Interest in belt and road projects remains huge, but investors demand better risk management

There is tremendous interest in belt and road infrastructure projects, but investors are demanding stringent risk management measures to safeguard their investment against political and currency risks, according to a senior HSBC executive.

“HSBC is very keen on providing support to its clients in these projects, from helping them arrange financing to consulting and even providing risk management services,” James Cameron, co-head of infrastructure and real estate group for Asia-Pacific at HSBC, said at a Belt and Road summit on Thursday.

The Belt and Road Initiative is a Beijing-led project that aims to rebuild the ancient Silk Road in 65 countries by building infrastructure projects such as roads, ports, railway and power plants to promote trade flow.

Risk management plays an important role as many of these infrastructure projects are in emerging markets where the chances of legal, political and commercial disputes are high.

Cameron said a major risk factor would be political disputes between neighbouring countries, which could lead to a substantial delay or even cancellation of a project.

The newly elected government in Malaysia led by Prime Minister Mahathir Mohamad is reassessing some Chinese funded infrastructure projects in the country.

Some projects have been delayed because of difficulties in land acquisition and environmental concerns, Cameron added.