BRI & Malaysia: Miraculous Journey

BRI (Belt and Road Initiative)

Despite constant and continued political instability, the level of cognizance of the China-initiated BRI remains positive, productive and participatory among the different ethnic communities in Malaysia.

Right from the beginning the two sides agreed to coordinate and promote development and cooperation in various fields to further enhance bilateral ties, which is injecting new momentum into the prosperity and development of the two countries and the entire region.

The two sides agreed to vigorously advance high-quality BRI cooperation, cultivate growth points for cooperation in the digital economy, green development, new energy and other areas, so as to bring more tangible benefits to the two countries and their people.

BRI and Malaysia:

It seems that the BRI is giving Malaysia an opportunity to make a choice to boost their own economy and is looking forward to more cooperation in trade and investment. In this connection, Malaysia supports the BRI to encourage sustainable development throughout Asia and bring the region closer together through a transparent and fair mechanism.

Economic Bond:

The strong economic bond between Malaysia and China has been evidenced by the fact that China has remained the country’s biggest trade partner, and Malaysia is receiving increasing number of Chinese tourists which recorded a 7.6 percent increase in the first 5 months of this year.

Strategic location:

Malaysia’s strategic location as it lies by the Strait of Malacca could help it benefit from the BRI by playing a bigger role like providing services to ships passing through.

Obviously, it is halfway between Europe and China. It can be a point where goods from China can be redistributed to the ASEAN area and vice versa. Goods from Europe too can come to Malaysia and for us to be a distribution point, a hub for trade in Southeast Asia.

China-Malaysia friendship:

The friendly relations between China and Malaysia date back centuries. Chinese great navigator Zheng He (1371-1433) and his fleet had visited Malacca five times in the epic voyages to the West, boosting friendship and trade between the two countries.

BRI and Malaysia

In 1974, Malaysia became the first ASEAN country to establish diplomatic ties with China. The bilateral relations between Malaysia and China have improved tremendously in the past four decades, country has benefited from the relationship and the development of China as it became a huge market for Malaysia.

Malaysia China cooperation:

The Malaysia-China cooperation through BRI involves mega projects such as railway links, ports, energy, advanced technology, trade and financial assistance.

Interestingly, Malaysia is a top 10 BRI country and BRI projects, including those in construction, transport and digital infrastructure, are the widest in scope and the largest in financial scale of any BRI projects in Southeast Asia, since the launch of the BRI in 2013.

The BRI was proposed by China in 2013. It refers to the Silk Road Economic Belt and the 21st century Maritime Silk Road, which aims at building trade and infrastructure networks connecting Asia with Europe and Africa along the ancient trade routes of the Silk Road.

Right from the beginning, the BRI has been further increased trade between Southeast Asia and China, and Malaysia is looking forward to serving as a hub for the greater exchange in the region.

On its part, Malaysia had advocated long ago the revival of the ancient Silk Road, the land route that links China to Europe, and it was good to see that China also took into consideration the Maritime Silk Road in the BRI.

East coast Rail Link:

Under flagship of the BRI, the East Coast Rail Link (ECRL) is a mega railway infrastructure project designed to improve connectivity between Peninsular Malaysia’s East Coast states (Kelantan, Terengganu, and Pahang) and the West Coast states (Negeri Sembilan, Selangor, and the Federal Territory of Putrajaya), which is currently only partially connected by rail.

BRI

In addition to improved connectivity, the ECRL is intended to spur the development of the industrial, commercial, and tourism sectors along its route. A groundbreaking ceremony was held on August 9, 2017, to mark the start of construction. As of March 2023, more than 45 percent of the project had reportedly been completed. The rail line is scheduled to commence operation by 2027.

EXIM:

The project is primarily funded by a loan from China’s state-owned Export-Import (EXIM) Bank. The expected total cost of the project has changed several times, reflecting a shifting domestic political landscape. The cost estimate was revised again to RM50 billion in 2021. The most recent announcement estimates the rail line to total 665 km in length.

The Malaysia-China Kuantan Industrial Park (MCKIP) is another mega project of the BRI which has remained a key economic driver along Malaysia’s east coast a decade after its launch, boosting industrial output and job creation.

Industrial Park:

It is the first industrial park in Malaysia to be jointly developed by both Malaysia and China, and to be accorded the national industrial park status. The MCKIP, together with the China-Malaysia Qinzhou Industrial Park situated in China’s southern Guangxi Zhuang Autonomous Region, has set an innovative example of bilateral economic cooperation under the model of “Two Countries, Twin Parks.”

In this regard, the development and expansion of Kuantan Port in Pahang state has allowed products from the industrial park as well as other key Malaysian industries, particularly palm oil, rubber and other commodities, to benefit, having a direct outlet to the South China Sea, facilitating ease of trade with East Asia.

With the full completion of the expansion, the throughput of Kuantan Port is expected to double from 26 million freight weight tonnes to 52 million freight weight tonnes. The increased port activities and expansion of cargo services will generate jobs for the locals in the shipping industry and business opportunities for local freight forwarders and logistic players,”

The two sides also agreed to vigorously advance high-quality BRI cooperation through the cultivation of growth points for collaborations in digital economy, green development, new energy, and other areas with common aims to bring more tangible benefits to both countries.

According to official data, China remains Malaysia’s largest trading partner for 14 consecutive years with total trade of US$110.6 billion (RM488 billion) in 2022. On the investment front, China was the biggest foreign direct investor in Malaysia in 2022, with investments amounting to US$12.5 billion (RM55.16 billion)

Hopefully, despite political ups & downs Malaysia will continue to support the BRI and that the long-term economic outlook between Malaysia and China will remain positive. The focus on BRI will now shift toward the so-called high-quality BRI projects, which seek to align with Malaysia’s ongoing efforts to diversify its economy and reduce reliance on traditional sectors such as manufacturing and agriculture.

Massive Chinese investments in sectors like renewable energy, artificial intelligence (AI), and technology will go a long way to help Malaysia in achieving a knowledge-based economy that relies on the development of human capital, innovation, and high-tech industries.

The senior Malaysian policymakers refute claims about a debt trap allegedly caused by the BRI’s projects, saying that the BRI offers an opportunity to developing countries to make a choice.

Conclusion:

In summary, Malaysia would want more quality investments in the BRI package such as digital economy and the renewable energy or the electric vehicle space.

Hopefully, the projects of BRI in Malaysia would help bridge the digital divide, boost productivity, support capacity building, and foster economic development, thereby encouraging entrepreneurship and job creation.

The two countries could also collaborate on the development of green/blue hydrogen as well as in food security. Cooperation in agricultural technology, such as precision farming, agricultural machinery, crop breeding techniques, agricultural productivity, food security and sustainable farming practices can also be part of the BRI in the days to come.

This article is written by Dr. Mehmood Ul Hassan Khan. Executive Director: The Center for South Asia & International Studies (CSAIS) Islamabad

Regional Expert: China, CPEC & BRI

BRI

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