Get on the New Silk Road

  • Columns
  • Sunday, 18 Dec 2016

China’s New Silk Road or One Belt One Road initiative is one of the most ambitious development projects ever, and it presents Malaysian SMEs with an opportunity that they just can’t afford to miss.

The One Belt One Road (OBOR) initiative or New Silk Road, first announced in 2013 by China’s President Xi Jinping to revive the ancient trade route between Asia and Europe, presents a great opportunity for businesses.

While “one belt” refers to the old Silk Road linking China and Europe through Central Asia and the Middle East, “one-road” refers to the 21st-century Maritime Silk Road to Africa, South-East Asia and the Pacific. Together, they may just deliver what could be the biggest source of growth the world has yet seen.

Tying in neatly with this over the past few years has been Chinese investment in various industries in the country. Apart from well-known Chinese property developers like Country Garden, R&F Properties and Greenland Group, Chinese presence is now being felt in other sectors as well.

Xiamen University Malaysia, which opened its doors recently in Sepang, is the first overseas expansion for the renowned Chinese university. It is tabling a full range of offerings and has a targeted student intake of 10,000.

Down in Johor, the RM7bil Gemas-Johor Baru electrified double-tracking rail project was awarded to the state-owned China Railway Construction Corp. The track provides capacity for existing trains to move up to 160kph, improving the transport of goods across the country, including to Singapore.

Over in the East Coast, the Malaysia-China Kuantan Industrial Park in Pahang has seen RM5.6bil in investment to build a steel mill and upgrade port infrastructure. The initiative is jointly owned by Chinese and Malaysian private and public entities.

Meanwhile, Guangdong province is teaming up with the Malacca government to promote tourism and manufacturing opportunities in the state. Private Chinese firms have also taken an interest in participating in the Malacca Gateway project.

Then there’s the RM18bil sale (including liabilities) of 1MDB subsidiary Edra Global’s power assets to China General Nuclear Power Corp. Edra’s power assets are spread across Malaysia, Egypt, Bangladesh, Pakistan and the United Arab of Emirates.

Let’s not forget the RM7.41bil (60%) equity sale of the 1MDB-owned Bandar Malaysia project in Kuala Lumpur to a consortium led by Iskandar Waterfront Holdings, the master developer of Danga Bay, and China Railway Engineering Corp (CREC).

Much of the attention on the OBOR Initiative has focused on infrastructure opportunities. But business prospects arising from China’s economic development plan extend beyond mere infrastructure and finance.

For Malaysia, there are vast opportunities in halal food, transport, tourism, trade, ports, education and industrial development brought about by this belt-road cooperation. Once infrastructural development swings into full action, there will be demand for services and supplies from SMEs.

One of the key potential sectors is the nascent but lucrative halal food industry to cater to the large Muslim population along the Belt and Road regions.

Malaysia is the first in the world to introduce halal food standards. Recognised by the United Nations and in 57 countries, the Jakim certification can help food manufacturers build an extensive distribution network across Asia, the Middle East and North Africa. The halal industry is not limited to food producers, but also extends to the supply chain, from transportation to storage and handling, in ensuring adherence to the integrity and purity of halal products.

SMEs have to seize the opportunities generated by the OBOR initiative or face the risk of being left out in the cold.

The signing of the “Malaysian Chinese Belt and Road Declaration” by 46 Chinese guilds and associations signifies the commitment towards promoting peaceful co-existence and a win-win cooperation in strengthening friendly Malaysia-China ties.

This will strengthen the OBOR initiative to open up new opportunities for the development and friendly ties of both nations, while making great contribution towards regional stability and prosperity.

China is one of the best platforms for Malaysian businesses to develop trade activities. Other than first-tier cities like Beijing, Tianjin and Shanghai, second-tier cities like Qingdao and Jinan are markets worth paying attention to due to their continuous growth to attract investments, creative ideas and talents.

The major challenge for SMEs is to be ready for the opportunities on offer.

Most SMEs are not ready. SMEs have been more focused on the Malaysian market. Most are not ready for the export market.

This lack could be in the form of money, production, ability to deliver in big quantities, etc. As such, capacity-building is critical.

In this regard, the Government should put in place a liaison person or agency to play the role of assisting and guiding Malaysian SMEs in relation to China through the provision of guidelines and consultation services and assistance.

It is imperative that we seize the day.

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Business , Central Region , OBOR , Silk Road , China , SMEs


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