Investments from China: Malaysia can afford to be – and should be – choosy
Investments from China is now a hotly debated subject after Chinese state-owned entities bailed out 1MDB, and in the wake of the mega deals announced during Prime Minister Najib Razak’s visit to China in November 2016.
Broadly, we welcome China’s investments, just like we welcome investments from any other country as long as they are aligned with Malaysia’s national interests. Of course, what our national interests are is another matter for debate.
In recent weeks, attempts have been made to portray the UMNO-Barisan National Government as the party that is “pro-investments”, with MCA acting as if it were an agent of China Inc., while the opposition is denounced as being anti-Chinese investment.
The actual difference between the two is something else. While the UMNO-BN Government prefers blanket and free-for-all investments from China, the opposition is calling for caution and emphasises the need to be selective in these deals.
Those who defend blanket and free-for-all acceptance of China’s investments expectedly argue that Malaysia does not really have much choice if it desires Chinese funds to rekindle the sluggish and slow economy.
But throwing caution to the wind when scrutinising foreign investments, wherever they are from, is a dereliction of duty by the government.
It is wrong to adopt the attitude that we must not be choosy, because the Chinese economy is huge and growing while Malaysia’s is weak. In fact, I would argue that China needs Malaysia more than Malaysia needs China. It is a known fact that Beijing needs our participation in order to realise its Belt and Road Initiative (一带一路). Our problem as a nation right now is that Prime Minister Najib needs China to bail him out of his failed ventures, especially 1MDB.
The Belt and Road Initiative proposed by President Xi Jinping in September and October 2013 included the “Silk Road Economic Belt” covering mostly Central Asian states, and the “21st Century Maritime Silk Road” that mainly covers Southeast Asia.
It is a brilliant grand strategy that combines geopolitical realignment with economic realities, and is aimed at projecting China’s power outwards through infrastructure construction, which in turn helps China to dispose of its excess capacity. China is a proven leader in building infrastructure at relatively low cost.
Much as the developing countries in the region under the Belt and Road Initiative are in need of infrastructure renewal, it has nevertheless been difficult for China to attain such projects. One of the latest challenges to China is that the Trump administration is moving to realign with Russia. During the Obama years, the emerging great power China worked closely with the retreating great power Russia to mount a challenge against the United States. The prospect of a US-Russia alliance threatens the viability of the “Belt” part of the Initiative.
Alongside this, Beijing has to deal with the Northeast Asian region, which is not always a region that is friendly towards China.
This leaves Southeast Asia. It is here that China can possibly achieve both strategic and economic gains. As it is, states such as Laos and Cambodia, and to a certain extent, Myanmar, have been heavily dependent on China for trade and investments, with or without the Belt and Road Initiative.
If there are any new gains to be made for China’’s new policy outlook, it will have to come from bigger and more developed Southeast Asian states like such as Indonesia, Malaysia and Thailand.
Since the recent railway projects in Indonesia and Thailand have hit a snag, and if this is a sign of China’s limited ability to function in these countries,. then Malaysia could be the new poster boy that China needs in order to sell its grand vision.
In short, China needs Malaysia more than the other way round. At the very least, Malaysia does not need to be begging things from China. The relationship could be a mutually beneficial one of collaboration instead and not as one-sided as it is now.
But due to the political vulnerabilities of Najib, Malaysia seems to be on a selling spree of national strategic assets to China and agreeing to projects whose benefits for the nation are not obvious.
It is admittedly never easy to define national interests in such a context but there are five elements of foreign investments that we should reject, regardless of where they come from.
First, investments must not contain elements of corruption or signs of backdoor deals which that will burden taxpayers for generations. For instance, the opposition is against the East Coast Railway because it was awarded without an open tender, carries an exorbitant price tag, and there is a RM 9 billion gap between the figure announced by the contractor (RM 9 billion) and that from the Government.
Second, there must be no selling of national strategic assets. Again, it is not easy to define what assets are strategic and what are not, but the sales of power generation plants and ports is very worrying. Malaysia is a maritime nation located at one of the world’s most important passageways – the Malacca Straits – and at one of the most contentious areas – the South China Sea. It now seems that almost all peninsular ports, from Kuantan to the Malacca to Klang and, on latest speculations, to Penang, are going to see some form of China investment. Any foreign ownership of ports is problematic, whether by China or others.
Having almost all ports in the peninsula being owned by one particular great power should not be comforting to anyone at all.
Third, we must reject investments that do not utilise local materials. It makes no economic sense to allow full importation of foreign materials for huge projects as this will just worsen the balance of payment, and side-line local enterprises.
Fourth, foreign investments must stimulate local employment. It is worrying that some of the projects involving China’s investments generate almost zero domestic employment, and are therefore of hardly any benefit to Malaysians.
Fifth, Malaysia already has too many domestic developers and therefore has no need of foreign property developers. The nature of property development is speculative and investments in that sector do not proliferate economic activity in the long run.
What Malaysia needs from China are investments that transfer technology and skills. China is the technological leader in many fields that Malaysia would do well to emulate. China is certainly a leader in infrastructure construction, and therefore offers skills that Malaysians need to acquire. This can be done without involving corruption and backdoor deals.
Where foreign investments of any kind are concerned, the Government is obliged to ensure that local workers are offered better employment and that local industries gain from an expanded market and from technological upgrades, and by learning from their foreign partners.
In short, investments from China are not a problem per se but investments that are against national interests are what we are against.
* Media statement by DAP National Political Education Director and MP for Kluang Liew Chin Tong in Kuala Lumpur on 13th January 2017