Malaysia’s Prime Minister Tun Dr Mahathir bin Mohamad plans to go to China in August to renegotiate Chinese-backed mega projects so that the Southeast Asian country will get fairer terms and more economic benefits from these deals, reported Bloomberg.
Notably, there are US$34 billion (RM 329.14 billion) worth of Chinese-backed infrastructure projects in Malaysia that had been implemented by the previous administration.
However, Dr Mahathir is concerned over these projects as most of their funding has been borrowed from China. Moreover, Chinese companies carrying out these projects are mainly using Chinese employees and equipment, so he wants these contractors to employ more Malaysians and use locally-made products.
Amidst the country’s debt of over RM1 trillion, the new federal government is also reviewing large-scale projects in a bid to reduce expenses.
For instance, the RM81 billion East Coast Rail Link (ECRL) being built by China Communications Construction Co has been temporarily suspended earlier this month as the government wants to lower the cost.
At the same, China Petroleum Pipeline Bureau’s (CPPB) RM9.4 billion Multi-Product Pipeline (MPP) and the Trans-Sabah Gas Pipeline (TSGP) projects have been halted. Finance Minister Lim Guan Eng said 88 percent of the funding has already been paid, but both projects are only 13 percent complete.
Aside from that, there are allegations that some of the funding for MPP and TSGP have been used to pay the debts of 1Malaysia Development Bhd (1MDB) as the company handling both pipeline projects is related to the controversial 1MDB that is entangled in a multibillion dollar corruption scandal.
“We expect some negative impact on future Chinese-related investments in Malaysia due to PM Mahathir’s nationalistic stance with regard to investment,” said BMI Research’s Head of Asia Pacific country, Chua Han Teng.
“However, we expect a compromise to mitigate the effect, with Malaysia unwilling to antagonise an important trade partner and China likely to prioritise its ambitious Belt and Road Initiative, of which projects in Malaysia are a key part.”
Notably, Malaysia is China’s largest trading partner in the ASEAN region after Vietnam with total trade hitting US$92.4 billion in 2017. Chinese foreign direct investment (FDI) here also soared by over 700 percent in the past ten years to RM9.9 billion last year
Image sourced from The Star Online
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