PRIME Minister Tun Dr Mahathir Mohamad’s trip to Beijing next week to participate in the Belt and Road Summit and Forum will be followed closely not only by Malaysians and Chinese nationals, but also the international community.
Malaysia-China ties are expected to leapfrog after one year of choppy relations, caused mainly by the cancellation of China-linked infrastructure projects by the government of Dr Mahathir, alleging corruption and price inflation in the contracts.
The future for closer bilateral ties brightened up when the China-financed East Coast Rail Link (ECRL) project was revived after reducing its cost from RM65.5bil to RM44bil .
China Communications Construction Company signed a supplementary agreement on the ECRL with the Malaysian government in Beijing on April 12, after nine months of painful re-negotiations.
“The revived ECRL project, considered an important project in the Belt and Road Initiative (BRI), marks a new chapter in Malaysia-China relations. It brings significance to both countries in scaling our 45 years of strong bilateral ties to new highs,” says Tan Sri Ter Leong Yap, president of the National Chamber of Commerce and Industry of Malaysia.
In hammering out the new ECRL deal, both governments have shown their political will and wisdom to resolve problems.
While China has given many concessions in the new ECRL deal, Malaysia has met the special request by Beijing to ink the “supplementary” agreement before the second International Belt and Road Summit (April 25-27) – to be opened by Chinese President Xi Jinping.
As the ECRL is a flagship project of the Belt and Road Initiative (BRI) announced by President Xi in 2013, its resumption on April 12 is a relief to China. Inevitably, this has lifted Chinese sentiment towards Malaysia.
Deputy International Trade and Industry Minister Dr Ong Kian Ming said the ECRL revival had cleared uncertainties among investors and Chinese companies over the country’s trade policies.
“(Prior to this), these companies might have some reservations about coming to Malaysia, but I believe there will be more Chinese companies engaging with Prime Minister Tun Dr Mahathir following the ECRL deal,” he told reporters after a forum last Tuesday.
In a media roundtable on Thursday, Chinese Ambassador Bai Tian said reviving ECRL had instilled greater investment confidence in Malaysia from the Chinese.
“Greater confidence will attract more Chinese to come here for economic and infrastructure development. There is a long queue of Chinese investments outside MIDA (Malaysia Industrial Development Authority),” he said.
Malaysia is considered an ideal place for Chinese investments due to some similarity in culture and language, close bilateral ties and a relatively good English-based legal system.
“I am very positive on the future of Malaysia-China relations, after the new ECRL deal. Bilateral ties, trade and investments, as well as tourism will hit new highs,” says Datuk Keith Li, president of Chinese Entrepreneurs Association in Malaysia.
“Our people, who previously viewed Mahathir as unfriendly towards China, now see him as a wise and far-sighted leader,” adds Li, in an interview with the Sunday Star.
It was wise of the 94-year old leader to appoint former finance minister Tun Daim Zainuddin to lead the Malaysian team on the ECRL negotiation, as he is seen as an old friend of China and not easily influenced by Western prejudice.
Dr Mahathir’s recent positive remarks on China are also lifting for the Chinese.
In an interview with the South China Morning Post, he said he would side with “rich China” over unpredictable US if he had to make a choice.
Early this month, he told Malaysians to emulate the industriousness of China’s citizens who helped make their country technologically advanced in just a few short decades.
Using the example of how Malaysia’s Proton had partnered China’s Geely to produce the popular SUV X70, he said other Malaysian industries could succeed too.
According to Bai Tian, China remembers that Dr Mahathir was one of the first state leaders in 2000 to say that “China’s rise is no threat to the world” amid fear spread by the West.
Li believes major Chinese firms involved in high technology, green energy, recycling and agriculture will venture into Malaysia soon as “the ECRL deal serves as a wind vane for the Chinese investors”.
The amicable settlement on the ECRL is important for Chinese companies as they do not want to have their own investments suffer suspension like ECRL, which Malaysia at one point wanted to scrap.
During his four-day trip to China starting from April 24, Dr Mahathir is scheduled to meet with President Xi and Premier Li Keqiang separately for bilateral talks.
International Trade and Industry Minister Darrell Leiking; Transport Minister Anthony Loke Siew Fook; and Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin will accompany the PM on his trip to China.
