China money pours into Malaysian infrastructure projects

  • Economy
  • Wednesday, 02 Aug 2017

KUALA LUMPUR: The Straits of Malacca have been a gateway for China for centuries in its quest for power.

A story blended from Malaysian history and folklore says an emperor sent a princess called Hang Li Po to marry the Sultan of Melaka in the Ming Dynasty, offering a ship filled with gold needles.

He also sent a blunt message.

“For every gold needle, there is a subject. If you can count the number of needles, you will learn the true extent of my power,” the emperor reportedly said in a letter.

Hundreds of years later, China is again seeking influence in Malaysia as it spreads its economic and military clout through South-East Asia. It is investing in a US$7.2bil redevelopment that will see Melaka, long the haunt of Chinese traders, become a new deep sea port.

It is also providing funds for infrastructure projects down the eastern seaboard of Malaysia, key heartland areas for Prime Minister Datuk Seri Najib Tun Razak ahead of a general election that could be held this year.

New roads and bridges may help him woo ethnic Malays, but the money could come at a long-term cost.

“The closeness with China is an Achilles heel for Najib,” said Mustafa Izzuddin, a fellow at the ISEAS-Yusof Ishak Institute in Singapore. “While investment coming in will balloon government coffers and boost the economy, the opposition is using the China card to criticise the government for becoming too close to China and accusing it of selling Malaysia’s sovereignty.”

China’s investment in Malaysia has risen since Xi Jinping took power in 2012, with the president describing ties with Najib as the “best ever.”

Beijing is readying a state visit by Xi to Malaysia in the coming months, according to three people with knowledge of the plans who asked not to be identified given the sensitivity of the discussions.

China has committed to import goods worth US$2 trillion from Malaysia over the next five years (a nearly eight-fold jump from 2016 imports over that period), invest up to US$150bil in the country and offer 10,000 places for training in China.

Najib brought home US$33.6bil in deals when he visited China in November – the biggest haul yet between the countries – plus an agreement to buy four patrol boats from China.

China has been Malaysia’s largest trading partner since 2009, displacing Singapore, with two-way trade last year valued at US$83.4bil.

China is Malaysia’s biggest export market.

Malaysia, like Singapore, has strong historical links to China.

About a quarter of its population is ethnically Chinese, and traders for centuries stopped at ports in Melaka and Penang to sell silk, tea and porcelain while buying cinnamon and nutmeg.

There is even a fusion cuisine based on Chinese and Malay ingredients, called Peranakan or Nyonya.

Chinese companies accounted for eight billion yuan (US$1.2bil) in construction projects in Malaysia in 2015, DBS analyst Chong Tjen-San said in an April report – nearly half the total value of projects clinched by foreign contractors.

“We are going to be drawn into the economic gravity of China,” said Steven C.M. Wong, deputy chief executive of the Institute of Strategic and International Studies Malaysia, at a conference on Xi’s Belt-and-Road trade project in Kuala Lumpur last month. “Just as if you are in North America, you are drawn into the economic gravity of the United States,” he said.

“This is not what we want or we don’t want. It’s just the way things are.” — Bloomberg


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