FE Today Logo

Malaysia renegotiating relations with China and neighbours

Muhammad Zamir | September 17, 2018 00:00:00

President Xi Jinping greets Malaysian Prime Minister Mahathir Mohamad at the Great Hall of the People in Beijing on August 20, 2018. During his talks with Mahathir, Xi said the two countries should be dedicated to raising the representation of developing countries in global affairs. —Photo courtesy: China Daily

Malaysian Prime Minister Mahathir Mohammad, consistent with his pre-election pledge, has initiated a review of his country's foreign relations with neighbours. This includes analysis and evaluation of the existing matrix and Malaysia's engagement pertaining to the economic, employment, energy and commercial sectors.

This dynamics associated with reforming governance led Mahathir to undertake a five-day official visit to China, from August 17-21. It was his first after his recent electoral victory. He had earlier visited China seven times as Prime Minister of Malaysia from 1981 to 2003.

Mahathir's visit to China this time was aimed at opening up new prospects. Highlighting the importance of the visit, the Chinese Ambassador to Malaysia Bai Tian remarked China "considered Mahathir as a well-respected and long-time friend of the Chinese people". The subtle nuances were further highlighted by the Ambassador with the comment that - "we may not see eye to eye on every issue but we are committed to resolving the differences or settling the issues through sincere and friendly dialogues in the manner of friends". Such an observation at this critical time when the whole world is watching with care the trade war between the USA and China had special significance.

WIN-WIN DEALS AND LESSONS FOR BANGLADESH: The above aspect led the Chinese government to attach special significance to the nuances of this visit and agree to further strengthen and enhance relations with Malaysia and "iron out" a new blueprint for the two countries by attaching importance to "each other's core interests and major concerns". Analysts interpreted this as an effort to reach consensus on how to synchronise their development strategies so that mutually-beneficial cooperation can be taken to a higher level in areas like investments, agriculture, digital economy and advanced technology. Mahathir subsequently made it clear that these measures would enhance employment opportunities in his country.

Mahathir's visit had several dimensions.

It may be recalled that economic cooperation between China and Malaysia has significantly increased in recent years. China has been Malaysia's largest trading partner for nine consecutive years. They have also been the largest investor in Malaysia's manufacturing industry for the last two consecutive ears. They have also been the largest source country for foreign tourists to Malaysia for six consecutive years. This last factor has been helped because of the large Chinese community in Malaysia who are involved not only in trade and construction but also in providing support to the Malaysian tourism sector.

The important areas of engagement led Prime Minister Mahathir to have in-depth discussion with President Xi Jinping, Premier Li Keqiang and other Chinese leaders. He also had serious discussions with Chinese manufacturing and business houses. These deliberations assumed particular importance because ahead of the Malaysian elections, Mahathir's Pakatan Harapan coalition had accused the then ruling party of selling out national interests in its dealings with both China's government and its corporate sector. This led analysts to monitor Mahathir's visit to China very carefully due to its sensitive elements.

It was also this delicate connotation that led Mahathir to prepare carefully ahead of his visit in August. In May he sent businessman Robert Kuok to meet the Chinese Ambassador in Kuala Lumpur and in July he sent his trusted lieutenant Diam Zainuddin, who heads the government's Advisory Council, to visit Beijing and begin negotiations on unwinding two billion-dollar deals signed by the former Najib Razak government. Beijing, it was reported, had treated both meetings seriously. This helped to prepare the ground for Mahathir's visit in August.

This delicate aspect of the visit had been carefully underlined by Mahathir in a press conference ahead of his visit. He had touched on the on-going charges of different financial scandals and unfair engagement that had smeared the Najib government's different China-backed projects worth more than US$ 22 billion that included a major rail link from the Thai border to Kuala Lumpur. Najib was subsequently accused of agreeing to quick deals with Beijing in return for pay-offs. Mahathir in the conference had pointed out that "we are looking at the agreements entered into by the previous government. Where we can drop we will drop, where we can modify, we will do that - but the most important thing for us is to save money". This paradigm was given importance because, consistent with his pre-election pledge, Mahathir is now trying to cut Malaysia's national debt, which has ballooned to nearly US$ 250 billion and has also eroded the value of Malaysia's currency, the Ringgit.

