Central Asian States Create New C5+1 Consulting Group

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The Central Asian states of Iran, Turkmenistan, Uzbekistan, Tajikistan and Pakistan have grouped together with Afghanistan in what is known as the 5+1. These countries all share borders with Afghanistan and effectively encircle the country. The initiative was announced at the meeting of foreign ministers of Central Asia and Afghanistan at their meeting this week in Ashgabat, and is designed to become an effective platform for discussion of the regional issues and development of joint measures for peace provision and sustainable development under UN support.

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China, United Kingdom Planning RMB10 Billion OBOR Development Fund

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China and the UK are planning a RMB10 billion joint investment fund, according to sources at Bloomberg. Details of the equity split have not yet been decided, however the fund is apparently set to focus on areas such as infrastructure, agriculture and hi-tech industries.

China and the UK have bi-lateral trade of just under £60 billion; of which UK exports to China last year were worth £16.8 billion; imports from China were £42.3 billion, according to a British Parliament November Briefing on China-UK trade which can be downloaded here.

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Tenders Announced For Belgrade-Budapest High Speed Rail

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The tender process for the controversial Belgrade-Budapest high speed rail for the Hungarian section has just been released by Hungarian State Railways with interested parties given until 19th January to submit their applications. The process has been controversial due to the conditions insisted upon by the European Union in Brussels, who have stated the tender process must confirm to EU protocols despite the fact it is not an EU funded project. This has upset the China Railway International Corporation and China Railway International Group who between them own the majority of the contracting entity, Chinese-Hungarian Railway Nonprofit Ltd. This is a subsidiary of Chinese Hungarian Railway, which was established in late 2016 based on an intergovernmental agreement between China and Hungary. Chinese Hungarian Railway is 85% owned by the Chinese state-owned China Railway International Corporation and China Railway International Group. Hungarian State Railways holds a 15% stake.

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Silk Road Development Weekly

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Uzbekistan Completes High Speed Bukhara-Misken Rail Link

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Uzbekistan Railways has launched a new electrified railway line between Bukhara and Misken. With work commencing just 12 months ago, the 355 km route saw construction and installation works begin simultaneously from two sides of the railroad. Two segments of the railway lines were docked on the day of the 26th anniversary of the independence of the country – 1 September 2017. Electrification works were completed on 1st December this year.

With the launch of the new railway, the distance between Tashkent and Urgench is reduced by 75 km. Previously, trains from the capital to the Khorezm region undertook a significant detour via the Navoi-Uchkuduk-Miskin line.

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China Funded Lapis-Lazuli Transport Corridor Unites Caucasus & Central Asia

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The Lapis Lazuli Corridor Agreement Being Signed In Ashgabat

China’s reach into Central Asia and the Caucasus has taken a major step forward with a new initiative poetically known as “The Lapis-Lazuli Transit, Trade & Transport Route” (or the “Lapis Lazuli Corridor”). This aims to enhance regional economic cooperation and connectivity between Afghanistan, Turkmenistan, Azerbaijan, Georgia, and Turkey, and according to the Chinese and regional governments concerned, thereby expand economic and cultural links between Europe and Asia. In doing so, the initiative seeks to improve transport infrastructure and procedures (including for road, rail, and sea), increase exports, and expand the economic opportunities of the countries benefiting from this new transport corridor.

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Iran Completes First Phase Of Chabahar Port & International North-South Transport Corridor

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Iran has held a ceremony to launch the first successfully completed phase of the Chabahar Port, which will be part of the International North-South Transportation Corridor (INSTC) linking India through to markets in Russia and the Eurasian Economic Union (EAEU).

Iran has recently completed negotiations with the EAEU concerning a Free Trade deal, with a ratified document expected to be released next year. India is also currently negotiating its own FTA with the EAEU, while both Iran and India are also exploring their own FTA  a situation that will make the INSTC an extremely valuable proposition.

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Silk Road Development Weekly

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About Us

Silk Road Briefing is produced and written by Dezan Shira & Associates. The firm provides governments and corporate businesses worldwide with strategic, legal, tax and operational advisory services to their SMEs and MNCs investing throughout Eurasia and has 28 offices across China, India, Russia and the ASEAN nations, and partner firms in Central Asia. We have specific and long term experience in China and the OBOR countries. For assistance with OBOR related issues, please contact the firm at silkroad@dezshira.com or visit the practice at www.dezshira.com

 

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Silk Road and OBOR Business Intelligence

Dezan Shira & Associates´ Silk Road and OBOR investment brochure offers an introduction to the region and an overview of the services provided by the firm. It is Dezan Shira´s mission to guide investors through the Silk Road´s complex regulatory environment and assist with all aspects of establishing, maintaining and growing business operations in the region.


China’s Silk Road Economic Belt

China’s Silk Road Economic Belt is the largest and most ambitious undertaking yet proposed by Beijing. With financing and the value of resources across Eurasia running into hundreds of billions of dollars, we outline the fundamentals of China’s plans. Included are details of the overland route from China through Central Asia, Russia and to Europe, and the maritime and overland routes through South-East Asia and beyond. Includes maps.


China’s New Economic Silk Road

This unique and currently only available study into the proposed Silk Road Economic Belt examines the institutional, financial and infrastructure projects that are currently underway and in the planning stage across the entire region. Covering over 60 countries, this book explores the regional reforms, potential problems, opportunities and longer term impact that the Silk Road will have upon Asia, Africa, the Middle East, Europe and the United States.

