Economic Policies And Global Environments - Implications Of One Belt One Road Project On Singapore

OBOR: Overview

Discuss about the Economic Policies and Global Environments.

The economic scenario in the global framework has undergone considerable dynamics over the years with some of the countries slowly emerging as the predominant and most influential economies of the world. These global economies have progressed impressively over the years in almost all the aspects and with huge commercial and industrial success are now capable of influencing the activities and prospects of other countries across the world. China is one such economy (Shambaugh 2013).

China has shown immense economic growth over the years and is currently one of the countries with highest economic growth rate and industrial and commercial prospects. For expanding their domain of economic expansion and long term economic progress and commercial sustainability, China, in the recent years has proposed the implementation of a highly ambitious project of connecting the country to the other countries in Asia, Africa and Europe, with the objective of facilitating trade  and commerce across the entire region (Lim 2015). Known as the One Belt One Road Project and with official announcement of implementation in 2013, the routes under the OBOR Project are expected to connect 65 countries across this region. This in turn is expected to have its influence on more than sixty percent of the population in the world, which contributes more than 30% of the world GDP (Minghao 2015).

The OBOR Project, having its domain of operation over nearly all of the South East Asia, is expected to have immense implications on the economy of Singapore, one of the most eminent economically progressing countries in the South East Asian region. Being the third largest economically growing country (In terms of global GDP) and characterized by the presence of a highly industrial and least corrupt environment, the country has shown immensely impressive economic growth traits and is expected to emerge as one of the leading economies in the world in the not so far future. In this context, with the implementation of the OBOR Project, the economy of Singapore is expected to be considerably effected, the effects being both positive as well as negative (Li, Bolton and Westphal 2016). The report, keeping this in consideration, tries to analyze the potential opportunities as well as the challenges which the economy of Singapore is expected to face with the implementation and operation of the ambitious OBOR Project by the government of China. 

Expected Benefits and Opportunities from OBOR: Singapore

The main objective of the Chinese government, behind the implementation of the One Belt One Road Project, is to connect the economy with all the growing economies across different parts of Asia as well as Africa, thereby facilitating trade and industrial growth not only in China but also the other 65 countries falling in this network. The proposed implementation of the same has been the source of extensive planning regarding the future projects that will be taken up by the concerned countries across the routes (Yunling 2015). The routes, being both through roads as well as Maritime ones create a complex and hugely expansive network, which can be shown as follows:

As the above map suggests, in the newly proposed revamped Silk Route under the OBOR Project of China, there is a complex and hugely integrating network of Road as well as New Maritime Route which is spread across a huge arena. Several gas and oil pipelines are projected to operate within this network, which is expected to make this network even more viable and profitable commercially in a general framework. This is not just true hypothetically and has real positive implications as can be seem from the rapid increase in the Gross Domestic Product of China itself, which with respect to the global share, increased to as high as 16% in the recent periods from a significantly lower percentage (2.7%) only several decades’ back (Lo 2015).

This OBOR Project, when in full operation, is also expected to influence the economic activities of Singapore massively, which is discussed in the following sections of the report. 

Singapore, like the other South East Asian countries, has been gaining robust market and economic dominance in the global scenario with time, much of which can be attributed to the fast and efficient technological, industrial and commercial progress of the economy, catered by its pro-commerce environment and highly developing industrial sector. The country, like many other South East Economies fall in operational domain of the OBOR Project, which gives the country to accrue huge benefits and economic opportunities and ling term prospects from the project itself, designed by the government of China (Huang 2016).  

One of the advantages of the economy of Singapore is that it is one of the most developed economies in the entire South East region, not only in terms of economy but specifically in terms of infrastructure, industrial expansion, commercial gateway and economically enthusiast and able population, which together help the country to walk down the path of progress with ease and in an impressive pace (Cheong 2017). However, apart from this primary plus point of the economy, the country also has several other advantages and added inherent privileges which may be beneficial for the economy of Singapore itself, with respect of deriving the benefits from the OBOR Project and its operations, some of which are discussed in the following section:

• The first and foremost advantage of the country, apart from its already highly developing economy is the strategic geographical location. The country, being the heart of the South East Economic Region, is located very near to the major Maritime Routes and is already one of the busiest and highly commercially populated ports in the entire region. Keeping this into consideration, it can be asserted that with the OBOR Project coming in full operation, the country has robust chances to develop itself as one of the point or channel of a massive share of all the trade and commerce taking place in this network of the revamped Silk Route (Krishnan and Sriganesh 2017).
• For any economy to flourish and take advantage of any trade and commerce route, it is of utmost importance for the economy to have a robust infrastructural framework and an able technological system supporting the economic activities. This, especially in the contemporary periods, has been significantly achieved by the concerned country. Singapore, in the recent times, have not only developed its infrastructural and technological bases efficiently but is an inspiration to the other parts of the world in this aspect (TODAYonline, 2018). The country has the ability to take the pressure of highly increased transactions of the goods and services, which is expected to happen with the OBOR Project operating in its full capacity. The country thus has the chance of becoming not only the most important port but also a business hub in its own capacity.
• The country already enjoys significant commercial relations with the Chinese economy, which is actually implementing this ambitious project. There are already working Chinese bases of operations in the economy of Singapore, through which the goods and services are exchanged not only between this two highly active manufacturing countries but also with other neighboring countries. This is expected to give the country an added advantage, given the OBOR comes into existence with full power.
• The population of Singapore is also another important factor, which may contribute extensively to the capturing of the benefits from the concerned project. The country has been efficiently building a strong and productive educational framework, building up a highly skilled and productive population. With the implementation of the OBOR, many jobs are expected to get created which can be helpful for the economy for the purpose of increasing the overall level of employment as well as standard of living of the population in the general in the country (Jinchen 2016).
• Singapore, in the last few decades, due to its robust infrastructural base and economic resource mobility has been the centre of attraction of the investors across the world. The inflow of foreign direct investment in this country has been consistently increasing with the development of the industrial and commercial sectors of the economy. This shows the chance of a significant increase in the inflow of the investments with the operations of the One Belt One Road Project by the Chinese government as it will give even more exposure to the economy of the concerned country, thereby contributing to the long term sustainability and economy prosperity of the country (LIM 2016).
• The overall social, economic and political environment of Singapore is highly stable, which makes the country highly attractive for the investors, businessmen and entrepreneurs for expanding their domain of operation. This, with the implementation of the OBOR Project is expected to increase the economic activities in the country significantly, thereby positively contributing to the economy’s GDP in the coming years.

