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Chinese investment in Malaysia: don't judge it by controversies with Mahathir

South China Morning Post logo South China Morning Post 10/10/2018 Bhavan Jaipragas in Kuala Lumpur
a man wearing glasses © Bloomberg

The poor reputation of the few, controversial Beijing-backed infrastructure projects that Malaysian Prime Minister Mahathir Mohamad is seeking to cancel should not detract from the overall benefits of “dynamic” Chinese investments into Malaysia, a prominent local political economist has said.

Unlike the US$23 billion worth of projects Mahathir is seeking to cancel, there are smaller-scale investments from private Chinese investors into Malaysia’s manufacturing sector that are not in the limelight, said University of Malaya professor Edmund Terence Gomez.

Speaking in a panel discussion at the South China Morning Post’s China conference in Kuala Lumpur, Gomez said there had been a spike in Chinese investments into Malaysia in the immediate aftermath of the 2013 election, when the government of since-defeated prime minister Najib Razak pursued increased investment growth for speedy gross domestic product growth.

“When we opened the doors [to China], other investments also began flowing into the economy. And these were very dynamic investments also from mainland China … and does Malaysia benefit from these private investments? Yes, we do,” Gomez said.

“The problem is the focus has been on the controversial major projects. What we should also look at is how we can encourage a proper dialogue [on investment] where one country does not feel hard done by or taken advantage of.”

a close up of a building © Provided by South China Morning Post Publishers Limited

Other panellists said Mahathir’s approach to dealing with what he deemed “unnecessary” Chinese-linked projects was a lesson in how countries could amicably resolve differences over “Belt and Road Initiative” investments without antagonising Beijing.

“Mahathir’s approach is a good lesson for other countries … there was uncertainty at the beginning, but I think now there is a good understanding of what the new government is trying to achieve with regards to some of these projects,” said Abdul Majid Khan, president of the Malaysia-China Friendship Association and a former Malaysian envoy to Beijing.

The status of the controversial Chinese projects – in particular the US$20 billion East Coast Rail Link – remains uncertain.

Even though Mahathir’s government suspended work on the rail link soon after the election, citing concerns over its high price and low demand, the contract has yet to be terminated.

a group of people in red shirts © Xinhua

The Malaysian government is negotiating the amount of compensation it must pay the main contractor, the Chinese Communication Construction Company, for unilaterally terminating the project.

Meanwhile, the government has successfully cancelled a smaller-scale project – pipeline projects being built by the China Petroleum Pipeline Bureau worth some US$2.3 billion.

Also in focus on the panel – which included Chang Hsin-Kang, an emeritus professor of City University of Hong Kong, and Stephen Groff, vice-president of the Asian Development Bank – was the US-China trade war.

Chang said one reason for fears in the US about China’s strategic and economic rise was a degree of “ignorance” among many Americans about the Chinese way of life and culture.

Majid Khan said Southeast Asian countries were likely to have an advantage in this regard because they had experience managing ties between the US and China since the 1970s.

“The Chinese saying may say there can be only be one tiger in the mountain. But I think we [in Southeast Asia] know that there can also be two or three tigers in the mountain,” he said.

Chang said he saw some silver linings in the trade dispute. “I think it will force those who are responsible for Chinese policies in the Chinese government to think harder on what is needed to meet standards … and be more efficient.”

This article originally appeared on the South China Morning Post (SCMP), the leading news media reporting on China and Asia. For more SCMP stories, please download our mobile app, follow us on Twitter, and like us on Facebook.

Copyright (c) 2018. South China Morning Post Publishers Ltd. All rights reserved.

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