BRI investment opportunities

Upgrading existing infrastructure or building from the ground up is central to the success of the Belt and Road Initiative (BRI). This includes the region’s major transportation systems such as ports, roads, railways and airports as well as power plants and telecommunications networks.

The scale of these projects means opportunity for local businesses and local subsidiaries of international sub-contractors. To compete, they’ll need a full understanding of the project’s requirements as well as tender and selection criteria including financing and staffing needs. International firms will also be faced with the practicalities of setting up business in new markets.

BRI projects will lead to imports of heavy machinery and components as well as raw materials, all of which will also need financing. And once underway, projects will need ongoing operational support.

Once these new infrastructure projects are complete, they will result in improved productivity, faster and more efficient trade flows connecting new and existing markets. This includes economies miles away from the Belt and Road trade routes. For example, sheep farmers in New Zealand will be able to use the new infrastructure to get their meat to Europe faster. In the past lamb was sent via slow steaming (slow transoceanic cargo shipping) to European markets. This can take as much as 70 days, which means the meat has a relatively short shelf life of just a couple of weeks once it arrives. However, the ability to ship lamb to China by sea and then to Europe by rail across Eurasia will cut about two weeks off the journey – extending the shelf life while also potentially helping farmers get better pricing from retailers.1

Why HSBC

HSBC has a comprehensive global footprint, with presence in around 44 markets linked to the Belt and Road. This means we understand the project risks from market to market and are well placed to provide Letters of Credit. We can also easily support our clients going into markets that are new to them and where we have a presence, and we are likely to have banking relationships with the prime contractor’s existing supply chain.

For example…

HSBC acted as Sole Arranger, Agent and Security Agent for financing improvements to the surface of the existing runway and taxiway system at Bandaranaike International Airport (BIA)

in Katunayake, Sri Lanka. The first international airport in Sri Lanka operated by Airport and Aviation Services (Sri Lanka) Ltd (AASL), BIA handles over 98% of the international traffic in and out of the island. AASL recognised the need to double this capacity over the next five years to accommodate for anticipated growth in tourism. HSBC helped arrange a 15-year Sinosure facility to finance the infrastructure project, marking AASL’s first Export Credit Agency supported financing. With a more than 120-year presence in the country, the deal also highlighted HSBC’s understanding of the Sri Lankan market.