Challenges to the Economy: Singapore

As can be seen from the above discussion, there are considerable opportunities for the economy of Singapore to reap the benefits of the OBOR Project. There are especially several sectors in the country, which are expected to be highly benefited from the same:

Tourism- Singapore has over the years, received huge global attention due to its beautiful as well as highly developed economy with infrastructural success. The country attracts huge number of travelers, both domestic as well as international, who come for the purpose of business as well as for pleasure seeking, thereby contributing to the growth of the tourism industry in the country (Arduino 2016). In this context, with the implementation of the OBOR Project and with the trade routes coming into operation fully, the tourism industry is expected to get a huge boost, attracting even more travelers with time.

Logistics- The country, as discussed above, already enjoys the position of an eminent commercial hub in the South East Asian region, due to its extremely strategic location. The infrastructure and logistics in the country is already impressive with almost two hundred shipping lines operating all across the world. The logistics industry of the country, with the implementation of the concerned project is expected to reap huge benefits and economic prosperity and sustainability in the long run (Arduino 2016).

Banking and the Financial Sector- With the investments flowing in from all corners of the world, the economic activities of the country is expected to increase manifold with OBOR coming into operation. This in turn gives the financial sector of the country the chance to play the role of mediator to the foreigners venturing in the local economy and reap the economic benefits in turn.

From the above discussion, it can be highly asserted that there are immense scopes for the economy of Singapore to reap the benefits from the implementation of the OBOR Project. However, there are several feasible hurdles for the country and challenges the economy needs to overcome before it can enjoy the advantages of the OBOR Project, which are discussed as follows. 

• With the implementation of OBOR, there are chances of development of several other ports apart from that of Singapore itself, which now handles commercial traffic worth 5 trillion USD annually. These competing ports, primarily including those of the Klang port and the Malaccan port, are expected to give tough competitions to the country. If these ports come into action with their full capacities, then much of the commercial traffic is expected to get diverted from Singapore (Das 2017). The ports are also getting Chinese support to get developed to handle bulk cargo, which poses serious threats to the economic prospects of Singapore.
• With huge economic and financial transactions, expected to occur under the operations of the OBOR Project, exchange rate fluctuations can be a serious threat to the economy of Singapore, which can be a byproduct of the industrial and commercial transactions. (TODAYonline, 2018)
• Apart from the new ports, rail routes are expected to get revamped, which includes the East Coast Rail Link:

This can also divert significant commercial traffic and economy prosperity of the economy of Singapore.

• With the operation of the OBOR Project, technological progress of other South East Asian countries is inevitable, which can be a threat to the market dominance of the economy of Singapore itself. 

With the possible opportunities and threats from the OBOR Project, it is of utmost importance for the governing authorities of the country to keep on striving for even more technological and infrastructural progress, to strengthen its financial sector even more so as to facilitate proper channeling of the investments in the country. The government of Singapore also needs to emphasize on maintaining an overall pro-industrial, economic and progressive social structure, with minimized fluctuations both economically as well as politically. 

Government’s Role

Conclusion

The OBOR Project, as has been proposed to get implemented by the Chinese government, if implemented efficiently is expected to bring immense opportunities of prosperity and commercial benefits for the economy of Singapore, in terms of long term sustainability and industrial growth facilitated by the inflow of huge amount of investments from all the parts of the world. However, there remains several serious challenges, which includes the competition which Singapore is expected from its neighboring countries which are also expected to develop under the domain of operations of the OBOR Project, which has to be overcome by the government of Singapore. However, with the efficient planning and working of the government, as discussed above, the country is expected to be hugely benefitted with the implementation of the OBOR Project by the government of China (KONG 2016).

References

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Das, S.B., 2017. OBOR’s Digital Connectivity Offers Both Benefits and Risks.

Huang, Y., 2016. Understanding China's Belt & Road Initiative: Motivation, framework and assessment. China Economic Review, 40, pp.314-321.

Jinchen, T., 2016. ‘One Belt and One Road’: Connecting China and the world. Global Infrastructure Initiative website.

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Li, Y., Bolton, K. and Westphal, T., 2016. The effect of the New Silk Road railways on aggregate trade volumes between China and Europe (No. 109/2016). Duisburger Arbeitspapiere Ostasienwissenschaften.

Lim, A.C.H., 2015. China’s “Belt and Road” and Southeast Asia: Challenges and prospects. JATI-JOURNAL OF SOUTHEAST ASIAN STUDIES, 20, pp.3-15.

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Lo, C., 2015. China's Silk Road strategy. The International Economy, 29(4), p.54.

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TODAYonline (2018). One Belt, One Road project will benefit Singapore, but challenges could arise: Analysts. [online] TODAYonline. Available at: https://www.todayonline.com/singapore/one-belt-one-road-project-will-benefit-singapore-challenges-could-arise-analysts [Accessed 3 Jan. 2018].

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