DAVOS-KLOSTERS, Switzerland: Finance Minister Heng Swee Keat on Tuesday (Jan 22) expressed confidence that the ongoing US-China trade war "should not slow" momentum for the Belt and Road Initiative (BRI) proposed by China as long as there is support for economic integration.
The Belt and Road initiative, unveiled in 2013, aims to build an infrastructure network connecting China by land and sea to Southeast Asia, Central Asia, the Middle East, Europe and Africa.
Mr Heng, speaking at a panel session on the BRI held as part of the World Economic Forum (WEF), said that geopolitics will "certainly" have an impact on the initiative's pace of development, as well as on the international trading system.
"Precisely because it has an impact, it is important for us to push on, to look for projects which are economically viable, are bankable and for which we have proper rules and regulations ... proper legal contracts," he said.
These can show the world that trade skirmishes should have no impact on the long-term economic integration for a better world, Mr Heng added.
The Finance Minister, who has been earmarked to succeed Prime Minister Lee Hsien Loong, had earlier in the panel session shared his thoughts on how economies need to restructure to feel the full benefits of free trade.
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While free trade has been an enabler of growth, it has its winners and losers, and those who feel they have been left behind oppose it, he said.
"How do we make adjustments to ensure that free trade does benefit our people? I think all of us, if we want to continue to open up, will need to do our reform," he said. "The structural changes we need to make to our economies are going to be fairly significant."
Mr Heng also described the BRI as a "major infrastructure project" and went into some of the challenges that can face such large-scale projects.
The first is that the project must be economically viable. This mean that it would yield not just commercial returns, but also benefit people, he said.
"I can't get people to build a factory, if there are no ports to export my goods. I cannot build a theme park or tourist attraction if I do not build an airport for people to come," Mr Heng said.
Secondly, the infrastructure project needs to made bankable and investable wherever possible. He pointed out that these projects, particularly in Asia, are so big that not one government is able to bankroll them.
Citing Singapore as an example, he noted that the country has a five-year election cycle, so the authorities need to make sure that whatever project it commits to will continue to be carried out and honoured by the next Government that comes to power.
This segued into the minister's third point on making sure these projects are properly structured, including legally.
He said that there needs to a proper legal dispute settlement mechanism, so that different parties have recourse during disagreements.
For instance, Mr Heng said there was an electricity project where, after the electricity was running, the country said the private company was making too much money and tariffs should be changed.
"The investor told me: 'I'll never invest in this country anymore'," he said. "So getting proper legal dispute settlement is very important."
This is why, he said, Singapore has proposed a set of rules on mediation, it has an international commercial court and is getting its lawyers to work with the World Bank to develop standardised contracts for these long-term infrastructure projects.
"In order to give investors some confidence that these (terms) are not going to be changed tomorrow, and that I will honour everything that I sign, we need that long-term thinking, and part of long-term thinking is proper legal agreements," the minister said.
Mr Heng was joined on Tuesday's panel by Azerbaijan President Ilham Aliyev, chairman of China Poly Group Xu Niansha, and Mr Wang Yongqing, vice chairman of the All-China Federation of Industry and Commerce.
He is attending the 49th World Economic Forum annual meeting with Deputy Prime Minister Tharman Shanmugaratnam and Minister for Communications and Information S Iswaran.
The Finance Mnister is expected to speak at two other panels, one on the global geopolitical outlook and one on globalisation hosted by the National University of Singapore and Nanyang Technological University.