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International Consultants LtdAndrew Leung
How Oman can leverage China’s OBOR to achieve
Diversification
- Gaining more with Less
Andrew K P Leung, SBS, FRSA International and Independent China
Strategist
University of Buraimi, OMANSeptember, 2016
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Disclaimer
All materials contained in this presentation, including any
analysis, comments, remarks, opinions and pointers are for
information, debate and discussions ONLY. No warranty of their
accuracy, completeness, timeliness or reliability is implied.
Any reliance on these materials in any way assumes total
exemption of any liability whatsoever of Andrew Leung International
Consultants Limited and Andrew K P Leung including all their
current and future Affiliates, Associates or Assigns.
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Volatile and uncertain global growth prospects
Fidelity Investments
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Collapsing oil prices
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Changing of the guards
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Rivalry and inter-dependence
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SAARC =South Asia Association for Regional CooperationPIF=
Pacific Islands ForumARF = ASEAN Regional Forum
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Regional bonds
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Shared Destiny
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Start of the Fourth Industrial Revolution
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Oman’s economy too narrowly focused
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Too dependent on too little oil
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Falling behind in R&D to build human capital
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Oman’s Vision 2020
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China’s OBOR offers epochal opportunities
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81,000 km (50,000 miles) high-speed rail to be built in 65
countries. Potential investment estimated at $1.4 trillion = 12 x
Marshal Plan ($120b in today’s prices)
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… with strategic energy implications
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… and military linkages
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China’s dual use port arrangements Helping to guard OBOR’s Red
Sea entrance
Anti-piracy patrols and operations
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Silk Road Economic Belt to be linked by high-speed rail
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A high-speed rail grand vision of continental proportions to
connect China’s world’s longest high-speed rail network, across the
Eurasian Continent, to the Middle East, Western Europe, and
Africa.
•Third Eurasian Land Bridge – proposed railway network linking
the Port of Shenzhen to Kunming onwards to Myanmar, Bangladesh,
India, Pakistan and Iran, across Turkey to Rotterdam.
•Across 20 countries in Asia and Europe over 15,000 km, 3,000 to
6,000 km < sea route via the Indian Ocean and Malacca
Straits.
•Total annual trade volume of the regions traversed - $300 b in
2009.
•A branch line to start in Turkey, cross Syria and Palestine,
and end in Egypt, facilitating transportation from China to
Africa.
•A new Chongqing-Xinjiang-Europe high-speed line via Duisburg
proposed by President Xi during visit in April, 2014
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Plus an alternative to Panama Canal ?
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• Nicaragua's Congress has granted Wang Jing's Cayman
Islands-registered HKND company a 50-year concession to develop a
286-km (178-mile) canal connecting the Caribbean with the Pacific
via Lake Nicaragua, at a cost of $40 billion, to be completed in 6
years.
• The canal is three times longer than Panama and can
accommodate the largest container vessels, thoseShanghai’s
Linyungang can accommodate as the world’s deepest container
port.
• To anchor China’s commercial and geopolitical interests in
Latin and South America
• Likely partner – China Railway Construction
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And an even grander vision or pipedream?
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• China-Russia-Canada-America" line –13,000km, entire trip to
take two days, travelling at an average of 350km/h (220mph).
• Crossing the Bering Strait between Russia and Alaska in 200 km
(125 miles) of undersea tunnel
• China to provide funds, technology and construction and to
share operation with countries traversed in exchange for
resources
• According to Beijing Times report 8 May, 2014, already in
discussions.
• According to Inhabitat.com 23.08.11, Russia has already given
the greenlight to $65 Billion Siberia-Alaska Rail and Tunnel to
Bridge the Bering Strait.
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Silk Road Infrastructure Fund
• China contributes $40 billion to set up a Silk Road
infrastructure fund to boost connectivity across Asia, through
building roads, railways, ports and airports across Central Asia
and South Asia.
• To focus on China's Silk Road Economic Belt and the 21st
Century Maritime Silk Road initiative.
• To be "open" and welcome investors from Asia and
elsewhere.
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Asian Infrastructure Investment Bank
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• 57 Founding Country Members including 16 of world’s largest
economies (except US, Japan, Canada, Mexico) and key US allies
(latest Philippines)
• All BRICS countries included. Nearly all of Western Europe,
except Belgium and Ireland.
