Second Finance Minister Johari Abdul Ghani today said Malaysia is affected because the trend of investors leaving China due to the measures will impact on China’s domestic economy and thereby on trade with Malaysia.
“In a way Malaysia will also be indirectly affected because our total trade with China is 16% of Malaysia’s total trade of RM1.5 trillion,” he told reporters at a community event today.
“So if China’s domestic economy is affected, to a certain extent we will be affected too,” he added.
Veteran economist Hoo Ke Ping echoed the concern. He explained that China’s capital flight would discourage multinationals from undertaking new foreign investments in the country while pushing those already existing there to take their businesses elsewhere.
“If multinational companies, especially those involved in manufacturing, leave China, then we too will be affected because the demand for exports to China from these multinational companies will decrease,” he told FMT.
“So Malaysian companies which export semi-finished products to China where the manufacturing process is completed would be affected.”
It was reported recently that the Forest City project in Johor may face difficulties with its Chinese developer, Country Garden Holdings closing all sales centres in mainland China due to the capital control measures.
Touted as a futuristic smart city project, Forest City, is planned to be built on four man-made islands spanning 1,385.6 hectares. Costing RM100 billion, it was expected to be completed within 20 years and have a range of facilities, including housing units, offices and shopping malls.
Alan Ho, a former sales agent at Country Garden’s Malaysian operations, was previously reported as saying that about 90% of Forest City buyers were from China.
Bernama yesterday reported Johor Menteri Besar Mohamed Khaled Nordin as asserting that Forest City will not be affected by China’s capital controls because it is open to international buyers.
He claimed that the project is not dependent on buyers from China, and is also marketed in Australia, the Middle East and Europe.