 The ancient Silk Road, sorry, we have two speakers from PWC here, Mr. Mark Rodpone and Mr. David Picharetne. Will you give us some brief remarks first and then we take the questions from the front later and you all receive the report which is on your share so do have a look as well. Please. Thank you. Thank you, Fon. Good morning. As I'm sure you're aware, this week is a very significant week with regards to China's Belt and Road initiative. On the 14th and 15th of May, President Xi Jinping will host a summit in Beijing where 28 heads of state, including Cambodia's Prime Minister, Hussain, and hundreds of global business leaders, many of whom are here at the forum this week, will attend. At that summit, President Xi will look to raise awareness and encourage participation in the Belt and Road journey. Therefore, it's a great honour to have the opportunity to release PWC's recent executive summary of our global report, Repaving the Ancient Silk Roots, here at the World Economic Forum this week. When the Belt and Road initiative was first announced back in 2013, I'm sure there were many who perhaps underestimated the ambition and the sheer scale that the Belt and Road initiative entails. And since then, there has been much information articulating where the Belt and Road lies, namely across the 65 countries and the six economic corridors, but there is still much speculation as to its specifics, namely what constitutes a Belt and Road project, how can companies commercialise it, how can companies get involved in a Belt and Road infrastructure project. And it's that final point that our report, which will be released in full at the end of this month, looks to address how can companies get involved in the Belt and Road initiative. The report was commissioned over nine months ago and involved the consultation of numerous subject matter experts both in China and across countries along the Belt and Road regionally and, of course, involving the expertise of our infrastructure and strategy colleagues around the PWC network. And as you will see in the Executive Summary that you have to hand, the full report is quite comprehensive. It not only articulates where the Belt and Road spans across, but also its objectives, how companies can get involved, the considerations they need to evaluate, and how they can position themselves for success, in particular looking to leverage the platforms that lie in Hong Kong and in Singapore. So there is a lot in this full 90-page report that is to be released. But for just now, I'd like to touch on two topics. First of all, it's holistic goals and some of the opportunities companies can realise from a Belt and Road initiative, and Mark later on will take you through some of the considerations companies have to evaluate and how they can position themselves for success. So first of all, from an overall objectives perspective, although not many specifics have been published regarding the Belt and Road objectives, many commentators have been perhaps too narrowly quick to label the Belt and Road as a purely geopolitical play from China to assert its influence across central, eastern and southern Asia. Now the Belt and Road initiative is a very complex and massive multi-dimensional programme. And therefore it needs to be evaluated and assessed accordingly. It has a multi-pronged objective approach. On one hand, it provides China with access to markets for them to digest its industrial overcapacity, to further boost trade and diplomatic ties not only along the 65 countries along the Belt and Road in the six corridors, but also regionally and globally. But in addition to that, it provides both China and the countries and enterprises along these corridors with an opportunity to gain global recognition in developing and operating transnational infrastructure projects, such as in developing highways, ports and railroads such as the one just recently opened in April from parking in London all the way through for 12,500 miles through to Yimu in East China. Developing capability such as roads and high-speed rail is an important aspect. It is important not only for those owning these capabilities, whether they are companies from China or along the Belt and Road, but they are important for the dozens of countries and millions of inhabitants along mostly the developing markets that these corridors lie along. Of course, the Belt and Road does align with China's go-out policy that it's been pursuing since the 1990s. It's a 13th five-year plan and it's made in China 2025 strategy. But underlying all of this is a focus on bankable infrastructure projects to create social, cultural and commercial integration. So with that hopefully more holistic and balanced view of the Belt and Road's goals, we believe that there are a number of opportunities for companies to get involved in the Belt and Road initiative. As I'm sure as President Xi Jinping will allude to later this week, but even with all its resources, people and financing, China and those countries along the Belt and Road do seek to partner with companies and countries outwith of these economic corridors. And for that reason, we believe there are about six areas that companies can look to get involved in the Belt and Road. First of all, as pure suppliers, suppliers of equipment and manufacturing equipment, construction equipment for these infrastructure projects. Secondly, in partnering as an EPC partners in actually developing these infrastructure initiatives. And once they've been