Silk Road Infrastructure Plan Receives Global Attention

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A massive global infrastructure project is being planned to connect countries bordering The Silk Road, via sea routes, roadways and railways. Representatives from Asia, the Middle East, Europe and Africa participated in the One Belt, One Road Summit in Beijing on May 15, 2017. The United States also sent a delegation to the meeting, led by White House adviser Matt Pottinger.

The Silk Road infrastructure project goals are to increase interconnectivity through the development of transportation, energy and communications networks. China and the new AIIB are already committing large sums of money to support infrastructure development in countries which will be part of the One Belt One Road initiative.

Deutsch Bank announced on May 31st it has committed $3.0 billion to the project in a partnership with China Development Bank. “CDB and Deutsche Bank agreed to work together over the next five years with an aim of supporting projects worth $3.0 billion,” the group said in a statement.

Vietnam is expected to be a beneficiary of the project for infrastructure improvements throughout the country.

According the Asian Development Bank and HSBC1, Vietnam will require between US $30-$35 billion a year for the planned development, which includes energy and transportation projects for both domestic benefit and to support greater international trade. Current projects requiring significant loans and investment include the North-South expressway, Long Thanh International Airport, subway systems, roads and energy projects many of which lend themselves to PPP, and which the Government will have to look to the private sector because of the cap on government borrowing.

ADB’s statistics show that over the period 2010-2014 Vietnam spent 5.7% of GDP on infrastructure development with 39% of funds coming from foreign sources, such as ODA, and 61% from local sources, much of this being from the State budget. However with ODA reducing because of Vietnam’s status as a middle income country, and the cap on foreign borrowing much of the money will now have to come from the private sector and new financing structures.

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