China helps launch $13 bil­lion Belt and Road rail project in Malaysia

New push to Bei­jing’s Belt and Road in­fra­struc­ture

Kuwait Times - - BUSINESS -

China and Malaysia broke ground yes­ter­day on a $13 bil­lion rail project link­ing penin­su­lar Malaysia’s east and west, the largest such project in the coun­try and a ma­jor part of Bei­jing’s Belt and Road in­fra­struc­ture push.

The planned 688-km (430-mile) East Coast Rail Link will con­nect the South China Sea, large parts of which are claimed by China, at the Thai bor­der in the east with the strate­gic ship­ping routes of the Straits of Malacca in the west. It is among the most prom­i­nent projects in China’s con­tro­ver­sial Belt and Road Ini­tia­tive, which aims to build a mod­ern-day “Silk Road” con­nect­ing the world’s sec­ond-largest econ­omy by land cor­ri­dors to South­east Asia, Pak­istan and Cen­tral Asia and mar­itime routes open­ing up trade with the Mid­dle East and Europe.

“The ECRL is in­deed yet an­other ‘game changer’ and a ‘mind­set changer’ for Malaysia as it will sig­nif­i­cantly cut travel time to and from the east coast of the penin­sula,” Malaysian Prime Min­is­ter Na­jib Razak said at the cer­e­mony half way along the route in Kuan­tan, which faces the South China Sea.

For China, the project is an­other ex­pan­sion of its soft power in Malaysia, which also lays claim to some dis­puted South China Sea is­lands, and is crit­i­cal for China’s geopo­lit­i­cal and strate­gic in­ter­ests.

“The China gov­ern­ment has at­tached great im­por­tance to the China-Malaysia re­la­tions and has al­ways con­sid­ered Malaysia a dear neigh­bor and trust­wor­thy part­ner who is com­mit­ted to seek­ing mu­tu­ally ben­e­fi­cial co­op­er­a­tion and com­mon de­vel­op­ment in the coun­try,” Chi­nese State Coun­cil­lor Wang Yong said at the cer­e­mony, head­ing up a 100-strong del­e­ga­tion in Kuan­tan.

Na­jib said the project would be fi­nanced with an 85 per­cent loan from China Exim Bank and the bal­ance through a “sukuk” Is­lamic bond pro­gram man­aged by lo­cal in­vest­ment banks.

The project is be­ing built by China Com­mu­ni­ca­tions Con­struc­tion Co Ltd. Bei­jing has re­peat­edly come to the res­cue of Na­jib over the last year, as he sought for­eign in­vest­ment that would help him pay off a mas­sive debt piled up by scan­dal-plagued state fund 1Malaysia De­vel­op­ment Ber­had (1MDB).

Na­jib has an­nounced a spree of in­fra­struc­ture projects in the last few months, many funded by China, as he builds up mo­men­tum for a gen­eral elec­tion that he has to call by mid-2018.

A No­mura re­search re­port last month said for­eign di­rect in­vest­ment in­flows from China into Malaysia surged by 119 per­cent in 2016 and con­tin­ued to grow at 64 per­cent year on year in the first quar­ter of 2017. The grow­ing close­ness to China has raised eye­brows among Na­jib’s op­po­nents who have ar­gued that the coun­try has be­come too reliant on Chi­nese funds.

But Na­jib dis­missed the con­cerns in a speech on Tues­day, say­ing turn­ing away from Chi­nese FDI made “no eco­nomic sense”. There have been protests in Sri Lanka and Thai­land over the Belt and Road ini­tia­tive. A planned rail link through Thai­land hit some re­sis­tance with what crit­ics said were Bei­jing’s ex­ces­sive de­mands and un­fa­vor­able fi­nanc­ing.

But Thai­land’s cab­i­net last month ap­proved con­struc­tion of the first phase of a $5.5 bil­lion rail­way project to link the in­dus­trial eastern seaboard with south­ern China through land­locked Laos. — Reuters

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