Seven opportunities: Thailand and the One Belt, One Road initiative

A new Silk Road – the revival of an ancient trade route

A multi-trillion dollar initiative aims to reshape intercontinental trade through a network of maritime and landside links, based on ancient trading routes. The OBOR, also known as the Belt and Road Initiative (BRI) or simply the Belt and Road (B&R), consists of the Silk Road Economic Belt (SREB) and the Maritime Silk Road (MSR).

Launched already in 2013, OBOR connects China with Asia, Europe, and Africa. Nearly 70 countries and international organizations have already signed up for the mega capital and infrastructure project. As a side-effect, China will deeply influence the region with its culture and power. The geopolitical effects from redrawing the global trade map cannot yet be predicted, but a tectonic shift in the regional economic and political leadership is undeniable.

OBOR gives China privileged access to developing countries in the region and aims to reduce its industrial overcapacity. As the driving force and main investor, it contributes US$ 125 billion in infrastructure projects along the new silk road corridor as loans boost trade and employment in these countries. Main infrastructure financing institutions include the Asian Infrastructure Investment Bank (AIIB), the Silk Road Fund (SRF), and the New Development Bank (NDB).  

The OBOR arena – everyone is invited

The areas and countries involved contain almost two-thirds of the world’s population and account for one-third of the world’s wealth (GDP):

  • East Asia: China, Mongolia
  • Southeast Asia: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Timor-Leste, Vietnam
  • Central Asia: Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan
  • The Middle East and North Africa: Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Palestine, Syria, United Arab Emirates, Yemen
  • South Asia: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka
  • Europe: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Georgia, Hungary, Latvia, Lithuania, Macedonia, Moldova, Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey, Ukraine

This is not the time for Sino-sceptical stance: India and Bhutan are the only countries in the region not being involved in the OBOR flagship project.

PUGNATORIUS Ltd. is a Bangkok-headquartered specialist provider of bespoke transactional legal and tax advice in the corporate and property legal and taxation industry sectors. 

The new gigantic infrastructure network in Eurasia

Apart from the Maritime Silk Road, running from the Chinese Coast through Singapore to the Mediterranean, it is geographically structured along six corridors, all running across and controlled by China:

  1. New Eurasian Land Bridge, running from Western China to Western Russia
  2. China–Mongolia–Russia Corridor, running from Northern China to Eastern Russia
  3. China–Central Asia–West Asia Corridor, running from Western China to Turkey
  4. China–Indochina Peninsula Corridor, running from Southern China to Singapore
  5. China-Myanmar-Bangladesh Corridor, running from Southern China to Myanmar.
  6. China–Pakistan Corridor, running from South-Western China to Pakistan

Seven particular OBOR implications for Thailand 

The Chinese belt and road initiative is still in the initial years of implementation. However, it will swiftly have a huge impact on Thailand’s economy. A plethora of new business opportunities is available along this huge initiative. This includes (i) road, railway, and marine technology, (ii) the energy sector (energy supply, distribution, storage), (iii) information technology, and (iv) transport and logistics.

Although the dominance of Chinese companies in major projects cannot be avoided, PUGNATORIUS Ltd. sees, in particular, seven implications for Thailand which should be seen as business opportunities for foreign companies to participate in OBOR in Thailand:

1. OBOR treaty: Thailand is part of the nearly 70 countries which participate in the greatest infrastructure project of our time. The economic implications will dwarf the  Trans-Pacific Partnership (TPP), the Asia-Pacific Trade Agreement (APTA), and similar multinational trade treaties.

2. EEC: The big national infrastructure project Eastern Economic Corridor will be heavily influenced by the OBOR initiative. The privileged legal environment in the EEC arena can be utilized for OBOR projects and vice versa. The symbiotic affects will be more visible in the coming months.

3. Chinese loans: Investments in Thailand will participate from huge funds granted as a loan from Chinese state banks and other institutions. 

4.  OBOR laws: The massive OBOR project with nearly 70 jurisdictions being involved could realistically not be managed with 70 different national legislations. It can be expected that a uniform OBOR legal framework will be developed and be applied also in Thailand. Such OBOR law will be most likely open to foreign investments and compatible to current Chinese laws.

5. ASEAN/AEC: Current treaties within the Association of Southeast Asian Nations, as for example the Asean Economic Community, will experience a reshuffle, revitalization or loose their importance. 

6. Investment hub: Thailand’s neighboring countries are more directly linked to the route of the Silk Road Economic Belt (SREB) and the Maritime Silk Road (MSR). This opens great opportunities to participate on these developments from Thailand as Southeast Asia’s investment hub.

7. Kra Isthmus Canal: The Thai canal project connects the Gulf of Thailand with the Andaman Sea across southern Thailand and provides an alternative to transit through the Straits of Malacca. It shortens the Maritime Silk Road by 1,200 km and will marginalize Singapore’s influence in the region.

Do you like to know more? The law firm keeps foreign companies up-to-date on investment opportunities in Thailand’s energy and infrastructure sectors in its newsletter “Seven Opportunities“. Further information is available here.


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