As a company focused on the business of investments and asset portfolio management, it is core that we understand the volatile elements of the global market and formulate a strategy to target investments with a high upside. Such projects and initiatives are often backed by large countries or international organizations, as such are much less prone to failure as the “big boys” cannot afford such failures.
The Belt and Road Initiative, proposed by Chinese President Xi Jinping in 2013, refers to the Silk Road Economic Belt and 21st Century Maritime Silk Road, and involves 65 countries that reach across almost the entirety of Eurasia. Set to be the largest platform for global cooperation of this century, the project covers a staggering total of 62% of the world’s population and yet only 30% of the global economic output. This means the project covers many areas yet to fully optimize its economic output.
The infrastructural setup that would support economic cooperation in the Belt and Road regions is estimated to cost a total of 8 trillion dollars, of which till date only 210 billion (2.6%) has been disbursed via the 3 major institutions set up of finance the initiative (Silk Road Infrastructural Fund, Asian Infra Investment Bank and New Development Bank). This means there is still much room for participation by private parties and institutions.
The development of the basic infrastructure for the region is estimated to take a total of 10 years, from 2015 to 2025. During this process we would expect large amounts of investments in the areas of energy, infrastructural basics such as transport, industrial, commercial and residential buildings, as well as utilities and amenities that would improve the overall living standards of the region.
After this 10 year period, we expect the opening up of the east-west trade and commerce corridor to power the economy of the region, from the increase in FDIs into the region to the build-up and implementation of commercialized technology, education and cultural exchanges. This boom period should see the optimization of economic output per capita, ultimately increasing the economic output from third to second world standards, and achieving an estimated output of 27 trillion dollars per annum, more than 300% of the total invested amount into the region.
Cirro’s strategy is to structure our portfolio of assets to cover the full spectrum of the Belt and Road Initiative, from the pre-boom period that includes energy, infra and utilities, to the internet and communications aspects of the economic, to finally dabbling in the implementation of the commercial technology, education methodologies and cultural exchange mediums, thus allowing us to reap the largest trove of profits during the next 20 to 30 years.