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Building the infrastructure for Eurasia’s future

KEY CONCLUSIONS:

  • Chinese experience in infrastructure projects can be useful for other countries

“The infrastructure may be essential for the economic development. <…> China is probably the most experienced in these matters if you look at the speed and also the quality of construction,” said Xiang Bing, Founding Dean and Professor of China Business and Globalization, Cheung Kong Graduate School of Business (CKGSB).

  • In addition to having an economic effect, infrastructure projects are also socially important

“Creation of high-speed trains on the territory of the diameter of 200 kilometres around Moscow will bring the prosperity of the people living there up by 30%,” said Vladimir Yakunin, Chairman of Supervisory Board, DOC Research Institute.

CHALLENGES:

  • Infrastructure projects are characterised by the highest risks

“Infrastructure, more than anything else, is risky, because it spans many years and geographical areas,” said Wang Jun, Director of the CEIBS-World Bank China Centre for Inclusive Finance, China Europe International Business School (CEIBS).

  • It is difficult to project future maintenance costs related to infrastructure facilities

“Maintenance costs for the existing and future infrastructure projects can easily run over 50% of the overall capital budget. <…> You can build, but after the building things may become problematic. This is seen everywhere. You see old and non-functioning, dysfunctional pipelines, rundown railways, etc.,” said Wang Jun.

  • Projects implemented as part of different initiatives are difficult to coordinate

“Who will coordinate day-to-day operations under projects to be implemented over the coming decades and related to the Silk Road, related to the coordination of the EAEU, SCO, ASEAN efforts? How this coordination will be organised? Who will be the supranational coordinator?” said Dmitry Mezentsev, Member of The Council of the Federation of the Russian Federation Committee on Economic Policy.

SOLUTIONS:

  • Coordination of infrastructure projects at the government level

“For conflict settlement <…> [and] in order for infrastructure projects that cut across countries in Europe and Asia to really take off and to take effect, it is absolutely necessary to have very effective coordination and integration of government efforts. <…> The level of coordination has to be improved among governments to pre-empt the unnecessary political and economic and social risks. And this will have to happen before major infrastructure projects can hope to be built and to function,” said Wang Jun.

  • Use of the public-private partnership model

“I believe that the public-private partnership is the only mechanism which can help to prevent any risks, <…> not allow any kinds of delays and cost overruns,” said Kairat Kelimbetov, Governor, Astana International Financial Center.

“We believe that any form of PPPs within these initiatives and their practical application is <…> the definition of successful efforts,” said Konstantin Limitovskiy, Deputy Chairman of the Management Board, Eurasian Development Bank (EDB).

  • Extensive cooperation in the development of cross-border infrastructure projects

“The whole initiative <…> is proceeding on the bilateral basis between the countries. What is very important is to achieve greater cooperation in developing this cross-country infrastructure. <…> The best would be to establish some kind of committee which would discuss the efficiency of the patterns and roles in the investment projects which are done within the whole initiatives,” said Konstantin Limitovskiy.

“Government leaders have to have vision, to work together and to leave the technical side to the professionals, to the international and regional financial organisations,” said Wang Jun.

  • New technologies and comprehensive approach within the Eurasian initiative

“We need to consider new governance, we need to consider new economic models and absolutely a new financial platform. <…> We need to involve the understanding of the entire development of the society from the point of implementation of these huge global projects,” said Vladimir Yakunin.