Southeast Asia and the Belt and Road Initiative
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From Carnegie, China, this is China in the World. Engaging leading scholars and former policymakers on China's foreign policy, evolving global role, and relations with Southeast Asia in particular. Brought to you by the East Asia-based Center of the Carnegie Endowment for International Peace.

Hi, welcome to this special five-episode series of the China and the World podcast from Carnegie China. We're looking at Southeast Asian perspectives on the People's Republic of China with Southeast Asian voices from Southeast Asia. My name is Ian Chong. I'm a non-resident scholar with Carnegie China and an associate professor of political science at the National University of Singapore.

Hey everybody, welcome to the latest installment of the China in the World podcast. We've got Yao Chao Bing from the University of Malaya and also a fellow non-resident scholar with Carnegie China. And we also have Mohamed Habib from CSIS Indonesia. And we are here today to talk about the Belt and Road Initiative, something that I

I think has become quite consequential for us in Southeast Asia, especially as we relate to the PRC. So why don't you say hi to our listeners and introduce yourself very briefly. Thank you so much. Glad to be here. Wonderful. Let's start with the big picture. From your perspectives, what role do you think the BRI has played in Southeast Asia broadly? Kelvin, why don't you start us off? Right. Thanks, Ian. Well, I think overall speaking,

China has made meaningful inroads and gains in securing a number of significant BRI projects in several, I think actually in the majority of ASEAN countries, I will say. Certainly we see China-Laos railway is going on in Indonesia as well. There are

canal in Cambodia is being built. In Malaysia, the East Coast Reel Link is being built and will be completed by the end of 2026.

And Thailand and Vietnam also are now aligning more with China in some of their infrastructure projects, whether they call it BRI or not in a way, but it certainly fit the purpose of China's BRIs. Of course, the major setback for China will be the Philippines. The current government has decided not to be part of it.

after having seen the deterioration of the relationship with China over the South China Sea issue. Myanmar, of course, with the coup and the uncertainties, I think the BRI projects that have been started there are now facing some uncertainties as well. But otherwise, I think China has certainly...

It grabs quite a number of significant projects and makes certain impacts. Great! Habib, how about you? What are your thoughts? Sure. I think China's BRI has been a positive force for regional development, especially in Indonesia somehow. We have alternatives now, not only depending on, for example, one middle power. Usually, we only rely on Japan.

in terms of infrastructure projects. But now we also have China to provide an alternative in terms of infrastructure. At the same time, I think when we look at how China engaged with the region or in the region somehow, we understand that China walks the talk or put money where the mouth is. When China says that Southeast Asia is important, then through BRI, I think we see Southeast Asia has become the largest beneficiary

of this initiative. For Indonesia, it has been a positive force in terms of our industries, like midstream industries, like critical mineral processing, regardless of the controversies. I think I have to acknowledge that there is a positive contribution from China side, especially through the BRI. At the same time, when we talk about, for example, the Jakarta-Bandu high-speed train,

At least Indonesians can enjoy the cutting-edge train technology, the high-speed train technology. So yeah, I think I'm going to stop right there. Okay. So, I mean, the other thing that comes up, right, is how the BRI might affect

regional, intra-regional relations in Southeast Asia. Chow Bing had mentioned earlier the canal project in Cambodia that of course has created some controversy with its neighbor Vietnam. So I guess apart from the

Southeast Asia, PRC bilateral dynamic. How do you think the BRI has affected relations between Southeast Asian states? Different projects certainly entail different dynamics. Most of the projects that are able to ensure stronger relations

connectivity between countries that will foster greater flows of goods, services, people, and so on and so forth, generally will be welcome. But those projects that are seen as being much more benefiting one side more than the other or the neighboring countries, of course, that will create some frictions. I think it really depends on whether China will reshape, the China's BII projects will reshape the interactions between countries

as a member state, you know, it depends on many factors, not only because of the China's beer project. I suppose, yes, to some extent, like because of China's financing this candle project to Cambodia, then it will have impacts of

for Vietnam, but Vietnam also has a strong relations in terms of party to party relations with China. So they can also communicate the concern to China directly. So there is a concern, but definitely there's also a mechanism to deliver the concern. And it depends on, for example, on the conditionalities of the DRI projects and also whether there is an alternative to that DRI project. I think that will shape the game itself.