developed, there's a role for foreign companies to actually help operate these new ports or airports to, as an example, to be operationally efficient, but profitable, commercially viable. There's also a very strong and very important role that foreign companies can play in bringing their global expertise in operating, in developing and then operating these types of initiatives in remote locations. Most of the Belt and Road initiatives or both of the Belt and Road projects that have been identified lie in remote locations, in developing markets, in complex markets with multiple stakeholders. And this is where we believe foreign companies, multi-nationals have a role to play. They can bring their expertise to the fore. Investing purely from a capital perspective and divesting assets to companies in China and those along the Belt and Road are other areas that companies can get involved in as well. So there are a number of different opportunities for foreign firms to get involved in. But the Belt and Road is unique. It has a unique construct to it. As I said, it is massive. It's multi-dimensional. So in that regard, companies need to assess how they participate very carefully. And evaluate a number of unique considerations. And then identify how they can successfully operate and participate. And that's where my mark will look to cover off a few of these considerations and how companies can position themselves for success. All right. David, thanks for that excellent introduction. The Belt and Road initiative, as David has mentioned, is a very ambitious vision that requires extraordinary amounts of skill, diplomacy, large amounts of funding, as well as deep understanding from both public and private sectors about how to influence and implement infrastructure programs. It's across many territories. It spans different cultures, languages, regulatory frameworks, different degrees of development across different countries and should lead to sustainable growth over the long term. Poverty alleviation for poorer parts of the population, but more importantly, or very importantly, a lot of opportunity for the companies that are looking to invest in these territories. As with most big infrastructure programs, there are a few things that need to be assessed before investment decisions are made. And risk and return are clearly two of those, as well as how you might approach a market and how you might position yourself to succeed in the delivery of big infrastructure programs. All of those are really critical parts of what you have to do and are very relevant to Belt and Road opportunities, and that's what I'm going to cover now. So let me start with some of the unique risks that are inherent in such a multi-pronged, multi-dimensional, multinational program. Of course, when we're advising clients about infrastructure projects, one of the first and most basic premises on which you make your investment decisions is risk analytics and return, understanding what risk exposure you have and how you price that risk into your projects. Belt and Road opportunities have all of those risks across procurement, construction, commissioning, operations, tax and regulatory risks, but there are a few risks that really do start to become more relevant when talking about Belt and Road because of the unique nature and the extent of the vision across so many different markets, across so many different territories, and these need to be considered quite importantly. Firstly, if you're looking at the different countries, you've got different cultures, different languages, different regulatory frameworks, different degrees of development across each of these, and you're working on projects that are strategically important for countries in markets that tend to be monopolistic in nature, so large-scale utility markets, for example, and most of those are controlled by government. So the regulatory framework in which that project is operating becomes more and more important and how that regulatory framework interfaces across political cycles which often are shorter than project implementation cycles and how they interface with other territories adjacent to your infrastructure project and on which that project might depend for success. The second key feature that really becomes quite fundamental around this is funding. And the fact that most of the companies that are investing in new markets look to see how to develop the capital market is in a destination territory. Why will they want to be able to fund the project effectively at cost-effective rates? They want to be able to extract their financing or their money over the course of time and generate their returns, so capital markets become quite important. The geopolitics around Belt and Road is something that is way more heightened than if you're looking to do a standalone project in a specific market. Of course, the projects are generally cross-border, and that adds complexity. So governments need to understand very clearly that if they want to make success of Belt and Road opportunities, they need to have very clear ideas to what they're trying to achieve and develop contracts that are based on precedent and are enforceable. On the private sector side, they should be working with governments to develop concession agreements and contracts that do use internationally accepted positions for things like compensation provisions, termination provisions, have tariff mechanisms that are enforceable and understood, have methodologies to ensure