Malaysia-China ties should trump any notion to review ECRL

The RM250b or so in investments in large-scale infrastructure projects by Chinese firms nationwide would surely help the country


MALAYSIA’S economic relationship with China has come full circle in the past year or so.

As the People’s Republic of China celebrates 70 years of its founding, Beijing must feel quite assured that its ties with Malaysia are strong and would continue to grow after certain hiccups in the recent past.

When Pakatan Harapan clinched the 14th General Election in May last year, many China-backed investment and infrastructure initiatives were suspended due to concerns over the financing of these projects, the transparency of the procurement process and the economic impact on the local economy and companies.

Putrajaya put a freeze on mega infrastructure projects like the multi-billion ringgit East Coast Rail Link (ECRL) secured by state-owned Chinese companies as well as private undertakings including the Forest City project in Johor developed by China-based developer Country Garden Holdings Co Ltd.

Putrajaya’s trillion ringgit debt and stretched finances led to renegotiations of major ‘Belt and Road’ projects like the ECRL which concluded successfully in lowering the total cost to the Malaysian government.

Getting a new deal was probably not in question as trade and investment links between the two countries were far more important to preserve.

Chinese demand, money and technology are today transforming the global economy. China now buys a third of Malaysia’s exports — from palm oil, durians to electronic and electrical products, while Chinese tourists are a major revenue source for the country’s hospitality sector and wider economy. Chinese money and investments help create jobs and bring in taxes.

The RM250 billion or so in investments in large-scale infrastructure projects by Chinese firms nationwide would surely help the country.

Chinese banks like China Construction Bank Corp are funding renewable energy plant development undertaken by Khazanah Nasional Bhd subsidiaries while private companies like Huawei are set to build the 5G network in the country for local telecommunications company service providers.

E-commerce giants like Alibaba Group Holding Ltd are helping push local products to a global marketplace while China Galaxy Securities Co Ltd (CGS) now owns a 50% interest in CIMB Securities International Pte Ltd.

China’s Zhejiang Geely Holding Group is now the driving shareholder in local automaker Proton Holdings Bhd.

Local property developers, via the Home Ownership Campaign, are promoting their launches to buyers in Hong Kong.

Many are also hoping the US-Sino trade tensions will see companies relocate their production to Malaysia and help reverse the premature deindustrialisation of the economy while strengthening our role in the global supply chains.

Thus, the recent revelations in the ongoing 1Malaysia Development Bhd-Tanore Finance Corp court proceedings about the reason the ECRL was mooted by the previous government, although damaging, should not put a roadblock to the improved ties.

We will probably never know what really transpired among the parties named in the court case.

Fresh calls to scrap or review the RM44 billion ECRL project are not likely to get much political support but it should be a reminder to those in the government that the fault really lies here, not in China.

Bhupinder Singh is the corporate desk editor for The Malaysian Reserve.