'A NEW VERSION OF COLONIALISM': Consequently, it was not a surprise that Mahathir, during his visit drew attention to the fact that wealthy countries should not use their wealth to take advantage of less developed nations. In this context, responding to Premier Li, he mentioned that -"there is a new version of colonialism happening because poor countries are unable to compete with rich countries just in terms of free trade. It must also be fair trade". This led Chinese Premier Li to say that he hoped the two countries would be able to achieve "balance" in their trade relations. President Xi also assured Prime Minister Mahathir that the two countries must "properly address existing problems based on the principles of mutual respect and equal consultation".

One must admit that such a dialogue would also be pertinent in the context of Bangladesh's bilateral trade relations with China and India, its two biggest trading partners, with whom it has a total trade deficit of more than US$ 15 billion. We have to learn how to deal with such a situation from Malaysia. Otherwise, persistent current account trade deficit is bound to seriously impact on our own financial position and the value of Taka as against other international currencies.

ALIBABA & MULTIMEDIA SUPER CORRIDOR: Mahathir also used the opportunity of his visit to address the issue of Chinese private investment in Malaysia. In this regard he had a fruitful meeting with Ma, the head of Alibaba Group Holding Ltd., known the world over for its innovative ideas and use of technology. After discussion Ma pledged to help Malaysia in two important areas - marketing and speedy delivery system. Billionaire Ma also admitted that he was inspired to venture into his current multi-faceted business initiative 23 years ago by the then Premier Mahathir's Multimedia Super Corridor vision. He assured the Malaysian Prime Minister that his company would work closely with the Malaysian government in strengthening that nation's digital infrastructure and also help young entrepreneurs and small businesses to grow.

PROTON: The other achievement from the visit was that of Proton Holdings of Malaysia receiving permission to enter the Chinese automobile market, considered one of the biggest in the world. Latest statistics indicate that as compared to 2008, car unit sales have grown from 6.76 million to over 24 million units in 2017. Proton will be setting up an automobile manufacturing plant in China which will enable them to assemble and market their cars in China. Till now Proton was having difficulty in entering the Chinese market because they produce right-handed drive vehicles in Malaysia whereas in China laws require left-handed driven vehicles. This problem will now be overcome by modifying and assembling the cars in the production plant in China. There is no doubt that this will be a major step within the evolving uncertainty and the escalation of tensions that has taken over the spectrum of the trade within USA-China trade relations.

SOUTH CHINA SEA: The Mahathir government is also trying to come to an acceptable position with regard to certain other realities that are complex and textured. One of them is the drive by China's state-owned enterprises (SoEs) taking an increasingly prominent role in the South China Sea. Analyst Bunn Nagara has observed that "not only is there growing militarisation in the area but also rising commercialisation supported by the Chinese government".

A study published in August by Singapore's Institute of South-East Asian Studies (ISEAS) has shown how Chinese SoEs are moving forward in various industries. These range from fisheries and telecommunications to oil and gas, to construction and tourism, even in bitterly disputed zones. It is being suggested that the Malaysian government will have to deal with this sensitive matter to the satisfaction of China and itself. It is proving to be difficult for the countries within this region because the Chinese SoEs enjoy a considerable edge over their counterparts because of their scale, resources, full support from their government and the presence of their military component in the South China Sea.

Consequently, strategic analysts monitoring Malaysian advances towards China have urged that Malaysia needs to tread carefully, recognise regional realities and retain full faith not only in the principle of Association of Southeast Asian Nations (ASEAN) inclusiveness but also in the functionality of the region.

Muhammad Zamir, a former Ambassador, is an analyst specialised in foreign affairs, right to information and good governance.

[email protected]

Share if you like