With the belt-road in place, there will be better links to support economic growth and trade in the region. For Malaysia, businessmen see vast opportunities in various sectors.
CHINA’s “one-belt-one-road” economic development and cooperation initiative is the latest buzz word among businessmen and diplomats. It promises unprecedented massive investment and trade opportunities for Malaysia and 64 other nations across three continents.
But not many locals understood or paid heed to this Chinese proposal until the blast of publicity generated by the recent high-profile visit to China by Transport Minister Datuk Seri Liow Tiong Lai.
Pages of media coverage, particularly in the Chinese newspapers, on the special Malaysia-China dialogue with regards to the belt-road plan and possible future projects were eye-opening.
In a nutshell, China’s belt-road regional strategy aims to promote infrastructure development in Asia, the Middle East, parts of Europe, South Asia and South-East Asia to enable deeper economic cooperation. While the economic giant can increase its influence through this strategy, it can also support its domestic economy by boosting trade and creating business opportunities overseas for Chinese companies.
“‘One belt, one road’ is the latest buzz word in the business community. Everybody is talking about this plan and is geared up to grab a slice of the huge business opportunities it presents,” says Datuk Bong Hong Liong, president of Malaysia-China Chamber of Commerce (MCCC).
Datuk Yong Ah Pwi, former MCCC president, says the economic benefit of this belt-road strategy will drive the Malaysian economy forward for years and will even help the country achieve its Vision 2020 despite current economic setbacks and other adversities.
“This initiative has a positive impact for the whole world, not just Malaysia and the belt-road nations, for years to come. Everybody is talking about it. The whole world is watching it. If Malaysia is slow to respond, we will lose out,” Yong tells The Star.
Yong says by leading 160 businessmen to China recently, MCA was creating awareness on the importance of this Chinese strategy. The proposal is expected to create tremendous opportunities in transport, tourism, trade and education sectors.
While in China in mid-July, Liow reiterated Malaysia’s official stand to be an active partner in China’s belt-road initiative.
“While deepening our bilateral co-operation, Malaysia can also play the role of a co-ordinator for China to expand into the markets of other Asean and neighbouring countries,” Liow said at the opening ceremony of the “One Belt and One Road, China-Malaysia Business Dialogue” co-organised by MCA and the China Economic Cooperation Centre.
This one-day dialogue on July 14 was attended by 250 businessmen and government officials from both Malaysia and China.
Liow stated Malaysia was ready to work with China on developing connectivity.
He added ports in Malaysia would be upgraded and more free trade zones and industrial parks would be built near the ports.
“Our open-door policy allows 30% to 40% of Chinese investments in our ports,” he said, as he invited Chinese partners to invest in Port Klang and Port of Tanjung Pelepas.
He also announced that Malacca’s airport could be upgraded to allow direct flights from China to boost tourism and business travel.
One of the highlights of his official trip was the signing of seven MOUs (memorandum of understanding) in China, which will pave the way for the export of Malaysian durian, bird’s nest and halal food produced by local small and medium enterprises (SMEs) to China.
The belt-road initiative was first announced in 2013 by China’s President Xi Jinping. It aims at reviving the ancient trade route between Asia and Europe. While one-belt refers to the old Silk Road economic belt 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.
This 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 its own industries to invest and broaden its market in these countries, and vice versa. And, the financing involved will speed up the globalisation of the yuan as an international currency.
Together, the belt and road covers 65 countries populated by 4.4 billion people. It is projected that infrastructure development alone will bring in investment of US$160bil (RM608bil) and China’s annual trade volume with belt and road countries will exceed US$2.5 trillion (RM9.5 trillion) in a decade or so.
Alongside the initiative is the establishment of China-sponsored Asian Infrastructure Investment Bank (akin to the Asian Development Bank) and Silk Road Fund to finance belt-road linked projects.
If the belt-road policy succeeds in boosting infrastructure development in targeted regions, there will be better links to support economic growth and trade in these regions. And for China, it will probably strengthen their diplomatic relations with these nations.
For Malaysia, businessmen see vast opportunities in transport, tourism, trade, ports, education and industrial development brought about by this belt-road cooperation.
While major corporations such as YTL Corporation, Sime Darby, Sunway, Rimbunan Hijau and Kuok Brothers are already in the thick of action, companies clustered under active Chinese chambers are making regular trips to China to build contacts and explore opportunities.
Ong Chong Yi, Minister Counsellor (Economics) of the Malaysian Embassy in Beijing, reportedly told the July 14 dialogue that Malaysian expertise in wastewater treatment, halal products, healthcare and biofuel sectors could be exported to China. Already, one Malaysian firm is involved in a 15 billion yuan (RM9.2bil) seawater desalination project in Tianjin.
Despite the exuberance, many local SMEs are still in the dark about this belt-road, according to chartered accountant Koong Lin Loong, a council member of the Associated Chinese Chamber of Commerce.
He says once infrastructural development swings into full action, there will be demand for services and supplies from SMEs.
“Most of our SMEs are not well aware of this massive one-belt-one-road economic strategy. They think that this is only a macro programme, and it has nothing to do with them. But if they miss this opportunity, they will go nowhere. Their markets could also be eroded as this one-belt-one-road strategy pushes China’s enterprises to come out to broaden their market reach,” says Koong in an interview.
“This belt-road will have 10-15 years of economic and business impact on Malaysia,” says Koong. In contrast, Hong Kong has projected a 30-50 year impact on the colony and urged its bankers to focus on Islamic finance as many countries covered in the belt-road map may prefer Islamic financing.
According to Bong, Chinese investments under this plan have started streaming into Malaysia since last year.
“When the Chinese come out, their investments are in the billions. They have entered Iskandar Malaysia for property development and now they looking at industrial development.”
He notes that the Malaysia-China Kuantan Industrial Park in Pahang has been boosted by the investment of RM4.2bil in an integrated steel mill by Guangxi Beibu Gulf Iron and Steek Investment Co Ltd late last year.
The recent decision by Elion Group to joint venture with local SME, Global Green Synergy Sdn Bhd, to produce palm fibre to green the Kubuqi Desert with an investment of 1 billion yuan (RM600mil) is another example.
And not to forget the rescue of ailing Perwaja Holdings Bhd. Under a proposed revamp plan, China’s Zhiyuan Group will inject RM1.8bil into Perwaja and turn it around in 2017.
“Originally, Zhiyuan agreed to inject only RM300mil into Perwaja. Hence, when they raised the amount to RM1.8bil I was pleasantly surprised. I was told this will come under the road-belt initiative,” says Tan Sri Pheng Yin Huah, who controls Perwaja jointly with Tan Sri Abu Sahid Mohamad.
According to local Chinese businessmen, their counterparts in China feel comfortable to do business in Malaysia due mainly to the close relations between the governments and the large Chinese population here.
And Chinese government is still grateful that Malaysia was the first country in South-East Asia to build formal ties with China in 1974.
Malaysia is now China’s largest trading partner in Asean and the third largest in Asia. Last year, the total two-way trade was recorded at US$102bil (RM387.9bil), according to Chinese data. Both countries have a trade goal of US$160bil (RM608.3bil) by 2017.