Amid China’s growing influence in the Asean region through the Belt and Road Initiative, the United States is stepping up its efforts to finance development projects in the bloc as part of its Indo Pacific Strategy.
Washington is keen on financing infrastructure, energy, digital and telecommunication developments in the bloc through the official Overseas Private Investment Corporation (OPIC).
The Indo Pacific Strategy marks the US government’s bid to enhance cooperation with countries from the Indian Ocean to the Pacific Ocean in areas such as economic development and security upgrade.
“The Asean region is central to our Indo Pacific strategy as it lies in the centre of the Indo Pacific region,” said Eric Jones, chief of staff at OPIC on Friday during a press briefing at the US Embassy in Bangkok.
The notion of Asean centrality is crucial to our Indo Pacific Strategy, which is why the US has kept up its efforts to strengthen its ties with Thailand, a key leader in this region, added Joseph Felter, deputy assistant secretary of defence for South and Southeast Asia.
OPIC offers debt financing, political risk insurance and private equity funds to US firms looking to invest abroad. In 2018, the corporation allocated US$4 billion (Bt128 billion) for project financing in the Asean region, from its $29-billion budget for exposure capital, Jones said.
“Our mission is to mobilise private capital towards development projects, particularly in developing countries,” Jones said. “Our goal is to invest to maintain the sovereignty of other countries through financing projects that are long-lasting, environmentally sustainable and have high labour standards.”
Among Asean projects, recently funded by the OPIC, is a $250-million telecom venture in Myanmar. It has also invested $200 million in a US firm which is currently looking for business opportunities in Thailand, according to Jones.
In 2019, OPIC’s budget for exposure capital will increase from $29 billion to $60 billion, further widening opportunities for US investment in Asean, Jones said. However, budget allocation to the Asean region this year was not disclosed at the briefing.
Despite a level of uncertainty arising from the split results from the Thai election, the US government and its private sector are looking forward to work with the next Thai administration on US investments in the Kingdom, Jones stated.
The US private sector remains interested in investing in the Indo Pacific region. In 2018, foreign direct investment in the region from US firms totalled $140 trillion, he said.
The US welcomes infrastructure developments, including China’s Belt and Road Initiative, Felter stated.
However, there is cause for concern over China’s flagship international infrastructure development project, which is said to have led to debt traps in developing countries, he said.
The US hopes that in going forward, the terms of future infrastructure investment under the Chinese initiative would be fairer to the host country, he said.