• Non-Asian countries limited to overall 25% shares
Jordan Kazakhstan Kuwait Kyrgyzstan Lao Luxembourg Malaysia
Maldives Malta Mongolia Myanmar Nepal Netherlands New Zealand
Norway Oman Pakistan Philippines
Poland Portugal Qatar Republic of Korea Russia Saudi Arabia
Singapore South Africa Spain Sri Lanka Sweden Switzerland
Tajikistan Thailand Turkey UAE United Kingdom Uzbekistan
Vietnam
Australia Austria Azerbaijan Bangladesh Brazil Brunei Cambodia
China Denmark Egypt Finland France Georgia Germany Iceland India
Indonesia Iran Israel Italy
Final list of 57 founding members of the AIIB
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AIIB as an alternative global financial institution
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• World Bank president reserved for an American
• IMF head for an European • ADB – Japan’s voting power 2X
China’s• Bretton Woods institutions follow
Washington Consensus – full privatization and liberalization of
markets, exchange rate, interest rates, trade and investment, tight
budget – Not working for most developing countries
AIIB - 57 Founding Member Countries including key US allies,
$50b paid-in capital, $100b authorized capital
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New Development Bank (BRICS Bank)
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• Representing 41.4% (3 b) world population, 25% of world land
mass and GDP
• HQ in Shanghai; African regional centre in Johannesburg
• Inaugural President from India
• Inaugural Chairman of B of Directors from Brazil
• Inaugural Chairman of B of Governors from Russia
• No veto power for any Member
• No increase in any Member’s share without other 4 Members
agreeing
• Non-BRICS country can join but BRICS share > 55%
• Authorized lending up to $34 b p.a., to start in 2016
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ASEAN infrastructure shortfall
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World Bank lent only $25 b for Asian infrastructure in 2011 =
50% of total WB capacity
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Thinking outside the box in the South China Sea
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Potential investments in Central Asia natural resources
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Joint Chinese investment in Central Asia natural resources
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Oman strategically-favourable to leverage OBOR
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Gwadar
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(1) Linking Oman with China-Pakistan Economic Corridor
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(2) As oil refinery hub for the Gulf
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(3) OBOR investment in Oman’s solar and wind energies
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Oman to study use of renewable energies for desalinationOman’s
massive 200 MW desert solar farm for oil industry
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(4) Oman as Gulf financial hub – RMB and Islamic finance
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(5) Oman as telecom hub for the Gulf
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(6) OBOR to invest in strategic linkages to Oman’s
industries
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Examples :
• Development of drilling rigs -potential business opportunity
estimated at $1.4bn-1.5bn
• Reshoring of engineering and engineering management services
($2.5bn-2.7bn).
• Localising the sourcing of construction materials and
equipment ($3.9bn-4.3bn of business and 577-639 jobs)
• Fertilizers
• Metal products
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(7) OBOR’s linkages with Special Economic Zones e.g. Duqm
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(8) OBOR to boost Oman’s tourism
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Arabic Theme Parks Arabic cultural tourism Oman merchandizing
for world markets
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(9) OBOR linkages for higher education
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International business schoolsExchange programs Joint R &
D
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(10) OBOR linkages to boost Oman’s creative industries
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Wanda’s Oriental Movie Metropolis in Qingdao Fashion
Interior design and furniture
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Back to the Future – achieving more with less
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Andrew Leung International Consultants Ltd
Thank you
Andrew K P Leung, SBS,
FRSAwww.andrewleunginternationalconsultants.com
International and independent China Specialist with over 40
years professional experience covering Hong Kong and Mainland
China. Chairman of Andrew Leung International Consultants, founded
in London now relocated to Hong Kong. Provides strategic advice on
China-related finance, investment, politics and economics globally,
including both business and governments. China Futures Fellow
selected worldwide by Berkshire Publishing Group, Massachusetts. On
the Brain Trust of Evian Group, a Lausanne-based think-tank.
Founding Chairman of China Group of Institute of Directors City
Branch, London. Advisory Board Member of China Policy Institute,
Nottingham University, 2005-10. Governing Council, King’s College
London, 2004-10. Visiting Professor with Metropolitan University
Business School. Helped set up Standard Chartered Bank’s first
merchant-banking subsidiary in Hong Kong (1983); oversaw the
trans-migration of industries into China as Deputy Director-General
of Industry; US-government sponsored month-long visit to brief
Fortune 50 CEOs on China beyond Tiananmen Square (1990);
Editor-at-Large of a London-based international consultancy on
China’s energies (2007). Sponsored Speaker on China at
international conferences, including Forum Istanbul, Turkey, Annual
African Banking and Financial Institutions Conference in Accra,
Ghana, and Low Carbon Earth Summit in Dalian, China. Regular
interviewee on live television with CNBC, Aljazeera English, Times
Now of India, BBC and other international channels. Awarded Hong
Kong’s Silver Bauhinia Star (SBS) and included in UK's Who's Who
since 2002.
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Andrew Leung Disclaimer Volatile and uncertain global growth
prospects Collapsing oil prices Changing of the guards Rivalry and
inter-dependence Regional bonds Shared Destiny Start of the Fourth
Industrial Revolution Oman’s economy too narrowly focused Too
dependent on too little oil Falling behind in R&D to build
human capital Oman’s Vision 2020 China’s OBOR offers epochal
opportunities … with strategic energy implications … and military
linkages Silk Road Economic Belt to be linked by high-speed rail
Plus an alternative to Panama Canal ? And an even grander vision or
pipedream? Silk Road Infrastructure Fund Asian Infrastructure
Investment Bank AIIB as an alternative global financial institution
New Development Bank (BRICS Bank) ASEAN infrastructure shortfall
Thinking outside the box in the South China Sea Potential
investments in Central Asia natural resources Oman
strategically-favourable to leverage OBOR (1) Linking Oman with
China-Pakistan Economic Corridor (2) As oil refinery hub for the
Gulf (3) OBOR investment in Oman’s solar and wind energies (4) Oman
as Gulf financial hub – RMB and Islamic finance (5) Oman as telecom
hub for the Gulf (6) OBOR to invest in strategic linkages to Oman’s
industries (7) OBOR’s linkages with Special Economic Zones e.g.
Duqm (8) OBOR to boost Oman’s tourism (9) OBOR linkages for higher
education (10) OBOR linkages to boost Oman’s creative industries
Back to the Future – achieving more with lessAndrew LeungSlide
Number 40