Malaysia to boost economic ties with China

BEIJING: While China is repeatedly trumpeted as a lucrative and vast market, Malaysia is fully aware that enhancing trade and investment linkages with Beijing will not happen automatically.

Neither will it happen overnight.

Like other countries keen on taking bilateral trade to a higher level with the Asian economic superpower, Malaysia knows it has to cultivate ties in diverse areas, while overcoming obstacles.

China has many suitors and that is why Kuala Lumpur has not lost sight of that critical need to work hard at nurturing economic ties with China, since establishing diplomatic relations with that country 40 years ago, following a visit by the then Prime Minister Tun Abdul Razak Hussein.

Now his son and current Prime Minister Datuk Seri Najib Tun Razak is continuing that legacy to ensure Malaysia stands to gain much from the bilateral relationship.

That Najib’s efforts are bearing fruit is clearly evident. After four decades, Malaysia-China economic ties are flourishing, and is expected to grow exponentially in the next few years, as both countries remain committed to taking the relationship to a higher level.

Malaysia, the first country in Asean to establish diplomatic relations with China, has not only seen trade ties grow, but the advent of strong people-to-people relations.

Malaysia’s bilateral trade with China last year recorded US$106bil. This made China Malaysia’s single largest trading nation for the past five consecutive years.

Bilateral trade between both countries has expanded at an average of 18.2% since 2000 with the trade profile witnessing a major shift over the last decade.

Commodities are no longer the major source of goods traded. As much as 50% of trade now comprises manufactured products, and other higher value-added goods.

Malaysian businesses also made over US$6bil in investments in China last year. About US$1bil in investment was posted by Chinese businesses in Malaysia during the same period.

Not stopping there, Najib and China’s President Xi Jinping have agreed to upgrade bilateral ties to a comprehensive strategic partnership, when the latter visited Kuala Lumpur last October.

Among the objectives set between both leaders is to increase Malaysia-China bilateral trade to US$160bil by 2017.

To add to the mutual agreement, Najib on his return visit to China last week signed a joint communique with Chinese Premier Li Keqiang which, among others, touched on increasing cooperation in trade and the people-to-people relationship.

The communique was signed during the grand celebration of Malaysia-China bilateral relation’s 40th anniversary.

Another key point in the communique is cooperation between the central banks of both countries to further accelerate the use of local currencies as settlement for trade and investment as well as promoting the development of the necessary supporting infrastructure.

Najib said that to realise all the resolutions and understanding agreed upon, a special committee would be set up to monitor and take the necessary follow-up action.

“It’s a committee within the Government and we will invite the relevant ministries. It is important for us to know what the other is doing and coordinate all the action necessary in a timely manner,” he told a media conference here.

He said the committee would be meeting from time to time and as when necessary but at least twice a year.

The prime minister will also chair a joint committee for the development of the Malaysia-China Kuantan Industrial Park (MCKIP). Both the Federal and Pahang governments have allocated RM700mil for the development of the park.

The park, part of the “Two Country Twin Park” project, is aimed at wooing more Chinese investments into Malaysia and address the imbalance in the investment gap between Malaysian and China.

The trade gap now stands at a 6 to 1 ratio, favouring the Chinese.

The MCKIP offers special incentives tailored to Chinese investors keen to invest in Malaysia.

Malaysian efforts to attract more Chinese investments also received positive response from the Chinese leaders. Both President Xi and Prime Minister Li gave a commitment to encourage investments by Chinese companies in Malaysia.The Chinese government is also giving priority to the Twin Park project, whereby, it has approved a 2.4 billion yuan development fund for the Qinzhou (Chingchou) Industrial Park on top of the 1 billion yuan already pledged by the government of Guangxi province.

Apart from bilateral relations, Najib said Malaysia and China are also working together to take the Asean-China free trade agreement to the next level.

At the opening ceremony of the China-Malaysia High Level Economic Forum, he said both countries are striving to deliver the Regional Comprehensive Economic Partnership, an FTA between Asean countries and its existing partners, in 2015.

During his visit to China, Najib also witnessed the signing of six government to government and 11 business to business agreements. – Bernama