China’s new Silk Road, which is expected to draw US$160bil in infrastructure investment alone, presents a huge opportunity for Malaysian SMEs. And China’s PM Li Keqiang has agreed to assist SMEs looking to participate, reports HO WAH FOON.
CHINA’S Prime Minister Li Keqiang has agreed to provide assistance to small and medium enterprises (SMEs) from Malaysia and China to facilitate their involvement in business ventures linked to the “one belt, one road” initiative.
According to Datuk Ter Leong Yap, who represented the local business community, at a 20-minute private meeting with Li on Nov 23, the premier had agreed to several proposals brought up by him.
Helping SMEs was one of them.
“During the closed door meeting, I made a few proposals to Premier Li. One of these was on how to help SMEs. The others included urging China to buy Malaysian bonds and import local crude palm oil using renminbi.
“I said as SMEs have been contributing significantly to the economy and bilateral trade between Malaysia and China, the Chinese government should formulate measures to help SMEs from both countries that are participating in the one-belt-one-road business ventures. And I’m glad he responded positively to this proposal,” says Ter, president of the Associated Chinese Chamber of Commerce and Industry of Malaysia (ACCCIM).
Ter adds that he had suggested that China make it easy for Malaysian SMEs to obtain low-interest financing or soft loans from the China-sponsored Asian Infrastructure Investment Bank (AIIB, akin to the Asian Development Bank), as well as from the US$40bil Silk Road Fund, which was established to finance belt-road linked projects.
The AIIB Bank, scheduled to open soon, aims to promote interconnectivity and economic integration in the region and to cooperate with existing multilateral development banks.
The Chinese leader also gave his nod to the suggestion by ACCCIM to help SMEs open up markets and seek business opportunities in the belt-road countries, according to Ter.
In his speech, the ACCCIM leader stressed that the local business community is supportive of China’s belt-road initiative, which was first announced in 2013 by China’s President Xi Jinping to revive the ancient trade route between Asia and Europe.
Premier Li was in Malaysia for a four-day official visit on Nov 20-23 to attend the East Asia Summit, Asean-China Summit and to hold bilateral talks with Malaysian Prime Minister Datuk Seri Najib Razak. This was his first official visit to Malaysia since taking office as premier.
In his address on China-Asean co-operation while in Kuala Lumpur, Li reaffirmed that Asean was a priority for Beijing’s diplomacy in the region.
He proposed that China and Asean countries should, in their bid to deepen relations, focus on the development of infrastructure, trade, finance, “One Belt, One Road” initiative, security and capacity cooperation, and cultural exchanges.
China’s belt-road strategy will see Chinese corporations building roads, railway lines, ports and power grids badly needed in many parts of Asia, Africa and the Middle East. It will also facilitate China’s industries to invest and broaden its market in these countries, and vice versa.
And for Malaysia, China has indentified Malacca as a site for major infrastructural and tourism development under the road-belt initiative.
The belt and road covers 65 countries populated by 4.4 billion people. China has projected that infrastructure development alone will bring in investment of US$160bil (RM680bil) and China’s annual trade volume with belt and road countries will exceed US$2.5tril (RM10.6tril) in a decade or so.
If the belt-road policy succeeds in boosting infrastructure development, there will be better links to support economic growth and trade in the targetted regions. And for China, it will probably strengthen their diplomatic relations with these nations.
For Malaysia, businessmen see vast opportunities in tranport, tourism, trade, ports, education and industrial development brought about by this belt-road cooperation.
While some Malaysian corporations are already enjoying the benefits of this road-belt strategy, others are making regular trips to China to build contacts and explore opportunities.
Malaysian expertise in IT, services, wastewater treatment, halal products, healthcare and biofuel sectors could be exported to China, according to experts.
Once infrastructural development of the road-belt plan goes into full swing, there will be strong demand for services and supplies from SMEs. Analysts believe this belt-road plan will have 10-15 years of economic and business impact on Malaysia.
China has been Malaysia’s largest trading partner since 2009, and Malaysia is also China’s largest trading partner in Asean, with bilateral trade last year totalling US$102bil. The two countries are targetting to achieve US$160bil by 2017.
In recent years, China has become one of the top foreign investors in Malaysia. By end-2014, a total of 182 manufacturing projects worth US$2.83bil had been launched.