What happens when you owe China too much


PETALING JAYA: A prominent socio-economic activist has warned Putrajaya that it risks putting Malaysia in the same trouble that Sri Lanka is in with its indebtedness to China.

There would be a heavy price to pay if China-linked mega projects were to fail, said Azlan Awang, who is deputy chairman of Bantah-TPPA and a founder of Blindspot, a socio-economic interest group.

Azlan told FMT there were similarities between Sri Lanka’s and Malaysia’s indebtedness to China.

He pointed to a recent violent riot near the port city of Hambantota in southern Sri Lanka. The rioters were protesting against a deal they said would result in the port becoming a Chinese colony.

The deal would see the port being leased for 99 years to a company in which China will have 80% ownership. It would also result in the establishment of an industrial zone where Chinese companies would be invited to set up base.

Azlan said the deal was a consequence of Sri Lanka’s failure to pay for the China-financed Mattala airport project. It should give a glimpse of how Beijing would deal with those failing to pay their dues, he added.

“Beijing may not be sending the Red Army, but the ownership of the Hambantota deep sea port as well as 15,000 acres of land for the new industrial zone ceded to China as its colony for the next 99 years will do.

“For Malaysia, what will be our pound of flesh if we default on our humongous debts?”

Azlan alleged that Putrajaya’s “indiscriminate and reckless” pursuit of investments and borrowings had led to “huge piles” of debt, without many multiplier effects or long term economic gains.

“While China may not be perceived as imperialistic, it certainly does not extend money out of chivalry. China knows exactly where its pound of flesh will be coming from.”

Former prime minister Mahathir Mohamad has expressed similar concerns. He recently said that land sold to Chinese companies would eventually become “foreign land”.

In October, it was reported that China would build and fund the East Coast Rail Link, a 620km high-impact project in Malaysia at an estimated cost of RM55 billion. Construction will begin next year and is expected to be completed in 2022.

Chinese firms are also involved in other development projects, such as the massive Malacca Gateway project.