Malaysia pins its belt and road infrastructure hopes on deepening China ties

16/06/2024

With the flagship East Coast Rail Link back on track, Malaysia's transport chief visited Hong Kong to take some top tips from MTR Corp

Setting his sights on major investments from China, Malaysia's Transport Minister Anthony Loke says he's confident that ties will continue to deepen as the Southeast Asian nation powers ahead with an ambitious infrastructure agenda, including a slew of high-profile belt and road projects.

"There is a very strong bonding between Malaysia and China," Loke told This Week in Asia during a sit-down interview in Hong Kong last week.

"The relationship has grown over the years, and right now, it is very stable," he said. "We currently have many collaborations across many sectors between Malaysia and China, particularly in the transport sector."

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Loke was in Hong Kong leading a delegation to commemorate the 50th anniversary of diplomatic ties with Beijing. Malaysia is also expecting to welcome a visit by Chinese Premier Li Qiang later this month.

China has invested billions of dollars into the Southeast Asian nation's infrastructure, including under its Belt and Road Initiative. One project, the East Coast Rail Link in Peninsular Malaysia that Loke is spearheading, is scheduled for completion in 2027 at an estimated cost of 50 billion ringgit (US$10.6 billion) and will offer both freight and passenger services once operational.

microsoft, malaysia pins its belt and road infrastructure hopes on deepening china ties

An aerial view shows work under way in Pahang, Malaysia, on the East Coast Rail Link project in 2022. Photo: Xinhua

But Malaysia's investment landscape with China has not always been so straightforward. A number of belt and road projects were either axed or left in limbo in the political instability that followed the ousting of corrupt former prime minister Najib Razak in 2018.

Exemplifying these challenges is the Forest City mega-project in southern Johor state. Once hailed as a flagship belt and road project, the US$100 billion development remains largely uninhabited, proving a continual source of embarrassment for successive Malaysian governments.

Loke insists that Malaysia has regained a sense of political stability under Prime Minister Anwar Ibrahim, who took power in 2022 after forming a coalition government by uniting several opposing political factions. But questions remain over whether enduring rivalries within the alliance pose risks for Anwar's economic and social agenda.

"By and large, we have managed to put up a cohesive government," Loke said. "Policies are being formulated, government machineries are functioning as normal. We are beginning to see some results."

He said this was a marked improvement on the turmoil that had gone before, with three prime ministers in the space of three years before Anwar took the helm. This political volatility had multiple knock-on effects, even leading to the mothballing of a high-speed rail link with Singapore that Anwar's government is now trying to revive.

Malaysia's Prime Minister Anwar Ibrahim walks with Singapore's Prime Minister Lawrence Wong in Putrajaya on Wednesday. Anwar's government is working to revive a high-speed rail link between the two countries. Photo: Malaysia's Prime Minister Office via AP

"There is more confidence from the international community, especially international investors coming to Malaysia," Loke said, citing major investment announcements made by the likes of Microsoft, Tesla and other multinational giants in recent months.

"This has shown that investors have regained their interest and confidence in Malaysia," he said. "Of course it's very much upon us, the Malaysian government, to continue to formulate investor friendly policies, and also to provide stability and certainty for investors."

Despite the domestic political hurdles, Malaysia's position on China's belt and road plans has held firm, according to Ngeow Chow-Bing, director of the University of Malaya's Institute of China Studies.

Anwar's government "appears to want to have more strategic and long-term cooperation with China" and has remained committed to belt and road projects, Ngeow said, dismissing concerns that Malaysia may be too reliant on Chinese investments.

China Communications Constructions Ltd workers stand in front of a tunnel of the East Coast Rail Link project in Terengganu in 2019. Photo: AFP

Malaysia "will not be apologetic in terms of asking for more investment from China," he said. "Malaysia is speaking with roughly the same terms to other countries, and remains very open and welcome to investment."

"We see a large number of investments from China not because the focus is just on China, but sometimes Chinese companies react more proactively to our calling compared to companies from other countries," Ngeow added.

There is always the risk of tensions between Malaysia's ethnic groups affecting political stability and Loke acknowledged this, but he said that Anwar's government is fully aware of the need to "win over the confidence of all the races in Malaysia".

"We want to have a government that garners support from across the different races and different ethnic groups," he said, noting that while the Malay majority largely backed the opposition in the last election, Malay leadership remains entrenched within the governing establishment.

Malaysia's Transport Minister Anthony Loke (centre, right) shares a toast with Hong Kong Chief Executive John Lee Ka-chiu (centre, left) and other officials in Kowloon on June 6. Photo: Jonathan Wong

Expanding partnerships

While in Hong Kong, Loke said he met with the city's MTR Corporation for insights on its 'rail plus property development' model and to learn how Malaysia could likewise maximise property values near its railway stations.

"Transit-oriented development is something we are adopting as well in Malaysia," he said. "Already we are seeing a lot of interest from property developers from the private sector to bring on this transit-oriented development."

Improving connectivity between Malaysia and China was also on the agenda, Loke said, "not only between big cities and Kuala Lumpur, but also secondary cities" in both countries.

He pointed to increased demand for flights to China from across Malaysia, including Johor Bahru, Penang, Kuching and Kota Kinabalu, while noting an "influx of Chinese tourists to Malaysia" following the relaxation of visa policies that now allow 30-day visa-free travel for Chinese visitors.

A group of Chinese tourists pose for a photo in front in Kuala Lumpur. Loke said Malaysia had seen an

Loke drew parallels between China's Greater Bay Area and a proposed special economic zone spanning Malaysia's southern Johor state and neighbouring Singapore, highlighting the similarities in their integrated, cross-border vision.

"The concept of the Johor-Singapore special economic zone is similar to the Greater Bay Area in terms of the conceptual framework where you are integrating the island economy with the hinterland," he said.

"This is a reference point for us to see how we can work this out in Malaysia, especially with Singapore."

Expanding partnerships

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