Malaysia was the 4th largest destination for Chinese investment in 2017 with numerous port and rail projects on the docket for development.
SUMMARY
As of May 29, following criticism over the recent years that Malaysian Prime Minister Najib Razak’s administration had allowed Beijing too much influence in agreeing to China’s One Belt One Road Initiative (BRI) projects, Mahathir Mohamad of Pakatan Harapan, an opposition party, won the early May election in a huge upset. There is a great deal of uncertainty over how the new prime minister plans to deal with Chinese investment in the future and Mohammad has promised to rework old agreements after accusing the old administration of giving preferential treatment to Chinese investors. The $13 billion, 430 mile long East Coast Rail Link, built by China Communications Construction, was one of the bigger targets of criticism for waste with concerns over inflated prices and questions of the project’s usefulness to Malaysia. As of May 2018, it was 20% finished. Malaysia was the 4th largest destination for Chinese investment in 2017 with numerous port and rail projects on the docket for development.
FAO GLOBAL ASSESSMENT
In addition to bad news for investors looking to profit from Chinese BRI projects in Malaysia, the election results also call into question how tenuous the initiative projects might be in other democratic countries. Investors looking to take advantage of the new railway should first wait and see how the new PM decides to handle business with China. The existing contract to complete the railroad does have a cancellation provision, albeit a costly one, that could result in the project never being finished.
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