MILLIONS can be lifted out of poverty with China’s Belt and Road Initiative (BRI) but it must be accompanied by deep policy reforms that increase transparency and improve debt sustainability, a study by the World Bank said.

The study led by economist Michele Ruta found that complementary policy reforms will be essential for countries to unlock BRI related gains.

“As explained in the report, the Belt and Road corridors have the potential to substantially boost trade, increase foreign investment and improve living conditions for citizens in its participating countries – but only if China and participating countries along the corridors adopt a deep policy reform.

“Today, the countries along the corridors are ill-served by existing transportation infrastructure. A variety of policy gaps in these countries hinder greater progress towards this end,” said World Bank country manager Firas Raad during his opening speech at the launch of BRI report in Bank Negara.

Firas said the BRI project would help in two critical ways.

“By lowering travel times and increasing trade and investment. Our team estimated that travel times along the corridor would decline by up to 12% once the roads, rails and ports are upgraded and completed.

“Countries along BRI corridors would see trade increase by up to 9.7%. Global trade would increase between 1.7% and 6.2%. Greater connectivity could bring substantial benefits, particularly for countries that have long been at the periphery of the global economy,” he added.

However, Firas said the BRI would present a large set of risk requiring careful analysis and consideration.

He said one quarter of economies along the China’s flagship trade and development project already have existing high level of debts.

“Our analysis shows that for 12 of 43 countries for which detailed data are available, debt vulnerabilities would increase now and 2023 including for both types of projects.

“Even in countries without high level of debts, governments need to evaluate the long term return of BRI projects,” he said.

The BRI is a global development strategy adopted by the Chinese government involving infrastructure development and investments in 152 countries in Asia, Europe, Africa, the Middle East, and the Americas.

“Belt” refers to the overland routes for road and rail transportation, while “road” refers to the sea routes.

Former prime minister Najib Razak had signed multiple investment deals with China, including the billion dollar East Coast Rail Link project, pipeline projects worth more than RM3.1 billion, as well as a RM100 billion Forest City in Johor. – September 30, 2019.