China dangles the economic carrot

A NUMBER of economic promises have come Malaysia’s way as the region prepares for the arrival of the Kuala Lumpur-Singapore high-speed rail (HSR).

Various firms and countries have offered their technical expertise to the two South-East Asian countries, claiming their train models to be the best fit for the planned 350km line.

China is one of them, though some have noticed that the Asian superpower had a different approach in making their HSR bid heard.

Transport planner Goh Bok Yen said business moves coming from China would have a significant impact on the Malaysian economy, and in turn affect the contest for the HSR.

“They’re actually approaching from a non-technical based approach. They’re coming from all doors, windows and gateways. Non-direct benefits come on board as well.”

State news agency Xinhua reported in February this year that China remained Malaysia’s biggest trading partner for the seventh year running in 2015.

Their firms have also been buying Malaysian assets at multi-billion ringgit prices, including 1MDB’s (1Malaysia Development Bhd) energy assets at RM9.83bil, and an equity stake in Bandar Malaysia.

China Railway Engineering Corporation later announced that it would set up its regional headquarters in Bandar Malaysia, where the main terminal for the planned HSR line will be.

The Star reported that China had bought more Malaysian Government Securities, with a possible inflow of new money of up to RM30bil.

Promises of economic development have also been made.

The Chinese embassy’s economic and commercial counsellor Wu Zhengping said in May 2015 that Chinese companies might be “encouraged” to locate their factories and firms along the line.

On top of that, non-HSR Chinese rail technology has been used in Malaysia for some time.

For example, KTM Berhad’s Komuter and Electric Train Service (ETS) cars, which run from Gemas to Padang Besar, are made by CSR Zhuzhou.

The new Sri Petaling Line LRT extension also got 20 six-car CSR Zhuzhou train sets.

The China Railway Rolling Stock Corporation (CRRC) was reported to also have a rolling stock plant in Batu Gajah, Perak.

Transport Minister Datuk Seri Liow Tiong Lai indicated in a recent interview that he was impressed with China’s rail technology. However, he also said that nothing was confirmed at this stage.

“Nobody can say anything now. We should be fair to all because this is an international tender,” he told The Star in an interview recently.

Malaysia, he said, wanted to enhance its trade with China, adding that the country’s two-way trade with Asia’s biggest nation exceeded US$100bil (RM402bil) in 2014.

Liow said Malaysia was keen on China to not only take on its projects but bring in soft loans and come up with technology transfers.

Goh said the other contending countries did not have the same kind of approach as China had.

“I strongly feel there will be an advantage (for China), which is not easy for others to follow,” he said, adding however, this did not mean the deal was sealed.

Goh said this might be so if it was up to Malaysia. But Singapore, he said, was also part of the decision-making process.

University of Tasmania’s Asia Institute director Prof James Chin agreed.

“Malaysia will fall into what the Chinese want, but I’m not sure about Singapore,” he said.

Chin said the Chinese with their plans to link the end of South-East Asia to their mainland would want their HSR standard to be adopted.

Singapore and Thailand, he said, would not agree to this without some form of concession.

Chin said Malaysia’s southern neighbour was looking for a seamless connection between its country with KL or Penang.

Association for the Improvement of Mass Transit advisor Moaz Ahmad said that China had “a lot of push” over the Indochinese countries, and South-East Asia (except for Indonesia, he added).

“Since the vision is to have a Singapore-Kunming rail link, it follows that China can exert more pressure on Malaysia and Singapore to choose a Chinese company,” he said.

Moaz said Singapore was looking to have an anchor for their Jurong business district (the HSR line will end in Jurong East). He added that the railway might also attract more Singaporeans to venture into peninsular Malaysia.

“We already have Singaporeans heading to Johor Baru for shopping; and Yong Peng, Kluang and Malacca for the weekends. Now they’ll be going to Port Dickson as well,” he said.

The five towns (Seremban, Ayer Keroh, Batu Pahat, Muar, Nusajaya) between KL and Singapore, he added, might also turn into mini-financial and industrial centres serving the interests of both countries.