Malaysia at BRI-global economic crossroads

Tengku Abdullah (left) inspecting a guard of honour at the opening of the state assembly sitting. - Bernama
Nod for review of ECRL cost
Wednesday, 25 Jul 2018
by ong han sean
KUANTAN: The Regent of Pahang has expressed his approval for the Federal Government’s move to review the cost of the East Coast Rail Link (ECRL) project. Tengku Mahkota Tengku Abdullah Sultan Ahmad Shah welcomed the decision but hoped the railway line would still be built to create more economic growth areas. “The construction of the ECRL will increase connectivity of economic and industrial areas from Kuantan Port to Tumpat in Kelantan and Port Klang in the west coast,” he said at the opening of the state assembly sitting here - for more, go to 

Malaysia at BRI-global economic crossroads

KUALA LUMPUR (July 2018): After all the post 14th General Election (GE14) hoo-haa over China-related mega projects in Malaysia, it is time to face reality or get real.

The new Pakatan Harapan (PH) federal government will have to eventually make a decision, whether it likes it or not. Stalling is no solution.

China has US$34 billion (RM138 billion) worth of infrastructure projects underway in Malaysia and the most crucial of all is the Belt Road Initiative (BRI)-linked East Coast Rail Link (ECRL).

Dumping the ECRL means throwing away the business and economic mega potential.

China had identified Malaysia as the gateway or rail transport hub for BRI’s link to Southeast Asia (SEA) and Asia. And the rail also links to 69 cities and countries in Europe, Russia, the Scandinavian and Nordic nations, among others.

And, the ECRL has already reached a progress rate of 13%, according to an official involved in the RM55 billion mega-project undertaken by Malaysia Rail Link Sdn Bhd (MRL) and China Communications Construction Company (CCCC).

Make no mistake about China’s commitment to the success of its multi-trillion-dollar BRI. China is not about to let Malaysia derail its ultimate target for trans-border business and trade.

And China will not hesitate to dump Malaysia in the BRI rail link and resort to alternative solutions when it is time to do so.

China can easily use Thailand as BRI’s new rail hub for SEA and Asia or combine BRI’s rail link to Singapore via maritime networking.

So, Malaysia, stall the ECRL project at your peril.

Here’s PH Malaysia’s problem, as reported by Bloomberg:

"Malaysia’s problem: how to cut a better deal with China
Wednesday, 25 Jul 2018
10:05 AM MYT

KUALA LUMPUR: (Bloomberg): Malaysian Prime Minister Tun Dr Mahathir Mohamad is pushing back against China’s dominance in the economy, stalling billions of dollars of contracts as he tries to renegotiate them.

He’s heading to China in August -- specific dates haven’t been disclosed yet -- to discuss those projects and try to win deals that he says should be more favourable to Malaysia.

China has US$34 billion (RM138bil) worth of infrastructure projects underway in Malaysia negotiated by the previous government of ousted leader Datuk Seri Najib Tun Razak, deals that Mahathir said favoured Chinese investors over the Malaysian economy.

Among his concerns are the large sums that the government has borrowed from China and contractors that use Chinese labour and equipment.

Mahathir’s move comes against the backdrop of growing disquiet in South-East Asia about China’s spreading influence in the region.

China’s multi-billion dollar Belt & Road Initiative to build roads, railways and ports is stoking fears of ballooning debt in poor countries like Myanmar and Laos.

Nationalistic Stance

Malaysia has been one of the region’s biggest beneficiaries of Chinese investment in the 15 years between Mahathir’s first and latest stint as leader, while economic links in the two countries from trade to tourism have strengthened.

“We expect some negative impact on future Chinese-related investments in Malaysia due to PM Mahathir’s nationalistic stance with regard to investment,” said Chua Han Teng, head of Asia Pacific country risk at BMI Research.

“However, we expect a compromise to mitigate the effect, with Malaysia unwilling to antagonise an important trade partner and China likely to prioritise its ambitious Belt and Road Initiative, of which projects in Malaysia are a key part,” he said.

