“When a government doesn’t honour contracts it has signed, it can create a sense of anxiety among foreign investors.
“The failure to carefully manage the review of existing contracts can affect bilateral relations,” Socio-Economic Research Centre (SERC) executive director Lee Heng Guie told FMT.
Lee was responding to comments by opposition leader Dr Mahathir Mohamad, who said a Pakatan Harapan (PH) government might stop the RM55 billion East Coast Rail Link (ECRL) if, after review, the Chinese-led project was found unnecessary.
Prime Minister Najib Razak earlier hit out at the idea, saying it would be “crazy and insane” to call off development projects awarded to China, warning that this could strain bilateral and trade relations with the country.
Lee concurred, saying if a planned project was still under negotiation, then rescheduling its implementation could be considered.
“Once the project has started, shelving it may be undesirable unless it is due to unforeseen circumstances such as economic shocks or funding problems.”
In recent years, there has been a flurry of Chinese companies and state-owned enterprises entering Malaysia.
They have invested billions in mega infrastructure and property projects such as the RM43 billion Bandar Malaysia in Kuala Lumpur, the RM442 billion Forest City in Johor and the ECRL, which will link Kuala Lumpur with east coast states.
Lee said what was important was for the government to conduct a robust economic assessment impact study on all projects in the country, including the Chinese-led projects.
“This is to determine the benefits the projects have on Malaysian businesses and people in terms of sourcing of raw materials, supporting local small and medium enterprises and suppliers, as well as the creation of jobs for locals.
“While China’s investments are welcome in Malaysia, just like any other investments, the spillover effects on the domestic economy and industries must be safeguarded to ensure a mutually beneficial partnership.”
Lee said even after the general election, he believed the government of the day would continue looking to China as a major trading and investment partner.
“Currently, China is Malaysia’s second largest export market and the fourth largest foreign investor in terms of foreign direct investment (FDI) flows and the 11th largest investor in terms of FDI stocks.”
Political analyst Zhang Qianye previously said Chinese investors in Malaysia have nothing to worry about if PH comes to power, despite the coalition’s promise to review Chinese interests in the country.
Writing in The Diplomat, Zhang said Malaysian opposition politicians were only playing up nationalist sentiments when questioning Chinese investments.
Zhang said they were likely to break their promise as there was too much at stake as far as China, Malaysia’s largest trade partner, is concerned.
Chinese investors have nothing to worry if PH wins polls, says analyst