KUALA LUMPUR (May 31): Malaysia is among three countries in Asean set to see a discernible boost to their economic growth over the next five years from projects under China's One Belt, One Road (OBOR) initiative, said HSBC Global Research.

These projects will supplement the domestic infrastructure programmes by the respective governments of Malaysia, the Philippines and Indonesia, it added.

In a report entitled Asean Perspectives — Sizing up the OBOR impact released today, HSBC Global Research said OBOR-related commitments for Asean — specifically in Malaysia, Indonesia and the Philippines — total over US$77 billion according to its calculations.

"Moreover, some of the most ambitious projects such as the East Coast Rail Link or Indonesia's High Speed Rail project have committed financing, with work set to begin soon," it noted.

However, HSBC Global Research said given the large size of the total investment commitments for Malaysia — many of which involve infrastructure or heavy industry, the impact on its gross domestic product and current accounts is the largest among the three countries.

"Assuming 10% of the projects are completed per year, all else equal, this would deduct 0.4% percentage points from the current account surplus, which is currently forecasted at 2.1% for 2018.

"If the projects are mostly Chinese-financed, as per our assumptions, the overall balance of payments (BoP) impact will be more or less neutral, and the current account change reflects the alteration in the savings and investment balance," it said.

"However, this brings up a separate question. The exact ownership of the deals [has] yet to be fully defined — they are mostly 'Chinese' due to the financing, which is ultimately debt that will be repaid (with many of the infrastructure deals, the home country appears to retain ownership, even if operating concessions are granted to the Chinese)," it added.

What does this mean? Well, external debt levels — especially in terms of contingent government liabilities — may be set to rise, said HSBC Global Research.

Nevertheless, the research firm noted that from a broader BoP perspective, foreign direct investment inflows would provide an offset, thereby counteracting any foreign exchange impact.

"While some discount OBOR because of the lofty goals it sets to accomplish, or the unclear terms of some of the deals, it would be a mistake to discount it altogether," said HSBC Global Research.