that the credit risk that you're exposed to is effectively contracted. The scale of the Belt and Road projects is big. We know that. And the more and more that we're seeing this develop across the emerging markets in Asia, the more we're seeing ODA and G to G relationships coming to the fall. One must ask why? Well, emerging market territories are able to accelerate their access to new infrastructure stock and funding through signing G to G relationships that avoid potentially long and costly procurement processes that they might have to go through under a public-private partnership procurement. With that comes the funding risks inherent in these big-scale programs. The estimates around Belt and Road are that there will be hundreds of billions of dollars spent in delivering the program. ODA financing will be one pool of capital that people can access to fund these. So, Chinese state government funds for strategically important projects is one pool of capital. The second pool of capital that we've identified is local government funding for locally important projects. The third pool of capital is private sector financing where commercially you'll come in and fund the project based on the economics of the project and the concession agreement you can get. Of course, multilaterals will continue to play an important role in that overall jigsaw of funding that needs to come forward, but they tend to fund projects that are more based on procurement methodologies that are transparent, fair and open rather than directly negotiated ODA contracts which I think will form a large part of some of the Belt and Road opportunity. And although the Chinese government have allocated very significant levels of funds for Belt and Road it does only form a fraction of the total cost of implementing the broader program. So what needs to happen to make sure that these projects do actually attract funding? Well, firstly, you've got to ensure that the projects are bankable. And how do you do that? Well, you prepare them effectively. You put in place strong contracts that have a lot of precedent included and are well understood. Secondly, you look at making sure that the revenue streams around those contracts are sustainable. You do your work around tariffs, you do your work around traffic forecasts, that sort of thing. But one must understand that in a lot of these territories, local government and the end payer don't necessarily have the credit worthiness that is required to attract commercial funding into a project. So work needs to happen around ensuring you have instruments in place that try and take on some of that risk. Operational and implementation risk across these programs is very significant. You're talking cross-territory, you're often looking at markets that are very underdeveloped. And so have inadequate supply chains, potentially lack capacity, certainly in government you have a lack of understanding around government procurement. And so you've got to do a lot more work in understanding what you're actually getting into around these programs, who your partners are, who are in government to the stakeholders and how you can effectively deliver the project. All right, so you've got some strategies around what you need to do to make sure that you're doing the right thing. How do you then assess whether a project is viable or not? Well, you've got to go back to some very basic principles. And certainly if I look back over the last 15 years in Asia, one of the biggest fall down points or failures of government is to not prepare projects effectively. So upfront, doing your viability assessments and ensuring that the projects that you're looking to invest in are economically viable on a standalone basis is important. Secondly, understanding the local market and what you want to be investing is critically important. All the markets that we are talking about are very different to each other, from a language, culture, political paradigm, funding, general economy, they're all very different to each other. So understanding your local market is crucial. Thirdly, the ecosystem in which your project is residing becomes quite important. If you're building a railway line, making sure that there is actually the traffic necessary to sustain that railway line is very important. And what you have to have around that is an ecosystem of an economy. You have to have ports or you have to have industrial manufacturing that will produce products to transport on your railway line. So the ecosystem becomes crucial. Finally, looking at your core skill set as an investor or owner or operator or an advisor and making sure that you're matching that to the opportunity becomes quite critical. Now, project viability in the context of very strategic projects becomes quite difficult to assess. In a lot of our markets, countries and companies are looking to invest in projects that are not necessarily economically viable on a standalone basis. They might be investing in that project or delivering that project to gain a strategic position within their country to gain access to a trade route or to gain access to capacity or to gain access to some resource. Now, often from those projects will come about more economically viable projects that you can invest in. So for example, developing a Greenfield port in Northern Myanmar might not be an economically viable project on a standalone basis but for a strategic position for China that's very important in gaining access to the Indian Ocean but