Here’s a look at how China’s economic links with Malaysia have evolved in recent years:

1. Trade

Malaysia is China’s biggest trading partner in South-East Asia after Vietnam, with total trade of US$92.4 billion (RM374bil) last year. In 2003, when Mahathir ended his first period as prime minister, the figure was less than a quarter of that.

Malaysia is one of the few economies in South-East Asia to run a trade surplus with China, exporting everything from electronics and palm oil to liquefied petroleum gas.

Last year, Malaysia exported US$54.4 billion (RM220bil) to China, or about 18 percent of its total shipments. In 2003, that figure was just US$14 billion (RM57bil).

Malaysia imports electrical products, machinery and equipment from China.

2. Investment

Official data shows Chinese foreign direct investment into Malaysia surged more than 700 percent in the past decade to RM9.9bil last year, a far bigger increase than any other source country.

The inflow has raised concerns among Malaysians over sovereignty, indebtedness and the risk of creating white elephant projects.

“Both Dr Mahathir and the China side look at the definitions of investments from their own experience and perspective and therefore differently,” said Oh Ei Sun, a senior adviser for international affairs at the Asian Strategy and Leadership Institute in Kuala Lumpur.

“It is important for both sides to iron out their difference in preferences and expectations.”

3. Tourism

Chinese tourists are now the third-largest group of visitors to Malaysia after Singaporeans and Indonesians, lured by sandy beaches, a shared culture in a country where a quarter of the population are ethnically Chinese, and a love of the pungent durian fruits.

That growth has underpinned a tourism industry that now makes up about 15 percent of gross domestic product.

Total tourism receipts in Malaysia climbed 54 percent in the past decade to RM82.1bil in 2017.

4. Immigration

Chinese nationals were the largest group of participants in the state-run Malaysia My Second Home program, an international residency plan allowing wealthy foreigners to live in the South-East Asian nation on a long-stay visa.

Chinese citizens accounted for almost 30 percent of successful applicants since the program was launched in 2002.

5. Property

The increase in Chinese migration has helped underpin property demand in Malaysia, especially in the southern city of Johor Bahru, which borders Singapore, and in Penang and Melaka states, according to Knight Frank LLP consultants.

For Chinese investors, Malaysia is a cheaper alternative to real-estate markets in Australia, Hong Kong and Singapore. What also counts in Malaysia’s favour is a lower entry cost for property and cultural ties that make food and language familiar to Chinese buyers.

China’s Xiamen University also became the first one in the country to open an overseas campus, which was set up outside of Kuala Lumpur (at Bandar Sunsuria, just south of Putrajaya) with the aim of boosting ties between Chinese and Malaysian students and academics. - Bloomberg/The Star Online

Politics | July 25, 2018 by | 0 Comments
KUALA LUMPUR – Deputy Minister of International Trade and Industry Ong Kian Ming said many Chinese businesses would consider relocating their bases to Southeast Asia to evade excessively high tariffs from the United States in the face of Sino-US trade war.
He said Malaysia would be the primary destination for Chinese manufacturers in this region.
During an interview with Sin Chew Daily, Ong said the “Jack Ma factor” would draw more Chinese businesses here because they have faith in the foresight of Alibaba Group’s founder Jack Ma.
“When Jack Ma was in KL, he mentioned why Malaysia is the best location for Alibaba’s first regional office. He thinks Malaysians have a strong aptitude in doing business.
“If Ma has so much confidence in the Malaysian economy, I believe many Chinese companies will also have the same kind of confidence in Malaysia.”
Ong went on to say, “China will very likely look for ways to deal with the trade war, including relocating manufacturing bases to Southeast Asia or elsewhere.
“Although a trade war is not going to be good to us because we are a trading nation, we need to face this challenge and try not just to lure investors from China but also US companies which can make Malaysia their regional hub to export to China.” – Sin Chew Daily/Malaysia Chronicle