China-backed railway could be game changer as Malaysia marks 50 years of ties with Beijing

KUALA LUMPUR - Premier Li Qiang touches down in Kuala Lumpur on June 18 in a visit marking half a century of bilateral ties that has seen China dominate as Malaysia’s top trading partner for the past 15 years.

Most observers are expecting predictable outcomes from Mr Li’s working schedule from June 19 to 20, which will include meetings with both Prime Minister Anwar Ibrahim and Malaysia’s King, Sultan Ibrahim Iskandar.

These outcomes will likely comprise more economic diplomacy in the form of memoranda of understanding across various industries, as well as the fanfare to commemorate five decades since then Prime Minister Razak Hussein took the bold step to establish formal ties between Kuala Lumpur and Beijing on May 31, 1974.

Yet, one event on the agenda could prove a bright spark. What appears to be a run-of-the-mill photo opportunity on June 19 could mark a potential boost for a signature Belt and Road Initiative (BRI) project.

Malaysia’s foreign ministry said Premier Li will attend a “ground-breaking ceremony” at the Gombak construction site of the East Coast Rail Link (ECRL), which is being built by a Chinese firm with funds from a Chinese bank. This, despite the 665km cross-country line being already two-thirds complete.

In recent months, Kuala Lumpur has pitched an ambitious extension from the ECRL’s current terminus in the north-eastern state of Kelantan, with Transport Minister Anthony Loke suggesting on June 10 that it “may potentially be part of the Pan Asian rail network… to tap into Thailand’s entire rail network and link with Kunming, China via Laos”.

This proposal came after the Thai legislature on Feb 16 voted in favour of a so-called land bridge across the country’s south, a transport route which would ostensibly bypass the entire Malacca Strait and Singapore.

“Thailand wants China’s help for the land bridge but we are suggesting to both Beijing and Bangkok that an ECRL extension is more cost-efficient and benefits everyone instead of a zero-sum game,” a Malaysian government official told The Straits Times on condition of anonymity ahead of the premier’s visit.

The ECRL dates back to when Najib Razak – Tun Razak’s son – was prime minister from 2009 to 2018, which was a high watermark for bilateral relations as a slew of BRI projects were announced. Several of these projects have now fallen by the wayside since his election defeat and subsequent jailing over the 1MDB scandal.

Chinese President Xi Jinping visited Malaysia in 2013, which led to an elevation of relations to a Comprehensive Strategic Partnership, before then Premier Li Keqiang attended the East Asian leaders’ meeting hosted by Malaysia in 2015.

Hence, Mr Li Qiang will be the highest-ranking Chinese official to visit Malaysia in nearly a decade and his presence will be symbolic of Beijing’s backing for what remains the most important BRI deal in Malaysia, which was nearly cancelled along with several others after Najib lost power.

Tun Dr Mahathir Mohamad, who returned to the helm from 2018 to 2020, told ST that several of those deals were “detrimental to Malaysia’s economy”, including the ECRL.

“The cost was very high and (it was) not a necessary project. The contract was given to a Chinese company, the workers were from China, the finance was from China. Everything was from China, to the point where the profit was declared in China, so we don’t even collect tax,” he said in an interview with The Straits Times in May.

Dr Mahathir’s administration had renegotiated the deal then, bringing down the construction cost by one-third from RM65.5 billion ($18.8 billion) to RM44 billion and also inserting local subcontractors to work on parts of the project.

Despite that hiccup, the momentum of Malaysia-China economic relations continues to gather pace. Datuk Seri Anwar, in an interview with Chinese media on June 17, signalled Malaysia’s readiness to join Brics, the economic bloc led by Beijing along with Brazil, Russia, India and South Africa.

According to Malaysia’s foreign ministry, Mr Li and Mr Anwar – who visited China twice in 2023 – will witness “several memoranda of understanding” to foster cooperation in a range of fields from technology and tourism, to housing and higher education.

“The visit itself will be largely symbolic. But even these signals can pave the way for more trade and investment,” Singapore Institute of International Affairs’ senior fellow Oh Ei Sun told ST.

Referencing how Malaysia has mooted a controversial “orang utan diplomacy” akin to how China loans its giant pandas to other nations, he added that “an exchange, orang utans for pandas, without financial consideration, would cement friendship and trust”.

Xing Xing and Liang Liang’s 10-year stay at Malaysia’s national zoo was to have expired in May, with some quarters keen to see the two pandas continue to reside in Malaysia. Three cubs were born during this time, said to be a “world record” rate of reproduction.