Leadership, Organisations and Behaviour Investm tmen ents s in t the Digital al Silk Road: A S Systemat matic ic Framewo work an rk and Case Studies es of a a D Digital al Ecosyst stem em Irina Heim, University of Reading, UK Jin Gao, Associate Professor ， Southwest Minzu University, China 1 April, 2020 29 May 2019
Content Content ● Resource-based economy in Kazakhstan ● Infrastructure investments ● New digital economy ● Chinese investments in Kazakhstan ● Digital Silk Road Case Studies: Digital Infrastructure and Application 2
New Silk Road/BRI/OBOR/B&R New Silk Road/BRI/OBOR/B&R Source: Merics.org (2018) 3
Resource Resource-based economy in KZ GDP per capita, USD. Russia 10950 Kazakhstan 9970 China 9633 IMF (2018). 4
Infrastructure Infrastructure investments investments New Silk Road targets: ● overseas investments in infrastructure projects: roads railways sea ports ● information and communication technology ● energy infrastructure 5
New Digital New Digital Economy in KZ Economy in KZ Digitalisation is recognised as a critical factor in ensuring sustainable development of the country 4.50 Research and development expenditures, % of GDP *IMF Working paper (2019) 4.00 3.50 suggests that min of 2% of 3.00 GDP needs be invested 2.50 2.00 1.50 1.00 0.50 0.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 China Korea, Rep. Turkey Kazakhstan Italy Sweden Source: WB (2018). 6
Digital Silk Digital Silk Road in KZ Road in KZ ● development of reliable, affordable, high-speed, secure digital infrastructure ; ● shaping a creative society , including the development of competences and skills for the digital economy, upgrading of digital literacy, training of ICT specialists for industries; ● digital transformation in the economy , including introduction of a digital technology to enhance the competitiveness of different sectors of the economy; ● digital government , including improvement of electronic and mobile government platforms, and optimisation of the public services supply sphere. 7
BRI Milestones BRI Milestones ● 2015 China – EU Digital Cooperation Roundtable ● 2017 – 1st Belt and Road Forum for International Cooperation (attended by 29 foreign heads of states and government, WB, UN and IMF) ● State Program Digital Kazakhstan ● 2018 – Kazakhstan welcome New Digital Silk Road (President speech) ● 2019 – 2nd Belt and Road Forum for International Cooperation 8
Chinese Investments Chinese Investments in KZ in KZ Date Acquirer Target Target Value of Announced Name Name Industry ($mil) 12/15/2017 Investor Group KTZE-Khorgos Gateway Industrials - 07/28/2017 Schlumberger Holding II Ltd Soak Oil & Gas Energy 214.00 KTZE-Khorgos 05/15/2017 Investor Group Industrials - Gateway-Dry Port 04/12/2017 CNMIE Co Alliur Retail - 11/03/2016 Investor Group Altyn Bank Financials 80.98 01/14/2016 CEFC Natural Gas (Shanghai) Petroleum Industrials 100.30 01/07/2015 Investor Group Galaz & Co Energy 100.00 9
Case studies es(D (Digi gital al Infrast stru ructu ture re) Case study: Khorgos, the biggest dry port in the world (infrastructure) Case study: Smart oil transportation 49% owned by SOE COSCO (CH) programme (energy infrastructure Special economic zone (KZ) and ICT) Duty-free zone (KZ & CH) KazTransOil Railway station (CH) Kazakh Universities Airport is planned (CH) Kazakh National Academy of Science New city Nurkent (KZ) for Kazakh-China Oil Pipeline Caspian Pipeline Consortium Case study: Huawei in KZ (energy North-West Pipeline infrastructure and ICT) Asia Gas Pipeline: a JV of Karachaganak Petroleum Operating Kazakhstan Oil and CNPC (one of 3 major exploratory projects) Huawei: communication part of the natural gas pipeline project 10
Case studies es(D (Digi gital al Infrast stru ructu ture re) Case study: Bank M&A (Financials Case study: e-commerce cooperation Sector) (E-commerce Sector) China CITIC Bank Corporation Limited The Memorandum of Understanding Shuangwei Investment Co., Ltd. on E-commerce Cooperation Altyn Bank JSC Increase domestic and cross-border The cooperation In the digital area trade especially in fintech area which CITIC Transit flows in KTZ arising from China bank pay high attention to. and the EU's courier services Three important parts in Altyn Bank in digital promotions: Platform(Altyn-i), Payment system(CIPS), banking technologies(Fintech) 11
Case Studies Case Studies Digital Application Digital Application Cross-border Trade Platform/Tech Payment-The foundation of digital ecosystem Application-Blockchain 1. China UnionPay-Regional 1.The trade info transferring payment network 2. NetsUnion Clearing 2.The money transferring Corporation-Non-bank 3.The credit system payment institution 3. Cross-border Interbank Example: eTradeConnect, the Payment System blockchain pilot project of Tianjin 4.Third-party payment port made by Ping An Insurance institutions’ oversea Company cooperation 12
Fintech industries Fintech industries and BRI and BRI Representative Technologies in Fintech Big data analytics, Blockchain Digital efficiencies/ Robotics process automation, Natural language processing, Real-time compliance, Cloud-based service/hosted solutions, Cognitive technologies/Machine Learning, Automated voice monitoring and analysis, Biometric technologies Regulation technology (RegTech) is the use of technological solutions to facilitate compliance with and monitoring of regulatory requirements (UK Financial Conduct Authority 2015). 13
Building Digital Building Digital Silk Road Silk Road ● 1.Cooperated with the local banking system, promoting the cross-border payment ● 2.Cross-border trade and E-commerce ● 3.Digital Industry-Energy, Medical Care, Manufacturing ● 4.Developing the Regtech cooperation ● Identity verification ● Real time payments ● Compliance data ● Regulatory compliance automation ● Monitoring behavior and organization culture ● Trade reporting … .. 14
Actors Actors Private SMEs Private SMEs State State-owned enterprises MNEs MNEs Government Government 15
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