Great, Chow Beng? Yeah, well, as you mentioned, some of these BRI projects definitely will affect the relations among neighbouring countries, especially they have cross-border implications.

If, for example, Malaysia and Singapore are agreeable about a high-speed rail and if China is in the picture, then of course it will be part of the BII project from China's point of view. The China-Laos project has also been

implications about Lao-Thailand border connectivity as well and Thailand in fact is now also aligning towards this real real-world project so all these cross-border projects in a way will have implications in terms of enhancing connectivities among neighboring countries but of course some of the projects are probably are being seen as much more

beneficial advantages to one particular country, sometimes maybe not at the best interest of some of the neighbouring countries. Of course, the Cambodian canal being generally seen as the case at the moment. But I think

A lot of these projects, we also have to understand that they are here to stay in the years and decades ahead. We wouldn't know what are exactly their implications and impacts in the years to come. And it's not sure whether we can say definitely that it is always positive or it's always negative.

The long-term bid, I think, is quite interesting, right? Because right now, or until quite recently, maybe as recently as last year, there was a lot of expectation that the PRC would be able to pour money into BRI projects.

However, we also realized that the PRC economy itself is maturing. Its growth is slowing. So the PRC has moved the emphasis of its BRI project from these big projects to what they call small and beautiful. So

What sort of effects do you think that this shift might have on BRI projects going on in Southeast Asia in future? Do you think that would change the tenor of anything? Any thoughts?

about small and beautiful. I think because of this slowdown in China, China also becomes more careful in terms of financing big infrastructure development projects. They also try to change the narrative, to align more with the global vision or aspirations, like sustainable development goals.

to some extent, they try to look more meaningful or engagement with regards to the global narrative as a pretext to shift from big infrastructure projects to a smaller one because they want to contribute more in terms of this low-hanging fruit cooperation, something like that. And I think it's still appreciated because

I think the development financing needs in the region is still massive regardless. So if China cannot provide any more in terms of the financing for big infrastructure projects, at least China can also help the Southeast Asian countries, for example, to transition to a greener economy or somehow more sustainable projects.

somehow environment among others. But what concerns me is actually whether China's slowing economy will impact its behavior in regional hotspots, like in the South China Sea or Taiwan Strait. I think we need to see what kind of implications from the growing economy

I don't know. I mean, if we look at Indonesia's history back then, when the economies faltered to some extent, Indonesian leader tended to venture outside of the country. And then, you know, the confrontation with Malaysia back then was because Indonesia's economy faltered.

And then we don't know yet about what kind of implications China's slowing economy and then also its behavior in this regional hotspot. I think there are two sides to it in a sense that it's true that today there are a lot more discussions about small and beautiful projects rather than large-scale infrastructure projects.

In a way, it is understandable how many infrastructure, big-ticket infrastructure projects the smaller countries can shoulder. These all require intensive financing, resources, mobilization of capital and labor and technology and everything. So it is a big project that these countries basically they can do maybe in the stretch of five years or 10 years for one or two big projects. So if all these big projects are still

For example, in the case of Malaysia, it is still actually being completed. It's not yet actually operational. So it is quite natural not to expect another big ticket project anytime soon. So right now, the focus naturally will therefore shift to small projects.

Yeah. So I think that in a way, uh, it makes sense. It's not just China and it's also sometimes the partnering BRI countries. They are basically, they don't have the appetite for another big ticket projects as well. But on the other hand, I don't discount that there will also still be some big ticket projects, uh, that, uh, come, uh, out of the BRI, uh,

even though with its current phase of emphasizing small and beautiful, it depends on the needs. It depends on the financing arrangement. If it works out, and if some countries feel that they need it, then I think it will still be possible to have one.