alongside that, you need power, you need water, you need railways, you need housing and you need manufacturing capability to sustain that port and that's where a lot of the commercial opportunity will reside. If you then look at the ecosystem around these projects there's probably three factors that are really important. One is connectivity. Making sure that your project is connected into a broader economy around which it sits. The second is workforce. Is there a workforce that can actually deliver this or are you expected to bring in a workforce? So often in parts of very emerging Africa what you have seen is big workforce as being transported from one territory into another to deliver a project and that often leads to some quite political issues around the local benefits of delivery. Around the taxes that might get generated by a project for a local economy and that is often where in Africa some of the backlash against the big programs has come. The third area is around how you, the longer term sustainable development of infrastructure around that corridor in which you're looking to invest. Is there a program? Some of the corridors clearly have more robust economic viability over the longer term than others do. So choosing your project and choosing your corridor from an ecosystem perspective becomes critically important. If you're then investing across these programs often what we try and do is make sure that our clients understand the portfolio of projects in which they're investing. And there are a few ways that you can diversify risk away from individual investments. One is looking at a broad section of markets and sectors in which to invest. Not focusing just on one territory so you're not crystallizing all of the risk in one market. The second point is around looking at different stages of procurement. So is it Greenfield? Is it a developmental project? Is it Brownfield? Is it under construction? And trying to bring in your capabilities across the different parts of the infrastructure of a life cycle can reduce risk very significantly. And the third part is around where in the infrastructure cycle you might or the supply chain you might invest. Are you looking to invest in logistics networks? IT? Are you looking to invest in supply of raw materials? Are you looking to invest in manufacturing? All of these are different parts of that infrastructure cycle that contribute to the success of an economy. So once you've made your decisions, you're looking at investing in a project in Belt and Road, the final point that is very important is how you position yourself for success. How do you make sure that your investment will work? And I think there are probably a few areas that really stand out when it comes to Belt and Road outside of the normal stuff that you would expect. Normal stuff being I've done due diligence. I understand the local market. I understand that my concession agreement is drafted on precedent. I have strong banking capability. I've funded the project. I've got good partners. The first one is contingency planning. We're working across markets here that are developing, often have very little experience in delivering large-scale infrastructure. There is red tape. There is bureaucracy. There is change in politics. Often that change in politics happens very quickly. So if you look at the Philippine market, for example, their political cycle is four years. Projects that we work on often last 40, 50 years. So you've got to make sure that the plans that you have in place are able to deal with change and be flexible. Putting in place contingency plans around termination or change in government. Understanding that you will have challenges in your supply chain. Understanding that technology might not be as advanced in some of these territories as it is in your home market. More and more, what we are seeing in infrastructure delivery is that technology is becoming a fundamental part of delivery. And in a lot of these markets, the technology curve is lagging way behind what you might expect in terms of data, the internet of things, access to mobile technology, cable, that sort of thing. The second aspect to recognize is that a lot of these projects are government led. And often these governments are relatively naive when it comes to implementing large scale programs. So two things need to happen. The first is that governments need to be very sympathetic to the understanding as to what the private sector can deliver within the constraints of their specific economy. And the second point is that the private sector need to empathize with what the government is trying to achieve through these programs. And only through working together will they actually succeed in successfully delivering a sustainable infrastructure program. The final point that I'm going to touch on is around local partnering. Now, on most of the projects on which I work, what you're aiming to do is allocate risk to the party that's best able to manage and mitigate that risk when implementing a project and operating that project. Belt and Road projects are no different. Finding a strong local partner that you can develop a long-term sustainable partnership with is very important. Understanding how you can work with local government is crucially important. How you can manage the stakeholders around that economy is very important. So when you're scoping your project, defining your contract, looking at your tariff mechanism, defining your subcontracts, make sure that you've