Malaysia, one of several countries scaling back on projects under China’s Belt and Road Initiative (BRI) over fears of huge debt traps, could see these projects resume in about a year or two after a period of review, said local observers of Sino-Malaysian bilateral ties.
Anbound Research Centre (Malaysia) member Fung Vun Ket said Malaysia is not the only country facing problems with projects under BRI.
Pakistan and Myanmar are rethinking the cost of their projects under China, while in Sri Lanka the government has had to hand over the Hambantota Port to a Beijing state-owned company after failing to pay debts taken for the project.
However, Fung expects their Belt and Road projects to pick up again in two years, and likewise in Malaysia with the projects that have been shelved.
These include the RM83 million East Coast Rail Link and oil and gas pipelines in Sabah and Malacca. The fear in other countries is that the projects benefit China more than the local population.
Fung, however, said while the price of the ECRL can be renegotiated, the project should not be abandoned completely.
“We don’t have the money now, so we should just review other costs but retain the original plan of the project. It is also not realistic to say that costs will be lowered due to new technology in the future because costs can also go higher.
“It is the political cost (of ECRL) that is high, so we should instead review the political side of things and continue with the project,” said Fung of Anbound Research, which is a Beijing-based consultancy with a Malaysian outfit that advises government agencies and Chinese and Malaysian companies.
Malaysia-China Chamber of Commerce (MCCC) vice-president Joseph Lim said the chamber still viewed the ECRL as a “necessity”.
“It is only the costs that need to be negotiated. The finance minister has also said that the ECRL is still being negotiated and it will not be stopped entirely, just readjusted. (It) will help the imbalanced development between the west and east coasts of Peninsular Malaysia,” Lim said, noting that 25% of work on the ECRL had already been done prior to the suspension.
MCCC has lobbied the government not to cancel the ECRL project entirely but review, renegotiate or redesign it.
He said the chamber’s stand has been covered at many Belt and Road forums and in a meeting with the Council of Eminent Persons.
Another project that should continue, Lim said, is the Malacca Gateway as an estimated 100,000 ships sail through the Straits of Malacca every year, with about 70,000 of them to-and-fro China.
The project is expected to raise Malaysia’s economic competitiveness, he said, adding that China also views Malaysia as a country with which it can still work.
“Malaysia is still an important partner to China. On the South China Sea, Malaysia has shown restraint and tolerance and is not confronting China. So, to China, Malaysia is still a country that it can cooperate with.”
From ‘Ardent Lovers’ to ‘Just Friends’
This ability to continue working together, albeit at a cooler pace, remains important, agreed China-ASEAN Business Association (CABA) secretary-general C.D. Lim. Malaysia and China first established bilateral ties in 1974.
After the announcement of China’s One Belt, One Road initiative by President Xi Jinping in 2013, bilateral relations between China and Malaysia entered a new phase with closer economic cooperation and warmer rhetoric, until the change in Malaysia’s government last year.
“Malaysia-China relations are not as close as before, but as long as business can be done, then that’s fine.
“While Malaysians are concerned with the loans taken from China, on the other hand, even Chinese citizens are criticising their government for lending to other countries, saying they would rather the money be used to build more schools in China,” said Lim.
Fung added that the current context of Malaysia-China ties must also be understood in line with Prime Minister Dr Mahathir Mohamad’s thinking, who is not necessarily “against” China and also displays a similar cautious attitude towards the US and Singapore.
Fung described the relationship between Malaysia and China as having changed from “ardent lovers” to “just friends”.
Lim expects Dr Mahathir to lead Putrajaya back to a more balanced diplomacy with China, unlike the previous administration, which leaned heavily on Beijing.
Malaysia under Dr Mahathir for the second time will also forge closer ties with Japan and cooperate with regional neighbours to improve security, added Lim, also founder of local Chinese research and consulting firm, Insight Think Tank.
Lim said things look positive as there are now more Chinese-Malaysians among elected representatives and ministers, which will only help improve ties with China.
The bilateral relationship is growing, “just at a slower rate in the last two years”.