PETALING JAYA: Sri Lanka has become the first Asian country to fall into what is called “China’s debt trap”, having previously received billions of dollars in investments into huge infrastructure projects, based on China’s guidance and promises, The Independent Singapore reported.
Sri Lanka is now facing the consequences of the vast investments, owing China US$8 billion out of the total US$64 billion overall debt that has arisen from the various projects.
As a result, most of the South Asian nation’s revenue is being directed towards debt settlement instead of towards much-needed development for the country which came out of a 25-year civil war in 2009.
Now, the news portal says, there is growing concern over the investment from the world superpower in Cambodia, Malaysia and even Indonesia.
“Experts asked questions about China’s sudden interest in Malaysia with the government of Prime Minister Najib Razak opening its arms and everything else to Beijing’s promises of massive loans.
“While China may still be considered a developing economy, its current strategy of providing soft power loans and aid to its regional neighbours is reminiscent of the tributary system that the country employed back in its empire days,” the portal reported.
The World Bank and Malaysia’s statistics department shows that between 2010 and 2016 state-owned Chinese firms constructed and invested US$35.6 billion (RM152 billion) worth of projects in Malaysia.
However, analysts believe the capital controls imposed by Beijing since earlier this year should see a drop in flow of investments.
The problems affecting the Forest City in Johor, and more recently, Bandar Malaysia in Kuala Lumpur, just adds to the concern.
Not surprisingly, it is the opposition who are asking most of the questions on China’s massive investment into infrastructure projects among other things.
“As a simple measure of magnitude, the 14 memorandums of understanding that Prime Minister Najib Abdul Razak signed with China last November stand grandly at RM143.6 billion, equivalent to 55% of our 2017 federal budget,” PKR vice-president Nurul Izzah Anwar was quoted as saying by Independent SG.
She added that Najib returned to China again for more in May this year, barely half a year after these deals were inked.
“Indeed, foreign investment remains important for economic growth. But as with any venture, we must adopt moderate and prudent approaches to cope with potential risks.
“Deals concluded too soon increases the plausibility for exploitation, collusion and corruption. Be frantic for China’s good graces and greedy for its wealth, and we stand to lose leverage over Malaysia’s own needs and priorities,” she told the portal.