PETALING JAYA: Just months ago, many Malaysians were voicing their concerns over the influx of Chinese-led billion ringgit projects in the country, including the ambitious One Belt One Road (Obor) projects.
Criticisms began to mount after Dr Mahathir Mohamad – Malaysia’s longest serving prime minister – hit out at the projects, warning they could compromise the nation’s sovereignty.
But even as critics labelled “Chinese money” as the Barisan Nasional-led government’s saviour, Beijing had already begun tightening the noose on the outflow of foreign funds, raising questions over the sustainability of Chinese projects, such as luxury property developments in Johor Bahru and infrastructure projects under Obor.
The Obor initiative has seen Beijing sign some US$926 billion in projects along land and sea routes, including railway networks, highways and ports in countries such as Laos, Malaysia, Pakistan and Vietnam.
Combined, the land and sea routes – known as the Silk Road Economic Belt and 21st Century Maritime Silk Road – span over 15,000 kilometres.
One analyst, Lee Heng Guie (picture), the executive director of the Socio Economic Research Centre, said Beijing wouldn’t stand in the way of Obor projects as they were vital to Beijing’s geo-economic and trade strategy, amid concerns that the capital flight controls could derail the initiative.
But veteran economist, Hoo Ke Ping disputes this, saying Obor was driven by geo-politics rather than geo-economics and that only projects vital to China’s geo-politics would be spared.
“Not all projects within the Obor initiative or Chinese-led projects are vital to China’s geo-political needs. The Melaka Gateway isn’t as vital to China’s geo-political needs as the East Coast Rail Link (ECRL) because its not viable and won’t benefit China the way the ECRL would,” Hoo told FMT.
He said the Melaka Gateway project, which includes a deep sea port, wouldn’t be able to compete with the bigger ports in Malaysia or Singapore’s mega Tuas Port, while the ECRL enabled China to bypass Singapore by linking the Kuantan port and Port Klang.
Pointing to China’s reserves – which have dropped from US$4 trillion to US$3 trillion in the past year – Hoo said he couldn’t see how Beijing would allow billions in US dollars to leave the country for projects which didn’t suit its geo-political needs.
PKR’s Kelana Jaya MP Wong Chen, however, has a different view. He said Obor infrastructure projects would not face much, if any, capital outflow restrictions as these were backed by Beijing.
But as far as he’s concerned, it “won’t be plain sailing either” because infrastructure projects involve public money which means they will have higher standards of governance, and must make commercial sense and be financially feasible.
“Overall, I foresee China taking a tough stand on property projects and as such the Tun Razak Exchange (TRX) deal may have serious problems,” he said, adding he also believed promoters of the ECRL would have a tough time convincing Beijing that the project was commercially sensible.