No replacement for Chinese investors if they pull out, warns economist

The East Coast Rail Link is one of the Chinese-funded projects that has been cancelled for now. (Bernama pic)

PETALING JAYA: Economist Firdaos Rosli of the Institute of Strategic and International Studies has warned the government that no group of investors from a single country can fill the void left by Chinese firms if they take their investments elsewhere.

The warning came in the wake of remarks by China Entrepreneurs Association (Malaysia) president Keith Li which indicated frustration over Prime Minister Dr Mahathir Mohamad’s negative comments on Chinese investments.

Li was quoted in a recent news report as saying the government’s “targeting of Chinese investors in an unreasonable way” would scare off foreign direct investments (FDI). He questioned how long the review of Chinese-led projects in Malaysia would take, saying investors needed to know for certain whether they were welcome.

Firdaos said Chinese investments in Malaysia were massive and pointed out that it was wrong to say the Chinese were interested only in infrastructure-led investments.

He noted that China was the largest manufacturing investor in the country in 2016, 2017 and the first quarter of 2018.

Under the previous government, the Malaysian Investment Development Authority approved RM6.2 billion worth of Chinese investments related to manufacturing.

“In fact, within the same period, Chinese FDI more than doubled that of the combined manufacturing investments into Malaysia from France, Indonesia, Japan, Singapore, the US and Hong Kong,” Firdaos said.

He noted that Chinese firms were also involved in education, retail, health, tourism and various other sectors.

He agreed with Li that Malaysia needed a policy that provides clarity to investors.

“If we are seen to be targeting investments originating from one source, will we also resort to targeting others in the future?” he said.

“Our FDI policy has to be crystal clear and consolidated at federal and state levels.”

Hence, he added, it was important to explain to stakeholders how and why reviews of projects were being done.

Ali Salman, chief executive of the Institute for Democracy and Economic Affairs, also urged Putrajaya to announce its policy regarding FDI, saying investments could thrive only with predictability and stability.

“Sporadic statements cannot be a substitute for policy and hopefully will not define the future of China-Malaysia economic ties,” he said.

He also cautioned the government against leaving the impression that Malaysia would renege on its agreements with foreign investors.