Rising Tide: Small Businesses May Profit Most From China's Ambitious Belt And Road Projects
18 Sep 2017


Pamela Ambler, FORBES STAFF


New Manila Bay - City of Pearl design rendering


30-year-old Nicholas Ho is an award-winning architect. As the deputy managing director of hpa, he's running the show for his second-generation family business, a Hong Kong based property development consultancy with humble roots as a small design firm. Ho has won the contract to create a proposal for a brand new central business district for the city of Manila. Designated as The New Manila Bay- City of Pearl, the Belt and Road metropolis will be built on 407 hectares of reclaimed land.


Nicholas Ho, Deputy Managing Director of hpa shares his insight in working on a Belt and Road project.


The Philippines' public-private partnership


After bilateral talks began in Beijing between Philippine President Rodrigo Duterte and Chinese President Xi Jinping, the “smart city” design received blessings from both sides to begin reclamation last month. China is willing to bear the initial cost that comes with a large amount of risk without any returns. This expense is seen as pivotal in activating the Philippine economy to bring about upward social mobility for a country with one of the largest populations of foreign domestic workers and call centers.


Chinese President Xi Jinping (R) shakes hands with Philippines President Rodrigo Duterte (L) prior to their bilateral meeting during the Belt and Road Forum for International Cooperation at the Great Hall of the People in Beijing, China. (Photo by Etienne Oliveau/Pool/Getty Images)


The journey to City Of Pearl


The landfill alone will take up to three years to complete. The first-phase of the seven-phase development will likely take five years according to initial plans. As for completing the entire infrastructure, which will include integrating artificial intelligence into the district and incorporating an advanced driverless railway system, it will take about 30 years, estimates Ho.


No one is saying financing will run out at any stage of the development, but it does happen. But Ho is optimistic for several reasons. He gets compensated up front for a “normal master plan fee plus a monthly retainer for my consultancy services,” Ho says. The kick-off capital was provided by China Development Bank (CDB) and UAA Kinming, a consortium of Filipino-Chinese developers. CDB is one of three policy banks in the country responsible for raising cash for large infrastructure projects, and the second biggest issuer of bonds after the Ministry of Finance.


China feeling generous


When asked what China gets out of bankrolling Belt and Road projects across Southeast Asia, Africa, and the Middle East, Ho said, “absolutely nothing to be honest.” The relation China has with Belt and Road countries is almost reminiscent of Don Vito Corleone in The Godfather, “Someday, and that day may never come, I will call upon you to do a service for me.” But it’s not really nothing. What China does get in return is a window of opportunity to export their technology, talent and enterprises.


The initiative has long been seen as a way for Beijing to exert soft power politics. In contrast to the growing protectionist ideologies in the West, the East has been working to develop what’s being touted as the Maritime Silk Road of the 21st Century, a rising tide that lifts all boats. While skeptics remain over what to make of the China driven initiative to connect six economic corridors spanning Asia, Europe, and Africa, projects have been set in motion with the financial support of the AIIB, the Asian Infrastructure Investment Bank - China's answer to the World Bank.


(1) The New Eurasia Land Bridge Economic Corridor
(2) The China-Mongolia-Russia Economic Corridor
(3) China-Central Asia-West Asia Economic Corridor
(4) China-Indochina Peninsula Economic Corridor
(5) China-Pakistan Economic Corridor
(6) Bangladesh-China-India-Myanmar Economic Corridor


In the case of New Manila Bay, once the reclamation is completed, commercial lenders will step in to partner with developers to underwrite high rises, shopping malls, and even the Pac-Man stadium, named after Manny Pacquiao, a filipino champion boxer turned senator.


New Manila Bay - City of Pearl rendering


Matching projects with partners 


At the second annual Belt and Road Summit jointly organised by the Government of the Hong Kong Special Administrative Region and the Hong Kong Trade Development Council on 11 September at the Hong Kong Convention and Exhibition Centre, more than 150 investment projects were presented with the aim of finding related service providers and commercial support to supplement the funding shortfalls. “Policy banks have no interest in investing in commercial projects,” said Ho. Hordes of small and medium size businesses flocked to drink the kool-aid.


“Belt and Road is going to be the future, it is happening right now. Whoever doesn't jump on the band wagon is going to regret it.”