Chinese investment in Malaysia: don’t judge it by controversies with Mahathir
While the media focuses on the US$23 billion worth of Chinese-backed projects opposed by the Malaysian prime minister, it’s easy to forget the smaller scale successes, says economist
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.
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“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.”
“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.
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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.
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.
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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.
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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.”