So on that note, I think one of the points that might be worth going over again is the fact that despite the BRI, all the attention on the BRI, if we look at official statistics from ASEAN, such as ASEAN Stat and the various national statistics, the foreign direct investment from the BRI, from the PRC, actually lags behind that of the European Union, that of the EU,

the United States and also Japan. It's a little bit above that of South Korea. So that picture sort of suggests that the BRI in terms of its pure value isn't quite on par with several other sources. But there's still so much attention on the BRI. Why do you both think that's the case? Well, I think the nature of the BRI project sometimes is actually not clear.

investment. It's not FDI. Quite a number of them are contract projects. So they are not in a way pumping in money. They are of course going to use the resources, the supplies, the labours, the technologies and everything but sometimes it's not everything that will count as

as the foreign direct investment. So in that sense, it won't show in the numbers, but it will show in other statistics or other data. That's one. The other thing, of course, is that investments from this sector

The United States, the European Union, Japan have always been strong. They have always come to invest in this region for many years and many decades. They have very mature networks and mature business connections that will continue to reinforce

the investment as well. So while China is picking up and if we look at China's numbers alone, of course it is lagging. But if we put actually together China and Hong Kong, I think it is counted differently put together. Actually, China's numbers are also not that small. It's picking up very close, very fast together with these other major traditional investors in the region as well.

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Yeah, the Hong Kong one is interesting because a lot of the capital coming from Hong Kong isn't just from China. Hong Kong is a financial hub much like Singapore. It sucks up capital from all over the world and then reinvests it. So how that's counted, I think that makes things a little bit more complicated. But Phil, I certainly take your point. Habib? Yeah, I think it may not be the biggest investor, but that's the easiest one to get.

I think for so many Asian countries, we understand Chinese investment to some extent have three characteristics, I would say, at least from the Indonesian perspective. One, they do not impose any upfront conditionalities when they want to invest.

For example, I think like compared to the Western investment, there are like these ESG requirements, right? China doesn't impose upon conditionalities. They just give the money, invest in it. Although like it's not as the biggest investor and...

even like that statement is actually debatable. I think like Chow Ping already mentioned about the number is divided and also like it's smaller if we divide China and Hong Kong. But if we combine the two together and especially like, you know, in the Indonesian case, we still have like Singapore as the largest investor, but we don't know like overall

where the money comes from. Is it from China or is it from the other countries or is it from Singapore? So basically, we still do not have a rigid or concrete data about the investor itself. The second point, our second characteristic of the Chinese investment is

they are willing to do joint venture. And not all countries, especially the advanced economies, want to work with this model. But Indonesia definitely sometimes requires this joint venture with Indonesian companies. But China, Chinese companies, either through BRI or not BRI related, I think that they are willing to join venture with Indonesian companies regardless of their shares. And then the third characteristic is

Somehow, they succeed in claiming themselves for transferring the technology. With regards to, for example, the critical mineral processing, they indeed build a vocational school and also provide scholarships

for Indonesian students who wants to study about engineering or metals in Singhua University, for example, recently Indonesia, I think was promised for that scholarship. And then other than that, like the Jakarta Banu high-speed train project, also somehow Indonesia enjoys the benefit of the training and also like the ground tunnel construction technology project

Although we do not, or we still do not get this, you know, manufacturing ability. To manufacture high-speed train, we still do not get it. But the ground construction, as well as the training and the fellowship with the KCIC or the Jakarta Bandung High-Speed Train, I think that we still get it. So, those three characteristics, like the not upfront conditionalities,

also willing to join venture and the third one is the transfer of technology limited transfer of technology Great so I mean the Singapore one I think it's quite reflective of ASEAN in general so I think most of Singapore's investment coming in is EU US Japan which then we export so just in case folks are interested in that

I guess the lack of upfront conditionality is something that I suppose is worth some exploration because we also know that the BRI investments themselves

have sometimes been mired in local controversy, right? There are issues of labor, labor treatment, how much of the skill transfers are actually happening. And also in Indonesia's case, quite recently, the environmental effects, right? So these, of course, once the

contracts get locked in sometimes the conditioning comes back on the back end what are your thoughts on that so i went to the morowali industrial park uh back then i think earlier this year and i witnessed by myself about this environmental impact to the people living or residing like me and near the morowali industrial park we also went to one lake uh