The PM will attend the opening ceremony of the summit by President Xi on April 26, and deliver a speech at the top leaders’ roundtable discussion on the same day.
The Malaysian leader will also speak at a high-level BRI meeting the following day.
He is expected to share his positive views on BRI concept and critical assessment of BRI projects, and guidance on future roadmap.
Although Dr Mahathir is critical of some BRI projects, he was the first head of government to accept Xi’s invite to the Summit.
In fact, he has continued to air support for the initiative amid warnings from the US to developing nations of China’s “debt-trap” diplomacy.
Launched in 2013 by Xi, the BRI aims to create an economic land belt that includes countries on the original Silk Road through Central Asia, West Asia, the Middle East and Europe, as well as a maritime route that links China’s ports with those in South-East Asia, Africa and the Mediterranean.
The early beneficiaries of this ambitious plan were the least-developed nations in Africa and Asia, but it also means they are now in heavy debt.
While some countries argue that China is the only country willing to extend a helping hand in building costly infrastructure to help in their economic development, Sri Lanka’s experience in ceding ownership of a port to China has sparked alarm and sent shock waves.
Against this backdrop, Malaysia’s valuable experience in rewriting a deal with the world’s second largest economy could be a timely case study.
“Mahathir is attending the BRI forum as the head of a BRI partner state and not as an opponent of Xi Jinping’s ‘Chinese Dream’.
“His hosts can point to Mahathir’s participation as evidence of pragmatic and flexible cooperation between China and its partner states in BRI implementation,” says Dr Khoo Boo Teik, a professor at Tokyo’s National Graduate Institute for Policy Studies.
The new ECRL deal can be seen as showing the China’s willingness to address debt and corruption issues in BRI projects, and to make adjustments and concessions accordingly.
Chinese experts say it will provide a valuable experience for China.
“We can use the Malaysian experience to help deal with future cooperation projects,” Zhang Yunling, director of the Chinese Academy of Social Sciences’ Institute for International Studies, told the Global Times last Monday.
As the BRI is a new development model, it is “understandable that adjustments are needed to make projects better conform with local conditions in other countries”, he added.
While Dr Mahathir openly envisioned a modern revival of the ancient Silk Road for Asia’s resurgence in Tsinghua University in 1985 and is an advocate of BRI, “he is no one’s show horse”, opines Professor Khoo.
“As he had done so many times before, he will criticise the protectionist tendencies, trade disputes, and geopolitical tensions that burden the current global situation. More than ever before, he will ‘speak truth to power’ with his refurbished authority as a venerable elder statesman.
“Neither China nor the BRI will stop this old Asian nationalist with non-aligned convictions from rallying disadvantaged and vulnerable states to find a unified voice to protect their common interests in difficult times,” says the academic.
From Malaysia’s perspective, participation at the BRI summit/forum also implies that the country will not let go the massive global trade and economic opportunities in the BRI programmes, which can run up to US$5-6 trillion (RM21-25 trillion) in investments.
As the economic growth of Malaysia is expected to slow, it is important for the government to bring in investments that could spur economic activity.
Indeed, Malaysia can ill afford to ignore China – its largest trading partner and major investor.
Last year, bilateral trade hit a new record high at US$108.6bil (RM445bil), according to the Chinese Embassy.
Manufacturing investments from China stood at RM20bil last year, or about one third of the total inbound industrial FDI for Malaysia.
According to Bai Tian, China is encouraging its enterprises to buy more palm oil and palm oil products this year in response to Malaysia’s request at the conclusion of the ECRL deal.
The top envoy repeated on Thursday “there is no ceiling” to the purchase of the commodity, the position China took when Malaysia-China relations hit their peak during the rule of former premier Datuk Seri Najib Razak.
Last year, Malaysia exported 3.07 million tonnes of palm oil and palm products with a total value of RM8.38bil to China.
The current improved sentiment towards Malaysia could filter down to tourism.
Li expects Chinese tourists to swell to 3.5 million to 4.0 million this year, up from 2.94 million last year, with the feel-good factor after the ECRL deal. He expects the figure to hit five million in 2020.
But Malaysia must now seize the opportunity to lure China’s first-time outbound travellers, set to surge exponentially due to Beijing’s relaxation on passport application rules for the whole continent beginning this month.