China’s ‘One Belt, One Road’ initiatives in Malaysia

By Ryan Khoo / Alpha Marketing, The Edge Property | February 1, 2016 10:00 AM SGT
On Jan 14, I attended a conference in Johor Baru organised by the Johor Bahru Chinese Chamber of Commerce and Industry and had the opportunity to interact with several mainland Chinese managers and leaders from the private sector who are active in Malaysia. High on the discussion list was China’s “One Belt, One Road” policy and its implications for Malaysia and Iskandar Malaysia.
The final weeks of 2015 were quite momentous in terms of the Chinese presence in Malaysia. During a state visit in November, Chinese Premier Li Keqiang pledged to buy Malaysian government bonds, which have been hit by foreign selling as crude oil prices have been falling since late 2014 and by the1MDB crisis in 2015. This caused a knee-jerk uplift in the value of the ringgit, as the perception was China would step in to stabilise Malaysia’s financial markets.
It was also the biggest step forward for the financial sector between China and Malaysia since April 2015, when Malaysia became the second country in Asean (after Singapore) to have a renminbi clearing centre.
At the same event, China Construction Bank announced the listing of the world’s first 21st Century Maritime Silk Road bond worthRMB1 billion (RM667.1 million) on Bursa Malaysia. Again, this has been widely interpreted as a signal of confidence in Malaysia by the Chinese government.
Chinese taking positions in various industries
In Singapore, we remember China’s investments in Malaysia most clearly through Iskandar Malaysia. In 2012 to 2014, major Chinese property developers such as Country Garden, R&F Properties and Greenland Group bought up large strategic landbanks in the region. But real estate is not the only sector in which the Chinese presence is being felt. Key developments include:
  • Xiamen University Malaysia opened its doors recently in Sepang, just outside of the Klang Valley, on a planned site measuring150 acres. It is the first overseas expansion of the renowned Chinese university, with a full range of offerings and a targeted student intake of 10,000.
  • The RM7 billion Gemas-Johor Baru electrified double-tracking rail project was awarded to the state-owned China Railway Construction Corp. The track provides capacity for existing trains to move up to 160kph, improving the transport of goods across the country, including to Singapore.
  • The Malaysia-China Kuantan Industrial Park in Pahang has seen a RM5.6 billion investment to build a steel mill and upgrade port infrastructure. The initiative is jointly owned by Chinese and Malaysian...