Deloitte China's M&A Leader Patrick Yip quoted by HKTDC Research on Professional Services for Belt and Road Infrastructure Projects

HKTDC Research recently published an article on January 25, titled "Hong Kong as a Platform Facilitating Infrastructure Investment and Financing” which cited the comments from Deloitte China's M&A Leader Patrick Yip. This article is part of a research series on Shanghai-Hong Kong Co-operation in capturing Belt and Road Opportunities.

The past few years have seen a marked increase in mainland Chinese enterprises investing in overseas infrastructure projects under the Belt and Road Initiative. This increase is bound to fuel a rise in demand for related professional services from mainland enterprises, generating opportunities for Hong Kong service providers. Patrick believed that projects involving infrastructure, manufacturing, retail etc. would require professional services such as financial, legal and accounting services, in order to ensure the sustainable development of these investment projects. However, infrastructure projects present different requirements and challenges across the various development phases of the project and thus to the professional service providers.  Factors such as macroeconomic trends, urban development, changing demographics, geopolitical tensions, emerging socioeconomic issues, etc. would all have implications on the quality and effectiveness of the services provided by professional service providers.  Hence, seasoned service providers would generally formulate contingency plans or measures in the initial stages of any infrastructure development plan to deal with potential exigencies and establish systems to monitor emerging issues throughout the project development phase.  

Patrick added that when performing financial planning and analyses for infrastructure projects, steps have to be taken to assess different possible financial scenarios as to risk and return on capital, impact on cash flow, tax implications etc.   Hence, it is probably more important for mainland enterprises investing in infrastructure projects in the Belt and Road countries (which are mostly developing countries more susceptible to investment risks) to conduct effective and in-depth financial, business and tax due diligence and planning, than would otherwise be the case with similar investments in the more developed economies.

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