China has the means to make the infrastructure plans of other countries happen, but as the case of Malaysia’s high-speed railway has shown, there is need for Beijing to be aware of public concern and sensitivities
Southeast Asian nations need infrastructure to sustain growth and China, more than any other country, has the means to make plans happen. But as Malaysia’s cancelling of a high speed rail link, a project that was part of Beijing’s “Belt and Road Initiative”, shows, realism is as necessary as vision.
Prime Minister Mahathir Mohamad contended the US$20 billion cost of the deal, struck under the government of his disgraced predecessor, Najib Razak, was too much for the country to bear and after months of review, has decided to have it scrapped. That does not mean its demise, though; there is always room for reshaping and renegotiation.
Pragmatism is necessary as much for China as Malaysia. The 688km line linking Malaysia’s west and east coasts was touted as a way of boosting the growth of less-developed eastern states by cutting travel times and increasing passenger and cargo traffic.
But elections last May forced Najib from office and it was inevitable, given the country’s financial problems, that Mahathir would review projects signed by his predecessor. The rail link is still justified, but now it will not be on such an ambitious scale.
The changed sentiment is not confined to Malaysia; around the region, governments are rethinking major infrastructure projects signed with Chinese state-run firms and banks. Myanmar has also scaled back its port at Kyaukpyu on the Bay of Bengal to cut costs. At the back of minds is Sri Lanka’s handing over in late 2017 of management of its port at Hambantota to a Chinese firm after being unable to repay debts.
But there are also worries about the trade war between the United States and China, a lack of transparency, commercial viability, lax environmental protection, conflict of interest among stakeholders and job opportunities for locals.
There has since been a marked slowdown in approval of new belt and road-related mega projects among the 10 countries of the Association of Southeast Asian Nations. Research by Citi Economics showed that in the second half of last year, there were only 12 with a total value of US$3.9 billion recorded, down from 33 worth US$22 billion for the corresponding period the previous year.
But a slowdown does not indicate governments are losing interest; they are being mindful of economic uncertainties and public concerns and, in Beijing’s case, the sensitivities.
ASEAN has the world’s sixth largest economy and the annual growth of member countries averages 5 per cent. Maintaining such a rate requires meeting infrastructure needs, which are estimated at US$2.8 trillion between 2016 and 2030.
Belt and road projects can help meet goals, but promised joint benefit will come about only if there is understanding, cooperation and coordination. Key to success will be a pragmatic approach by all sides.