This article first appeared in Forum, The Edge Malaysia Weekly on June 24, 2024 - June 30, 2024

It is undeniable that China has a major influence on Malaysia. The presence of its companies is felt from the north to the south in the peninsula.

Some of the better-known investments by China-based companies are a steel plant and port in Kuantan, a railway workshop in Batu Gajah, power plants in Melaka and several solar panel manufacturing plants in Penang. Huawei is poised to be the anchor for the second 5G network in Malaysia while several of China’s state-owned construction companies are undertaking major infrastructure projects here.

Apart from investments, the country is Malaysia’s biggest trading partner. It is a fact that without China, our palm oil industry and many other natural resource-based sectors would suffer. Also, our tourism industry would suffer were it not for the tourists from China.

Amid the good working relations between both countries, there are also investments that have left deep scars on Malaysia and are felt by Malaysians as a whole.

Forest City in Johor has gained notoriety as a “ghost city”. It was developed by China’s Country Garden, catering mainly for buyers from China, and launched in 2016. However, the significant slowdown in China’s housing market since 2018 has affected the developer financially. The slowdown dampened its citizens’ purchases of assets overseas. Also, Forest City came under increased scrutiny by Chinese citizens from 2018, making it worse for the developer.

Now, many of the units in the development are empty and poorly maintained. Country Garden has defaulted on US$11 billion in offshore bonds and has virtually stopped all overseas investments.

Up north in the dense forests of Kelantan, a 665km railway track is being built to connect Kota Bharu to Port Klang. The award for the construction of the RM50.3 billion standard-gauge railway track was handed on a silver platter to China Communications Construction Company (CCCC).

In terms of infrastructure spending, the East Coast Railway Link (ECRL) is the single-largest construction project that the country has seen, but the construction spending has had no impact on our economy.

This is because the main contractor, which is CCCC, sources most of its requirements from China. It is said that even the workers’ personal items such as toiletries come from China. Local construction companies and suppliers get only a pittance of the RM50.3 billion spending on the ECRL.

Based on announcements to Bursa Malaysia, IJM Corp Bhd has received the biggest contract so far, a sum of RM258 million, which is a fraction of the total project cost.

The irony is that Malaysian taxpayers will pay for the ECRL for many years to come. It is financed by a Chinese government agency via a loan to Malaysia; it is not a gift to Malaysians.

In essence, we will pay for the infrastructure later but during its construction, there is very little multiplier effect on the economy.

Work on the ECRL started in 2017 when Datuk Seri Najib Razak, who is now serving a prison term, was the prime minister. It was one of two projects that Najib awarded to state-owned companies in China at inflated prices. In return, the plan was for China to settle some of the borrowings of Najib’s 1Malaysia Development Bhd (1MDB).

During the 1MDB-Tanore trial, Najib’s former special officer, Datuk Amhari Efendi Nazaruddin, testified that Najib had sent him to China in 2016 to negotiate the terms of the ECRL and a gas pipeline project. He also stated that in China, he was joined by Low Taek Jho, better known as Jho Low, who by then had already fled Malaysia after it was uncovered that billions that had been siphoned out of 1MDB had flowed into his account.

Another star witness in the 1MDB-Tanore trial, Jasmine Loo, also testified that she had met Jho Low in China in 2017.

Malaysians are still reeling from the colossal financial damage caused by 1MDB. Since 2015, the government has been servicing and settling the principal on 1MDB’s debts. Taxpayers are still servicing interest on a RM5 billion bond that it took in 2009.

The closest that China has come to responding on Jho Low is a statement it made in July 2020 in reaction to former Inspector-General of Police Tan Sri Hamid Bador’s statement that the fugitive was hiding in Macau and attempts to extradite him were not successful due to lack of cooperation from China. It was reported that the Embassy of China stated that Jho Low was not in that country.

Malaysia’s and China’s relations go back 50 years. But it has never been, and will never be, a relationship of equals. That is the reality.

China is the second-largest economy in the world and Big Brother to the Southeast Asian nations. It is Malaysia’s biggest trading partner and probably the single-largest contributor to the economy of the other countries in the region.

Apart from territorial disputes in the South China Sea, the nations in the region generally respect China for its economic prowess and the might of its military and enforcement agencies.

No one will forget how the country supported global growth when the US was in trouble in 2008. Until 2016, China’s investments overseas were the pillar of growth for the world. Only in recent years has it been more stringent in its overseas investments.

Nevertheless, if the situation warrants it, the country will step up. This is evident from its resolve to complete the ECRL even though the economics of the infrastructure will take many years to be realised and nobody knows whether the rail link from Kunming in China to Singapore will ever be completed.

On a smaller scale, when hundreds of Chinese citizens lodged police reports on being cheated by Tedy Teow Wooi Huat, the Malaysian founder of Penang-based MBI Group, China’s enforcement agencies flexed their muscles to extradite the suspect from Thailand in December 2022.

Until today, nobody knows the whereabouts of Teow, who is also wanted in this country.

If China has the resolve, it can assist Malaysia in helping to put an end to the 1MDB episode by facilitating the return of Jho Low.

This would be more meaningful to ordinary Malaysians than the RM13 billion in memoranda of understanding signed by companies from both countries during the visit by premier Li Qiang last week.

M Shanmugam is a contributing editor at The Edge 

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