KUALA LUMPUR, June 25 — Economic superpower China will have to compromise with Malaysia if it intends to continue its projects here, the Financial Times (FT) said following Malaysians’ demand for more scrutiny on the allegedly “lopsided” agreements.

FT noted that Malaysians were “alarmed” by Sri Lanka’s experience last year, in which the Sri Lankan government’s inability to pay a loan resulted in a firm owned by the Chinese government taking over a port there.

As the new Pakatan Harapan (PH) government reviews and seeks new negotiations on mega projects handled by Chinese companies that are allegedly overpriced and possibly irregular, FT said the usual “rhetoric” from China will not be sufficient.

“Chinese officials have responded with the usual platitudes about Chinese companies following the law and the government always operating on the basis of ‘mutual respect’ and ‘mutual benefit’.  

“But, with Malaysians demanding accountability and transparency from their new government, it will take real compromises, not just rhetoric, to keep these ambitious Chinese projects on track,” the business publication said.

“Giving ground will be uncomfortable for a Chinese government — and a Chinese public — that has become used to getting its way in south-east Asia through a combination of military threat, economic coercion and carrot-dangling,” FT added.

FT said China cannot rely on using “brute force”, and will need backing from governments and citizens of foreign countries for its mega infrastructure projects in its pursuit of its Belt and Road Initiative.

The paper also pointed to China’s technology tycoon and billionaire Jack Ma as the model for the former, noting that the Alibaba Group founder’s previous move to court Datuk Seri Najib Razak and recently Tun Dr Mahathir Mohamad after the latter became prime minister.

“Beijing will need to emulate Mr Ma’s flexibility and charm if it is to ensure that Malaysia does not go from being a leading light of the Belt and Road to a harbinger of the dangers of unsustainable Chinese investment,” the paper said.

Dr Mahathir has constantly assured the Malaysian government under Pakatan Harapan will be business-friendly and will welcome investments even from China, but FT noted that the leader also wishes for cost-effective and transparent projects that can truly result in “real benefits” to Malaysian companies and employees.

“That will prove difficult for the many Chinese state-owned companies operating in developing countries that bring thousands of their own workers, operate without public scrutiny and rely on soft Chinese state loans to fund projects that may not otherwise be profitable.

“But Malaysia’s unexpected electoral turn provides Beijing with a perfect opportunity to show that it is serious about its pledges to improve the efficiency of state-owned companies and build ‘win-win’ projects along the Belt and Road,” FT said.

In an earlier controversy over the East Coast Rail Link (ECRL) project undertaken by a Chinese firm, then deputy prime minister Datuk Seri Ahmad Zahid Hamidi had said that the project developer had applied to use workers from China due to language accessibility and as the operating system and manuals for the Chinese machinery would be in Mandarin.

The ECRL’s project owner later said that 70 per cent of the workers will be locals, noting in April that only 18 per cent or 311 of the 1,718 people already hired were Chinese nationals.

The ECRL project is currently under review, while the Malaysian government recently revealed two projects worth RM9.4 billion awarded to a Chinese firm during Najib’s rule had resulted in 88 per cent of payments being made despite only an average of 13 per cent work being completed.

https://www.malaymail.com/s/1645250/ft-under-microscope-china-must-compromise-to-keep-malaysia-projects-going