise to execute, appropriate professional advice is needed to manage projects.
Corruption is also a significant risk factor for infrastructural investments. It is therefore necessary for corporate sponsors to insist on, implement proper governance and transparency structures Therefore, for corporate sponsors to have sufficient comfort to participate, market discipline needs to be instilled within the projects.