 

EU Investment Tender Compliance Regulations Hinder China At Budapest CEEC Gathering

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The Chinese invested Belgrade-Budapest Rail Route

China has received a reality check over the progress of investment into the European 16+1 initiative it has instigated, officially known as the Co-Operation Between China and Central and Eastern European Countries (CEEC). The initiative, which was created in 2012 and includes Albania, Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, the Slovak Republic, Slovenia, and the three Baltic States: Estonia, Latvia and Lithuania, has never sat that easily with the European Union headquarters in Brussels responsible for regulating the activities of the CEEC EU members.

Yesterdays 2017 CEEC conference in Budapest highlighted areas of concern, even with Chinese Premier Le Kejiang in attendance. The main crux of the issues impacting Chinese investment into much, but not all, of the 16+1 has been EU regulatory policy. This has noticeably slowed down investment into the EU nations concerned. Tamas Matura, an assistant professor at Budapest’s Corvinus University  said that “Chinese investment in EU members of the 16+1 has remained limited. Some countries have not received any new major Chinese investors in the last five years. China has had more success in Western Balkan countries like Serbia, Montenegro and Bosnia and Herzegovina, where EU funds are not available and EU regulations are not applicable.”

Serbia is indeed a case in point. While not part of the 16+1 grouping,.the country is the Balkans largest beneficiary of Chinese investment. Chinese businesses have invested in local factories and provided financing for roads, bridges, energy projects and railways. In fact, the largest project discussed in Budapest is the Belgrade-Budapest high-speed rail link, with construction work on the Serbian stretch expected due to begin next month. The modernized railway would enable Chinese goods coming through Greek ports to transit quickly from Serbia into the EU. Currently, the rail journey between the Belgrade and Budapest takes eight hours. The planned route would allow passengers and cargo to travel up to 200 kilometers per hour, cutting travel time to less than three hours.

Progress on the project however has been slow due to EU regulatory compliance issues on the EU portion of the route. The Export-Import Bank of China is expected to lend about 85% of the total funds for the €2.4 billion-project, with the rest having been raised from Russian sources. An agreement between China and Hungary over the railway raised concerns within the European Commission earlier this year that the planned tender process may not be in compliance with EU rules.
Brussels has raised concerns about the project in the past and is keen to ensure both China and EU members states such as Hungary obey EU laws, an issue that is caused tensions between Brussels and Budapest and Beijing. Discussing the Belgrade-Budapest rail project earlier in the year, an EU statement read “The EU welcomes investment — whether domestic or foreign — as long as it is compatible with EU law. It is standard practice for the Commission’s services to assess the compliance of major public contracts with EU law. Against that backdrop, a dialogue with the Hungarian authorities, at technical level, is ongoing in order to seek some clarifications.”

The issue for China is that much of the work and investment is expected to come from Chinese firms tendering for the project, including Chinese contractors and workers. Budapest wants the investment and the infrastructure development. Both see Brussels of getting in the way of progress; especially so as the project funding is not from EU sources.

Chris Devonshire-Ellis of Dezan Shira & Associates states “These types of frustrations are going to crop up whenever there are cross-border investments that impact upon EU and non-EU projects. A solution maybe to classify certain categories of these as ‘special cases’ and subject to arbitration by a separate panel whose members also include the investors, the host countries, and the EU. Clearly EU regulations concerning compliance and tendering were not designed to cater for cross-border projects and this needs to be addressed. Situations such as the Belgrade-Budapest rail project will only become more common in future, and especially with both China and the Eurasian Economic Union rubbing up against the EU’s eastern borders. Foreign investors such as the Chinese and Russians should be allowed to at least express their opinion and justifications for alternative tender and project treatment on cross-border projects that include EU members. A different category of regulatory mechanisms would be appropriate.”

 

About Us

Silk Road Briefing is produced and written by Dezan Shira & Associates. The firm provides governments and corporate businesses worldwide with strategic, legal, tax and operational advisory services to their SMEs and MNCs investing throughout Eurasia and has 28 offices across China, India, Russia and the ASEAN nations, and partner firms in Central Asia. We have specific and long term experience in China and the OBOR countries. For assistance with OBOR related issues, please contact the firm at silkroad@dezshira.com or visit the practice at China Targets, Funds, and Incentivizes Eastern Europe as Bilateral Trade Potential Intensifies

 

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 China Targets, Funds, and Incentivizes Eastern Europe as Bilateral Trade Potential Intensifies


Silk Road and OBOR Business Intelligence

Dezan Shira & Associates´ Silk Road and OBOR investment brochure offers an introduction to the region and an overview of the services provided by the firm. It is Dezan Shira´s mission to guide investors through the Silk Road´s complex regulatory environment and assist with all aspects of establishing, maintaining and growing business operations in the region.


China’s New Economic Silk Road

This unique and currently only available study into the proposed Silk Road Economic Belt examines the institutional, financial and infrastructure projects that are currently underway and in the planning stage across the entire region. Covering over 60 countries, this book explores the regional reforms, potential problems, opportunities and longer term impact that the Silk Road will have upon Asia, Africa, the Middle East, Europe and the United States.

 

Silk Road Development Weekly

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The latest round up of Silk Road opinion, analysis and regional infrastructure developmentsnts

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