Seen from the outset as a key partner in bringing China's Belt and Road Initiative to fruition, Malaysia has made clear progress with regard to a number of related infrastructure projects, despite some concerns about the consequences.
The Strait of Malacca: A vital channel for the success of the BRI.
When China's plans for the Belt and Road Initiative (BRI) were first unveiled, it was generally assumed that Malaysia would benefit substantially from the investments on offer and the likely co-operative opportunities. China is, after all, Malaysia's biggest export market and its most significant trading partner.
Given that Malaysia is one of the littoral states along the Strait of Malacca – one of the world's most important shipping routes – the country is seen as a valuable connector for China's broader infrastructure plans. In particular, it is a key component of the high-speed railway Beijing hopes will eventually run from Kunming down to Laos and Thailand, and then on to Malaysia and Singapore. Malaysia is also one of the most trade-dependent countries in the world, with trade accounting for 154% of the country's GDP.
To date, financing for the expansion of the country's ports and or the development of a number of industrial parks has already been put in place. The Kuantan Industrial Park in Pahang, the country's third largest state, for instance, has now been backed to the tune of RM5.6 billion (US$1.2 billion). This investment, some 40% of which has come from China, will be spent on the construction of a steel mill and a substantial upgrade to its port infrastructure.
Another major infrastructure project – Bandar Malaysia, a 197-hectare transport transit district – is now planned as one of the most ambitious developments in the greater Kuala Lumpur area. At present, construction is scheduled to begin this year, with completion due within 30 years. Once operational, it will be the main intercity link for all of the country's primary rail lines, while also offering access to 12 major highways.
Ultimately, the plan includes the construction of an underwater canal city, which would house a financial centre, cultural villages, lifestyle retail outlets, theme parks and gardens. The consortium handling the RM160 billion project is led by Iskandar Waterfront Holdings, one of Malaysia's leading developers, and CREC Malaysia, a subsidiary of the China Railway Group.
Commenting on the progress to date, Liang Haiming, Chief Economist at the China Silk Road iValley Research Institute in Beijing, said: "We have already established the China-Malaysia Port Cooperation Alliance, comprising 11 Chinese and six Malaysian ports. Work has also begun on the Strait of Malacca Maritime Industrial Park and a number of other projects. Given that the initiative wasn't proposed until 2013, the BRI has developed very quickly."
Despite the clear benefits on offer to Malaysia from the BRI, there have been some concerns about its wider implications, especially with regard to its consequences for the local environment. One particular flashpoint has been the Kuantan Industrial Park project, where open-pit mines are being used to extract bauxite destined for export to China.
According to reports in the local media, the mining has already caused extreme environmental damage and has seen a number of rivers in the immediate vicinity run red, while forests, plantations and orchards are also said to have been stripped bare. There are also suggestions that the air has become contaminated with radioactive dust, something that has poisoned and killed many of the durian trees for which the region is famous. This has led to a number of local farmers staging protests against the mine works.
Another major concern has been the amount of Chinese investment on offer and the terms on which it is being supplied. One body keen to regulate the country's financial dealings with the mainland has been the Malaysian Chinese Association (MCA), a political party that forms part of the ruling Barisan Nasional coalition.
Commenting on the arrangements currently in place, Datuk Seri Liow Tiong Lai, President of the MCA, said: "China is investing in our ports, railways and in the Kuantan Industrial Park. The cabinet has decided, however, that Chinese investors must use local materials and engage local industry players as a way of ensuring that we are driving our own economy forward."
There are also some concerns that inbound investment from China is still falling short of outbound investment to China. Highlighting this, Datuk Chua Tee Yong, Vice-president of the MCA and the country's Deputy International Trade and Industry Minister, said: "In 2015, Chinese companies invested RM10 billion into Malaysia. At the same time, though, Malaysian companies were investing RM30 billion into China."
Geoff de Freitas, Special Correspondent, Kuala Lumpur