IGNORING CHINESE FDI WILL HAVE ECONOMIC CONSEQUENCES
The main goals of attracting foreign investments are to create jobs, boost economic growth
LAST year, Chinese stateowned and private companies invested US$170 billion (RM729 billion) in close to 8,000 enterprises and companies in 160 countries with investments flowing into both developed and developing economies.
Despite capital control measures imposed by China’s monetary authority to stem excessive capital outflows for the past two years, Chinese companies continued to make big acquisitions and invest in new mega projects abroad.
Risk of missing out
It’s becoming increasingly difficult to ignore China. Its modernisation, snowballing in size, is having an impact in the world, the same way as Britain’s industrialisation in the early 19th century and America’s in the late 19th century.
Certainly, Malaysia can manage without Chinese FDI (foreign direct investment), but there is a difference between being prosperous and merely sustaining. Ignoring such a big player is not without economic consequences. We cannot afford to miss out and risk being left behind as other countries make use of the cheap and abundant capital provided by China to grow their economies.
Diversified source of investments
As a small open economy, Malaysia has always been dependent on external trade and investments for its development. Our total trade of RM1.48 trillion is bigger than the economy size or gross domestic product of RM1.23 trillion itself, and investments contribute to about a quarter of our economy.
Malaysia does not only attract investments from just a single source as China’s FDI into Malaysia represents only 12.5 per cent of our net FDI inflows last year. Singapore, the United States, Japan and the Netherlands are among other countries which have invested in Malaysia last year, and their share of contributions is more than 50 per cent of total net FDI.
Loan for development purposes
In the 1990s, Japan offered Malaysia a financial assistance scheme with a low interest rate and a long repayment period of approximately 30 to 40 years. The loan included a long grace period of five to 10 years with a maturing period of approximately 15 to 40 years.
We are still servicing the loans that were taken out in the 1990s to fund rural development and higher education projects with an outstanding balance owed amounting to RM5.9 billion.
The same model is replicated by China, which is now offering favourable loans to developing countries to finance infrastructure and socio-economic projects in their respective countries.
Strategically located
Malaysia’s strategic location gives us an edge in the vast plan masterminded by Chinese President Xi Jinping to ramp up trade between Asia, Europe and Africa through a network of new ports, railways and roads.
The plan covers 65 nations, about 60 per cent of the world’s population and a third of global GDP. China has budgeted US$40 billion for the project. The Asian Infrastructure Investment Bank, which began operations last year with US$100 billion in capital, is also expected to fund Belt and Road projects.
For the benefit of the people
With the saying, don’t put all your eggs in one basket, the prime minister has been working hard to attract foreign investments not just from China, but also from other countries like France, the United Kingdom, India and many more. This is evidenced by the steady inflow of FDI for the last two years despite uncertainties in the global economic climate. Malaysia’s net FDI inflow increased to RM39 billion and RM47 billion in 2015 and 2016 respectively from RM35 billion in 2014.
Irresponsible opposition
Xi has asserted that China would abide by a “Three Nos” policy as it spearheads the Belt and Road projects: no interference in the domestic affairs of foreign countries, no expansion of Beijing’s “sphere of influence” and no asserting of dominance.
Ultimately, the main objectives of attracting foreign investments are creating jobs and boosting economic growth. The rhetoric played by the opposition equating foreign investments to selling our nation’s sovereignty is proof that they would politicise everything even at the expense of Malaysia’s economy.
The choice in the next general election is crystal clear. Whether you want a ruling party which looks after people’s interest by attracting investments for the purpose of creating jobs and boosting income, or a party which only knows how to scare monger to the extent of sabotaging and damaging our own economy. The writer, MP for Kota Belud, Sabah, is minister in the Prime Minister’s Department
Malaysia’s strategic location gives us an edge in the vast plan masterminded by Chinese President Xi Jinping to ramp up trade between
Asia, Europe and Africa through a network of new ports, railways and roads.