paid a lot of attention to the risks inherent in that transaction and how you will deliver it in the most effective and sustainable manner. I'll stop there and hand back to David. Thank you very much for taking the questions. So you have just... I'll just conclude. Thanks, Mark. I think before we take questions, I'd just like to just sum up with, hopefully, an appropriate metaphor. As you've heard, the Belt and Road train has already left the station. It's travelling through some unchartered territory. It doesn't necessarily have all its carriages in place, and it certainly doesn't have all the passengers it wants on board, but it is moving and it is gathering speed quickly. And therefore, that's why we believe now is the time for foreign companies outside of the Belt and Road countries, 65 in China, to learn more and participate. It's great hope that the Beijing summit is a success and that companies and countries outwith the corridors embrace and start to get involved in what we believe is arguably the world's largest transnational infrastructure programme ever. So we have to take some... Thank you very much. Thank you for writing that report, and I'm sure we have the questions here already. Please say your name and your organisation. Thank you. My name is Sukun Tia. I'm from Cambodia Daily. Could you tell us since 2013, since this initiative was announced, how is the progress right now with the Chinese government and how much funding the government have got so far? On the funding. So I think as Mark alluded to, so a number of institutions, international institutions, have signed up to our part of it. So you have the AIB, you have the CBD, the Silk Road Fund. There are hundreds of billions already, around about a trillion dollars already identified. However, that is a fraction of what is needed for the 900 or so projects that have already been identified. And that's where, as I said, investing in some of these projects is one area that foreign companies can look at, but to the point that Mark made, you need to make that decision very judiciously. There are a number of considerations. Maybe if I can just add to the answer. I think if you look at places like Bangladesh, Pakistan, India, there are a lot of projects that are already attracting commercial funding in the power sector, the water sector, railways, ports. You've got commercial financing going in there. You've got multinational financing going in there. You've also got parts of our Southeast Asian market that are developing long one belt one road type principles. So for example, if you look at the Lao high speed rail between Vientiane and Kunming, that is one belt one road. That is a China rail project. There are multiple high speed rail projects that are being developed or scoped in Thailand, whether it be Bangkok Nongkai or Bangkok Chiang Mai. You've got the Eastern Corridor in Malaysia that's been committed by China. That's a 15 billion dollar project. That was signed up at a G to G level between the Malaysian government and the Chinese government a few weeks ago. In Myanmar, you've got three special economic zones that have been developed by the Myanmar government, Tilawah, Dawey and Chao Pew, all of which could be classed as one belt one road in nature. One is Chinese, one is Thai, one is Japanese, and they are at different levels of development. So I think there are lots of examples of projects that are up and running and being implemented. There are pools of funding that are being developed at a government level or national level, so things like the Silk Road Fund. And there are also pools of capital in the commercial lenders like HSBC, SMBC, BTNUs, DBSs, Maybanks of this world, all of which are being allocated towards one belt one road. Thank you. I have a next question. Chris with German newspaper, Frankfurt, Augemann. I have a very simple question. You got to your own project. You invited us for handing out the full report. Now we get the summary. What does it mean? What's gone wrong? What's gone wrong? So in terms of our report? Well, that we don't get the report. We were invited that the report is published today and it's only a summary. So what's the reason for that, please? So it's very simple. So we have a number of companies that we are invited and we worked with on the report and we have done the courtesy to give it to them first. And we're now, we will release the full report at the end of the month. But we wanted to release a summary of the report this week given that we were invited with the forum and also the Beijing summit. So it was just purely out of courtesy to give it to those companies, about 50-odd companies around the world that have been helping and working with us. And in that regard, it just shows the robustness and the credibility of the report when it comes out. I think I'll see you at the meeting next week. So you have some information beforehand. Yeah. Do we have more questions here in front? Actually, you have mentioned that. It is a very quick project. Can you say your name, please? Okay, sorry. My name is Nithi. I am from Tmoy Tmoy. And then my question to you is all about the influence of bad Android initiative. Whether you see it is going to have a massive influence especially to save the world financial order and also economic order in the future. Because foreign company, especially private company is going to be on board and participating in this initiative. So I think it's very important and it's to give China a very big opportunity to