VARIOUS China-backed projects such as the East Coast Rail Link are still under review, but Malaysia remains open to Belt and Road Initiatives (BRI) and investments from China, said Deputy International Trade and Industry Minister Dr Ong Kian Ming at the Standard Chartered Belt and Road Forum in Kuala Lumpur.
Concerns over the possibility of falling into the debt trap from the high debts incurred by BRI projects have sparked debates on national sovereignty, especially in Pakistan, Laos, Sri Lanka and the Maldives.
For example, Pakistan leased its Gwadar port to China for 43 years and Sri Lanka gave a 99-year lease of its Hambantota port to China Merchants Port Holding in 2017, in hopes of reducing their debt burden.
However, Ong said it would not be fair to place the blame of such debts solely on the Chinese parties involved, as the projects were approved by the respective sovereign governments.
He also stressed that countries looking to undertake mega projects must ensure financial sustainability and viability.
“The lesson from past BRI projects is that there is a need for recipient countries to strengthen their own internal processes, in terms of the evaluation and institutional frameworks, when approving any large infrastructure project. For that matter, the foundation of any successful project is good governance and a transparent procurement process,” he added.
Ong believes that future BRI projects should focus on better governance and control on matters such as anti-corruption and environmental sustainability.
BRI will also indirectly create opportunities for companies in Malaysia and other countries to invest in China as well, he said.
In addition, he foresees a push for more Chinese investments in different countries including Malaysia, in efforts to diversify its supply chain due to the ongoing United States-China trade war and the latter’s global expansion plans.
Standard Chartered Asean and South Asia chief economist Edward Lee also opined that Asean countries such as Malaysia can benefit from the potential shift in the supply chain.
“With what is happening on
the US-China front, the share of manufacturers thinking of leaving China will increase and I think Asean – and countries like Malaysia – certainly has a lot of room to absorb this shift in supply chain,” he said.
The BRI, launched in 2013 to promote free trade and connectivity between the Asian, European and African continents, is making some progress in achieving its goals.
Lee said the BRI is still at its early stages, but noted that data has been promising thus far.
“From the data we have so far, it’s encouraging. A good way to look at it is trade. A key element of BRI is trade facilitation and BRI countries have grown from about 32% to about 36% of China’s total trade,” he said.
Asean and North-East Asia form the bulk of BRI trade with China at approximately 50%, with West Asia contributing 16% to the figure. Despite the current significant size of trade between Asean and Asia with China, trade is still growing at 12% to 14% per annum.
For Malaysia, the second largest exporter of goods to China among the BRI countries, he said the initiative will serve to further facilitate Malaysia-China trade integration, especially when it comes to China’s top imports of commodities, resources as well as electrical components.
The Standard Chartered Belt and Road Forum coincided with the Malaysian leg of the Standard Chartered’s Belt and Road Relay.
The first-ever global running event spanning the Belt and Road, it kicked off in Hong Kong on Feb 17 in conjunction with the Standard Chartered Hong Kong Marathon, and ends in China on May 11.
Standard Chartered Malaysia managing director and chief executive officer Abrar Anwar said, “We believe our investment in this relay is important to raise awareness of our unique position and capabilities to support our clients and communities in Malaysia to benefit from the BRI.”
In 2017, the bank committed additional financing for BRI projects of at least US$20bil (RM81.7bil) by 2020, and was involved in more than 50 Belt and Road deals worth more than US$10bil (RM40.8bil) across a range of products and services.