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CHINA'S INVESTMENT IN MALAYSIA, A BOOST TOWARDS BECOMING A DEVELOPED NATION

KUALA LUMPUR, May 15 2017 (Bernama) - Prime Minister Datuk Seri Najib Tun Razak's current visit to China has been one of the most productive with significant, judging from the signing of nine business agreements between Malaysian and Chinese companies, worth RM31.3 billion, in various areas including construction, agriculture, stock exchange, infrastructure and port and, airport operations.

With China's economic presence becoming more prominent in the region and globally, Malaysia is reaping the benefit of a strong bilateral relationship with China, which President Xi Jinping described was "at its best".

Xi praised Malaysia for the country's support to the ''One Belt One Road'' initiative and expressed his support to any Chinese company wanting to invest in Malaysia as long as they fulfilled the required criteria.

As Malaysia pursued its ambition to become a developed nation, support from the world economic powerhouse will be a major boost to the economic development as seen in a number of developed countries in the past such as South Korea and Singapore which had also been dependent on capital and technological transfer from other developed nations.

Meanwhile, PM, who is on a five-day working visit to China, beginning last Friday, discussed with Wanda Group of the possibility for the Chinese multinational conglomerate taking over as master developer of the ambitious and mammoth Bandar Malaysia project.

A new milestone was also achieved there for the Digital Free Trade Zone as Malaysia and China's giant e-commerce, Alibaba Group, was expected to kick start operations in October, capitalising on Alibaba's iCloud e-commerce platform.

As China continued to be one of Malaysia's main source of trading and investment, there were some public discontent over the country's over-reliance on China but some economists begged to differ.

Affin Hwang Investment Bank Bhd Economist Izzuddin Yussof said the increasing relationship between Malaysia and China was mostly due to strategic reasons rather than about China per se.

"On infrastructure projects, the government has a preference towards China due to the low cost of funding offered," he told Bernama.

Furthermore, Chinese companies have the capability of carrying out these projects and this becomes an attractive package for the Malaysian government to pursue.

RHB Research Institute, Head of ASEAN Economics, Peck Boon Soon said China was just another foreign direct investor that could help Malaysia grow its economy although its investments were becoming more visible in recent years.

"Until today, Malaysia still receives a sizeable amount of foreign direct investments from the United States, Europe, Japan and Singapore but China is becoming more prominent in recent years due to its policy of encouraging investments abroad," he pointed out.

Peck said China's net direct investment in Malaysia rose from just RM25 million in 2011 to RM975 million in 2014 and jumped to RM3.8 billion last year.

"Despite the sharp increase, the RM3.8 billion only accounted for less than 10 per cent of total net foreign direct investment in the country," he pointed out, adding that the share would be significantly larger if Hong Kong's investment was considered as part of China.

As part of the visit, PM attended the "One Belt One Road" forum which discussed China's long-term strategic vision involving large-scale Chinese and multilateral financing of infrastructure development in many developing countries, notably in the Asian region and also Africa, the Middle East and Eastern Europe.

The forum was attended by 28 world leaders, among others, Russian President Vladimir Putin, Italian Prime Minister Paolo Gentiloni, President of Turkey Recep Tayyip Erdogan and President Joko Widodo of Indonesia.

PM also witnessed the signing of three memorandum of understandings involving the Ministry of International Trade and Industry, Transport Ministry and Ministry of Agriculture and Agro--Based Industry, ahead of the forum.

Commenting on the initiative, both economists were in consensus that China's growing economic influence was not only limited to Malaysia but the region as a whole.

Peck said as the Chinese economy grew to become the second largest economy in the world, it was quite normal for an economy of China's size to have influence on other economies in this region due to the increasing trade and investment ties.

He said this would allow countries in the region to diversify their trade and investment.

"The Belt and Road Initiative will certainly increase China's good working relations with these belt and road countries, in my view," he said.

As for Izzuddin, he said China's economic influence was likely to become larger and concurrently benefit the regional economy from higher trade activity and opportunity.

"Intra-trade activity in the region is likely to increase, and at the same time, we will become more dependent on each other just as how the European Union had become - though it will remain a trade and investment activity," he added.

Bilateral trade between China and ASEAN, had grown from US$9 billion in 1991 to US$346 billion in 2015, and as such, the ''One Belt & One Road'' initiative has become a key geopolitical priority for ASEAN countries.


SOURCE : BERNAMA


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