Not so fast with China investments, caution opposition MPs

wongchen-Charles-SantiagoPETALING JAYA: Two opposition MPs have asked the government to be cautious of investments from China, citing the experiences of other countries such as Africa and Sri Lanka.

PKR’s Kelana Jaya MP Wong Chen asked if the Chinese investments were really “investments”.

He said in the case of Africa, the resources swap model was deployed. However, he cautioned that if the same model was utilised in Malaysia but the project was not financially feasible, the government would be unable to repay the loans to China.

“This is because in Malaysia, land belongs to the state governments, and oil and gas belongs to Petronas,” he told FMT.

Prominent banker Nazir Razak had earlier raised a red flag on the matter, asking the government to scrutinise Chinese-led investments in Malaysia that are part of the One Belt, One Road (Obor) initiative, particularly the 600km-long East Coast Rail Line (ECRL) project.

Nazir, who is chairman of CIMB Group Holdings Bhd, the country’s second-largest lender by assets, said the RM55 billion ECRL project should be thoroughly scrutinised as the project should not be solely measured in terms of investment scale, but also by its value proposition.

Wong Chen said ultimately, the Malaysian government would foot the bill for any Chinese project.

“The Chinese are actually ‘contractors’ bringing in soft loans from Chinese banks which need to be repaid.

“We need to analyse whether projects with China can actually generate economic multipliers. For the China companies, they in turn must make sure the loans are repayable,” he said.

Carry out cost benefit analysis first

Meanwhile, Klang MP Charles Santiago urged the government to carry out a cost benefit analysis before proceeding with the ECRL project.

Speaking to FMT, he said the government should rethink whether the country needed the project, and asked the government to look at Sri Lanka’s experience with China.

He was referring to the Hambantota port in southern Sri Lanka. According to a BBC report, the port has struggled to make money, partly because it is fairly isolated. The reports said with no industrial hub nearby, there were no natural customers on its doorstep.

But now, China looks set to take control of the port. It is reportedly talking to the government about plans to create a large economic zone and buying 15,000 acres of land to build factories and offices.

Santiago said the government needed to inform the public of the advantages of having the project, the possible challenges, and the opportunities it would bring in terms of new places it could develop and the job opportunities it could offer.

“Will it compromise the environment and disrupt any water catchment area?” he asked.

He said with the cost benefit analysis, the question of whether Malaysia really needed the project connecting the east and west coasts could be answered.

In Sri Lanka, he said, the Chinese helped build a port but the port was not utilised.

“The port is under-utilised and the cost is very high, causing the government to lose money. Did they really need the port?” he asked.

The DAP lawmaker said the Chinese government was now asking the Sri Lankan government for an exchange of land after it failed to pay the debt.

He asked the Malaysian government to explain the debt repayment plan for the next 20 years and the repercussions if the government were unable to pay the debt.

“Looking at financial constraints at this time, what if we can’t pay back? What are the repercussions?” he asked.