It's actually quite close to the center of the industrial park. It's around like 10 kilometers. The water is so much polluted and you can tell from the color of the water, it's close to red. That means somehow like being polluted

contaminated by chemical elements to some extent. And then after coming back from that, you know, field visit, I suffered, you know, respiratory disease for a week because like the air is so much polluted, like in the Morowali industrial park. And, you know, I sympathize towards the workers and also like the people residing in the, you know, in the Morowali industrial park. They are not well equipped to,

with regards to the environmental consequences. The local government I spoke with also still doesn't have somehow a long-term plan or long-term vision after nickel and what goes beyond nickel. Natural resources by any means will somehow exhaust rate given the technological development by any means. But the Indonesian people, especially in Muali,

We still do not have any long-term plan about what will be done after that. But with regards to that, actually Indonesia is considering, I would not say Indonesia directly accept that offer, but recently the United States announced

encourages Indonesia to participate in the U.S. Mineral Security Partnership that adopts higher ESG standards for this critical mineral sector. And I think Indonesia is now looking at the cost and benefit from joining it.

But Indonesia tries to comfort China that by joining the Mineral Security Partnership Initiative, it doesn't mean that Indonesia joins the U.S. endeavor to contain China. That should not be interpreted like that. But definitely by joining that, we can also protect China.

Chinese workers working in the Morawali industrial park because what happened in late December 2023 and also like one year earlier, there was an incident which a turnage of exploitation, sorry, explosion of the turnage. So by any means, if Indonesia adopts higher ESG standards, then also protecting like Chinese workers working in the company. But definitely about in the influx of Chinese workers,

is being a concern for many Indonesians because sometimes they are bringing low-skilled labourers and competing with the Indonesian labourers who also work on the same scale. Right. Kaving, what are your thoughts?

Yeah, I think the issues here sometimes is actually more from the hosting country. Well, first of all, BRI is not a standard approach. It is defined in a way, in a very flexible way. It is manifested in different projects and it is up to how the host governments want to impose standards of the projects and then let the Chinese government

counterparts or the partners to comply with these standards and it is up to the local government to enforce to monitor and to ensure the compliance from the Chinese BRI

counterparts. So there are definitely cases where environmental issues are not being prioritized, are not being respected. So Chinese companies, of course, have to bear responsibility. But sometimes it's also in the case of the hosting government, wanting the Chinese government not to respect those because they want expediency, they want no efficiency, they want just to generate incomes and things like that.

So I think therefore we shouldn't just say that it is because the Chinese do things in a very lax way. It is also the hosting governments that have to ensure stronger responsibilities over the standards of this project.

Well, having said that, I think it's also in China's own interest as their BRI is evolving to be much more aligned with international standards, even if they cannot align with the higher standards at the moment, but perhaps to be much more careful

to be much more respectful of certain minimum requirements, even if the hosting government sometimes they don't ask for those. I think it is for their own interest because I think a number of BII projects that run into these issues have given them enough lessons that it is...

not necessarily good to or to partner with corrupt local governments or local governments that don't care about environment and labour standards. So I think these are the lessons that they are learning. And I believe that the future BII projects will see the reduction of this kind of issues that are not complying with standards.

I think, sorry, just to add a point, I think I agree with Jopeng. It's unfair to put all the blame on China because domestic institution eventually matters. Especially, you know, Indonesia has a lot of regulations with regards to the environmental and labor standards. But sometimes, you know, local government...

we know for sure the rent-seeking behavior is always there. As such, I think I agree with what China should pay more attention to. It gets to monitor its overseas companies working on the resource-intensive sectors, including the private sectors. Because China's state-owned companies, probably the Chinese government has direct control, but the Chinese private sectors don't.

they do not have direct control with the Chinese government. But eventually, given this kind of situation in the hosting country, then I think it is in the best interest for China to also look at how to monitor the consequences from the Chinese private sector's activities in overseas.