achieve the goal. So how do you think about the future of world economy order and also financial system? Thank you. Okay, that's quite a big question. I think what's very clear and well-acknowledged globally is that there has been a very significant economic shift eastwards with a more important role or the bigger role that China and some of the bigger economies around Southeast Asia are having on the global network. I mean, if you combine Southeast Asia and include Indonesia, you have an economy that is very large and growing and counterbalances slightly China but those two together are very significant economies. The Belt and Road program or ambition or vision should over the long term develop a lot more sustainable growth around most of our region. If you look at the emerging markets around Southeast Asia, let's take Indonesia as an example. Since the ASEAN crisis in 1997, very little has happened in terms of infrastructure development in that market. Over the course of the last 12 years, I've seen very significant change in that space. More recently under Jacobi, we've seen projects come to market better prepared. They're dealing with the land acquisition issues and they're starting to take projects to the private sector that are financeable. So we are seeing things improve. I think the Belt and Road ambition or the program will help accelerate that to large degree. It's providing big pools of capital. It's opening doors and avenues to ODA type arrangements that can accelerate funding into some programs that would not necessarily be commercially financeable if they weren't ODA financed. So if you look at something like the North South Line in Jakarta, which is an ODA arrangement between Japan and the Indonesian government, the Japan machine through JICA and JBEC is funding the North South Line over a 42 year period at very low costs of financing, about 0.1% interest rates, which are not achievable commercially. And you would not be able to deliver that project on a pure PPP commercial basis. So the ODA framework for that has really helped develop a project that Jakarta desperately needs. And I would think you'll see a lot more of that type of thing happening across our market and hopefully from that more commercial opportunities for other companies that want to participate in that growth. So could we running out of time here? Maybe we could give to the ladies here at the back. That would be the last question and of course we can do more follow up questions later on. Please, no. Okay, if we do too then. We're very happy to stay behind afterwards and answer questions individually. That's not a problem. Thank you. I'm Sujita from Biyo Ekmei. My simple question is that what can Biyo Ekmei do to maximize the benefit from bilateral projects? Thank you. And maybe already the question should come. I think as a government it's understanding and recognizing the need to develop frameworks that encourage infrastructure investment. Both for the private sector to be able to come into Cambodia and understand the procurement frameworks that you have and the regulatory frameworks and creating an environment that encourages people to come and invest in your market. Of course there are projects that through Belt and Road you'll be able to have governments talking to the Chinese government, the Japanese government, the Korean government, the Singaporean, the Malaysian, the Thai governments, all of whom might want to invest in your country through ODA-type relationships. And I think that's something that certainly should be part of the agenda for the Cambodian government. Our last question. My name is Mui Hong. I came from Nene, Japan. So I have a question. I'm wondering if you have the figure of how much investment that ASEAN need to invest to develop the infrastructure for the region and for Cambodia specifically. All right, well, there's a lot of numbers that get thrown around. So if you look at our own PWC reports, we look that between now and 2025, about $70 trillion will be invested in infrastructure. Of that, so by 2025, around about $9 trillion per annum globally, and about $5 trillion of that will be in Asia. ADB estimate that in purely economic infrastructure, so telco, transport networks, and utilities, you'll have at least $26 trillion that needs to be invested simply to sustain current growth levels. That's not to satisfy the overall demand for infrastructure. That is simply to keep things going as they are, okay? McKinsey estimates a number of, I think, about $1.6 trillion per annum over the next 10 years or so that is specific to, not 1.6, it's more than that. I can't remember the exact McKinsey number, but it's a significant number that needs to be invested to sustain growth levels. So that's across the broader Asian economy. In Cambodia, it's a very emerging market, okay? So you need power, you need water, you need transport networks, you need healthcare, you need education, you need technology, telco investments. So quite broadly across the whole economy in Cambodia, there needs to be a sustained infrastructure program that should be developed by government and prioritized. So looking at your projects, prioritizing which ones are important that leads to the most growth and allow for the most international investment into your market is the way forward. All right, I think we're running out of time, but our speakers can still follow maybe 10 or more minutes after this. See if we can judge that. Thank you, everyone. Thank you, sir. Thank you.