STRENGTH­EN­ING ECO­NOMIC LINK­AGES FOR MU­TUAL BEN­E­FIT

Malaysia should fo­cus on port in­fra­struc­ture, land-wa­ter trans­port and IT in mar­itime lo­gis­tics

New Straits Times - - Opinion - The writer is a Se­nior Re­searcher at the Mar­itime In­sti­tute of Malaysia

CHINA has com­mit­ted it­self to a long-term strat­egy to grow its in­flu­ence in the Asia-Pa­cific re­gion and rise as a ma­jor power. An im­por­tant plank in this pol­icy is her Silk Road Eco­nomic Belt and the 21st Cen­tury Mar­itime Silk Road (MSR), oth­er­wise known as the Belt Road Ini­tia­tive (BRI), or One Belt, One Road (OBOR). The BRI is China’s response to the need for more and im­proved in­fra­struc­ture, such as trans­port routes con­nect­ing ma­jor sea ports in the South­east Asia re­gion, and to­wards cre­at­ing an ef­fi­cient network of land and air pas­sages in Asia, Europe and Africa. OBOR will be im­ple­mented through “joint con­sul­ta­tion” with part­ners and will fo­cus on projects that are im­ple­mentable within the short to medium term.

China will be lever­ag­ing ex­ist­ing mul­ti­lat­eral co­op­er­a­tion mech­a­nisms to im­ple­ment BRI. Among the mech­a­nisms are the Shang­hai Co­op­er­a­tion Or­gan­i­sa­tion, Asean Plus China (10+1), Asia-Pa­cific Eco­nomic Co­op­er­a­tion, Asia-Europe Meet­ing, Asia Co­op­er­a­tion Di­a­logue, Con­fer­ence on In­ter­ac­tion and Con­fi­dence-Build­ing Mea­sures in Asia, China-Arab States Co­op­er­a­tion Fo­rum, China-Gulf Co­op­er­a­tion Coun­cil Strate­gic Di­a­logue, Greater Mekong Sub-re­gion Eco­nomic Co­op­er­a­tion, and Cen­tral Asia Re­gional Eco­nomic Co­op­er­a­tion. Work­ing with ex­ist­ing mech­a­nisms is also ex­pected to at­tract more coun­tries and re­gions to par­tic­i­pate in BRI.

The eco­nomic im­por­tance of par­tic­i­pat­ing in OBOR can­not be un­der­stated as it could pro­vide busi­ness and new in­vest­ments op­por­tu­ni­ties for coun­tries eye­ing for­eign in­vest­ments. Ac­cord­ing to a re­port by the Asian De­vel­op­ment Bank (ADB), Asia will re­quire ap­prox­i­mately US$8.2 tril­lion (RM35.6 tril­lion) to fi­nance in­fra­struc­ture de­vel­op­ment from 2010 to 2020.

The World Bank and ADB are two ma­jor fi­nan­cial in­sti­tu­tions in­volved in the race to fi­nance in­fra­struc­ture de­vel­op­ment. Eco­nomic growth in Asia is ac­cel­er­at­ing, in tan­dem with the in­crease in pop­u­la­tion that will trans­late to greater mar­kets and em­ploy­ment, and this ex­pands the scope for re­al­is­ing in­fra­struc­ture projects. In this re­gard, the Asian In­fra­struc­ture In­vest­ment Bank based in Bei­jing may be­come a third plat­form to pro­vide in­fra­struc­ture de­vel­op­ment fi­nanc­ing, es­pe­cially for in­vest­ments un­der OBOR.

At the re­gional level, most South­east Asian coun­tries have in­cluded OBOR and MSR as im­por­tant com­po­nents in their in­ter­na­tional trade and de­vel­op­ment strate­gies. Malaysia’s par­tic­i­pa­tion and co­op­er­a­tion with China on OBOR projects are based on sev­eral con­sid­er­a­tions. Among oth­ers, Malaysia val­ues the peace­ful co­ex­is­tence be­tween the two na­tions and ef­forts at strength­en­ing eco­nomic re­la­tions. Malaysia’s ge­o­graph­i­cal lo­ca­tion, sta­tus as an in­flu­en­tial mid­dle power and its sub­stan­tial co­or­di­na­tion and im­ple­men­ta­tion

MON­DAY, MAY 1, 2017 struc­tures are plus points for en­hanc­ing such a re­la­tion­ship. Malaysia has been pos­i­tive on OBOR with the ex­pec­ta­tion that it could be a part­ner in achiev­ing its eco­nomic goals of be­ing a com­pet­i­tive na­tion by 2020.

Prime Min­is­ter Datuk Seri Na­jib Razak is ex­pected to at­tend the OBOR Sum­mit in Bei­jing from May 14-15 to fur­ther strengthen co­op­er­a­tion with China. Malaysia has been sup­port­ive of any re­gional, sub-re­gional and global poli­cies that will pro­mote eco­nomic growth. Malaysia’s to­tal trade for 2015 stood at RM1.47 tril­lion, with al­most 90 per cent, or about RM1.32 tril­lion, seaborne and chan­nelled through Malaysia’s ports.

Malaysia is strate­gi­cally lo­cated along the Belt and Road link. To ben­e­fit from eco­nomic op­por­tu­ni­ties un­der BRI, Malaysia should co­or­di­nate its eco­nomic de­vel­op­ment strate­gies and poli­cies, and de­velop plans at the na­tional and re­gional level to fa­cil­i­tate im­ple­men­ta­tion of large-scale in­fra­struc­ture projects with China. This is more so as BRI may be a vi­able al­ter­na­tive to the originally struc­tured Trans-Pa­cific Part­ner­ship ini­tia­tive. Ma­jor ar­eas un­der OBOR that Malaysia should fo­cus on include port in­fra­struc­ture con­struc­tion, land-wa­ter trans­porta­tion chan­nels, port-to-port co­op­er­a­tion and in­creas­ing ca­pac­ity in in­for­ma­tion tech­nol­ogy in mar­itime lo­gis­tics.

Cur­rently, there is co­op­er­a­tion be­tween Malaysia and China on ports through a port al­liance ar­range­ment es­ti­mated to in­volve 11 Chi­nese and six Malaysian ports. China is keen to in­vest in Malaysia’s in­fra­struc­ture projects for sev­eral rea­sons. Malaysia is viewed as po­lit­i­cally sta­ble, has favourable eco­nomic growth prospects, is highly ranked in trade com­pet­i­tive­ness and has both tra­di­tional as well as new emerg­ing ar­eas for de­vel­op­ment in which to in­vest. Al­though BRI en­vi­sions ma­jor eco­nomic ben­e­fits, some fun­da­men­tal challenges re­main, such as geopo­lit­i­cal mis­trust and eco­nomic con­straints on China’s side.

To ad­dress such con­cerns, the Mar­itime In­sti­tute of Malaysia and China In­sti­tute of In­ter­na­tional and Strate­gic Stud­ies will jointly or­gan­ise an In­ter­na­tional Con­fer­ence on OBOR from May 25-26 to ex­am­ine OBOR and MSR is­sues and de­vel­op­ment and as­sess how coun­tries, in­clud­ing Malaysia, can best reap the ben­e­fits of this ini­tia­tive.

Work­ers work­ing on a ‘Golden Bridge of Silk Road’ struc­ture out­side the Na­tional Con­ven­tion Cen­tre in Bei­jing, where world lead­ers are set to at­tend a sum­mit this month to dis­cuss China Pres­i­dent Xi Jin­ping’s One Belt, One Road ini­tia­tive.

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