So that brings up a really fascinating point that's in tension with something that we had said earlier. One of the attractions we've talked about is that the PRC doesn't come with preconditions in terms of its investment, right? But if what we're saying now is that, well, maybe some preconditions are a good thing. And I think if you look at the

whether it's assistance or investment from other sources, there's a reason why governance, environmental, labor standards are there. It's because of the past experience, well, past unhappy experiences with abuses, with damage in the environment. So,

in some respects, right, not having any preconditions may be a little bit of a risk. So that's something that I pose to you. I'd like to get your reactions on it. Chow Ming, why don't you start us off? I would say that is actually a good point as well, that when China becomes to export its capital, when China becomes a new player in a way, they believe that, well, they can

kind of, uh, force your own path. Uh, they don't have to follow everything, uh, that has already been standardized, uh, in many ways. Um, but now I think they found that, well, perhaps those standards, uh, they exist for a reason. But having said that, you should also realize that, uh, there are also sometimes feelings from the developing countries are real, not just feeling the real issues that this kind of standards can also become quite rigid, uh,

it would certainly rule out the opportunities for many countries to receive loans, investment projects and so on and so forth. So a little bit more flexibility is not necessarily a bad thing. And China, at least in the initial years of the BRI, they did provide that flexibility for many countries. But

But I think there needs to be, therefore, a sort of a balance between adhering to certain standards and also allowing for certain flexibility in order to move forward what many developing countries require in terms of development, financing and addressing their infrastructure needs. Great. Habib? Yeah, I think the conditions are important.

But I think I also agree with Chopin. The flexibility is still needed given the situation in developing countries, including Indonesia. Somehow, like, the conditions are expensive. Expensive not only, like, for the politicians because, like, politicians basically, you know, hate anything new that probably, like, will shake their position, something like that. But politicians tend to dislike the idea of free form.

politicians only have like five years to rule and also to run the country to some extent. As such, I think the balance between the cost from preconditions and also the benefit following the preconditions will need to be in place equally.

Sometimes the problem about non-China's investment, the preconditions come first, but the benefit that will be enjoyed by politicians come so long, probably go beyond their terms. And they cannot see that as an incentive to follow their preconditions.

As such, I think the flexibility really matters here. That's a great point. We talked a lot about politicians and elites, but how do the public see the BRI? How do they see the PRC because of the BRI? Chow Bing, why don't you lead us off? Well, I think sometimes it actually depends whether the BRI projects have been completed and up and running. I think the perception is

I don't know, but I think the perception in Laos, Laotian people certainly now will be much more affected, perhaps positively for what I have read, maybe some negativities. But once the Lao-China railway operations is beginning and people start to see the flow of the people and good and generate the economic activity and so on and so forth,

In the case of Malaysia, the East Coast rail link, the construction, as I mentioned just now, is still ongoing. It has already created the economic impacts in terms of local employment, technology transfer, and so on and so forth. But for people to realise

finally whether it is a useful project or it's a white elephant project, right? It's only after it has started being operational, then I think the perception will shift in either way. But I think PRI is not the only factor in terms of Southeast Asian public perception towards China.

other issues certainly matter more. I think no matter how much infrastructure connectivity between, let's say, China and Vietnam, because of the South China Sea issue, there will always be a certain guarded attitude towards China among Vietnamese people and public.

Same with the Filipinos as well. So I think it's not the only factor. It can affect definitely, but not the only factor for the perception towards China. Again, I think it really depends on the VIA project. When we talk about, for example, the Jakarta-Bandung high-speed train, for some people, they celebrate the project because it offers an alternative for them to commute between Jakarta and Subangina.

But for others, like for example, those who reside close to the Morowali Industrial Park, they feel like the influx of Chinese workers are taking over their jobs and also creating this somehow environmental damage and also pollution and so on and so forth. So the perception is very

close to negative like outside of the town but in Jakarta it's relatively like you know much more positive given like the presence of this Jakarta Bandung has been trained but again I think the historical baggage

also matters here. You know, the BII, regardless of how many projects and also how significant the projects are, the BII projects to the country, I think the historical baggage we have with regards to Indonesia-China relations should not be ignored.

