Malaysia-China relations not further affected by WSJ claims

KUALA LUMPUR: The Wall Street Journal's (WSJ) recent report on the 1Malaysia Development Bhd (1MDB) bailout fiasco will not further affect bilateral relations between Malaysia and China, and exacerbate the strain on the economic front that followed the cancellation of China-backed projects, analysts say.

Singapore Institute of International Affairs political analyst for Malaysia, Oh Ei Sun, said the latest series of revelations on the scandal-ridden 1MDB would not affect relations significantly, as two other factors had a larger impact.

The factors are the Malaysian government's review of various infrastructure projects undertaken by Chinese companies and China's tighter currency control measures.

“The Malaysian government has reconsidered the China projects due to the mounting national debt, and this has caused a strain in the relations between the two countries,” he said when contacted by Bernama.

Among the projects under scrutiny are the Kuala LumpurSingapore High Speed Rail, East Coast Rail Line, and Forest City in Johor, while three oil and gas pipeline projects worth US$3 billion (RM12.44 billion) have been cancelled.

Besides the cancelled Chinabacked projects, he pointed out that China's tighter currency control measures had also made it extremely difficult for capital to leave China and be invested in Malaysia.

Oh said Chinese investors usually looked for incentives, especially in the form of tax concession or land price reduction, before deciding where to invest.

“This is because when the Chinese government opens the country for foreign investments, it would provide such incentives and it expects the same when it comes out to invest. So, as long as there are such incentives, they will consider,” he added.

The Chinese Embassy in Malaysia yesterday said both China and Malaysia had all along treated each other as “friendly neighbours and sincere partners”. — Bernama