We have a longstanding, I think, like, perceptions about that, about that historical baggage. At the end of the day, I think I agree with Chow Ping about the flashpoints, like in the South China Sea. But also on the other hand, you know, we see also China's global positive contribution, like the way it negotiates different factions in Palestine.

also a crisis and also between at least China also tries to mediate between Russia and Ukraine and also like Iran and Saudi Arabia so I think like there are a lot of factors you know that shape one country's perception towards China

So for listeners who might not know, can you just talk a little bit, introduce the historical baggage that the PRC has in Indonesia? It's important, but I think many listeners might not be aware of it. Sure. I think Indonesia has a longstanding history with regards to fight against communism. In the 1950s, 1960s, there was a perception among public

about China supported the coup and also the communist movement in the country. As such, I think we still remember that Indonesia and China just resumed their diplomatic relations in the 1990s after everything that happened in the past about this communist movement and also the misperception of the coup.

Great. So I guess we're drawing things to a close. And any final thoughts, Kaobing? Well, I would say that despite the BRI is now almost a 10-year, I think 11-year anniversary, it was launched back in late 2013. Even

even if it is a 10 or 11 year anniversary, I still have the feeling that it is too early to give it a definite judgment. Actually, it seemed to be a very flexible, expensive, a very agile in a way project. It is defined in whatever ways the leadership want to define it, but still retain certain core elements. And then it is now,

making inroads even to Latin American countries while facing setbacks in others. And it can be quite dynamic and it doesn't have to retain the name of BRI, but sometimes you see the things that actually fulfill BRI's ideas continue to go on. So I will say that while it continues to be a

A project that needs constant observations and monitoring and understanding, but not necessarily a definite judgment at this moment. It is neither this or that, I think. Yeah, I mean, that's an interesting and important point, right? A lot of these infrastructure projects, for them to really be felt, their effects to be really felt, right, they take decades. So that's something that we certainly should be aware of.

Habib, any final thoughts? I don't know, like it or not, I think we should thank China because of the DERA project. I think more, you know, powers look at this, Southeast Asian region, like to offer the alternatives, right? For example, the European Union talking about the Global Gateway Initiative.

or the Partnership for Global Infrastructure, among others. So because of China's DRI in Southeast Asia, now more countries are interested to compete and also to offer alternatives for Southeast Asia.

As such, I think Southeast Asia is being benefited, not only because of the Chinese money through the BRI, but also because it draws attention from all major powers around the world. And I think it also happens to other regions as well. So I think the expectation from Southeast Asia definitely increases.

China will improve the BRI in terms of its quality because quantity matters. But what is much more important for this growing economy, definitely about the quality because we want our growth sustainable and also long-term, not only for this generation, but also other generations beyond that. So again, I think Indonesia enjoys the benefit that the BRI offers, but there is still much room to improve.

Right, yeah, that's an important point too, right? That some states see the sort of competitiveness that the BRI has introduced as a means for them to benefit from different sources. So, I mean, that, I guess, puts a more optimistic spin on things, but that, of course, assumes that the competition among major states don't take a turn for the worse.

So, you know, lots of food for thought. Thank you both so much for joining us for this recording. I hope for our listeners, you've taken away something from how people in Southeast Asia might look at and understand the Belt and Road Initiative, this 10, 11 year old project now put forward by the People's Republic of China. Thank you all so much for joining us. Thank you. Thank you.

Thank you for listening to the China in the World podcast, a production of Carnegie China, the East Asia-based center of the Carnegie Endowment for International Peace.

Views expressed are those of the host and guest panelists, and not necessarily those of Carnegie China or the Carnegie Endowment for International Peace. Subscribe to the China in the World podcast on popular podcast platforms such as iTunes, Stitcher, or wherever you listen to podcasts. Learn more about Carnegie China at carnegiechina.org. Tim Martin is our audio engineer and producer, with help from Hewan Park and Wanyi Du.