Too good to be true

First published in theSun on 10 November 2016, here.

Malaysia woke up last week to find that its government had signed not one, but 14 bilateral agreements with China worth RM144 billion in total, in addition to a RM55 billion East Coast Rail link project. China is one of Malaysia’s largest trading partners for both exports and imports, but these new deals are extremely large and unprecedented.

Some have commented to me that they think this might help elevate the status of the Chinese in Malaysia. But will this new-found relationship between Malaysia and China really change how local Chinese in Malaysia are viewed by the state? I’m not so sure about this.

The Chinese minority in Malaysia is one of the largest Chinese minorities in the world outside of China, and to a large extent has flourished well in this country. But perceived discrimination is real, due to the affirmative action policy for the bumiputras.

In September 2015 when the ambassador of China made a statement alluding to protecting local Chinese in the face of the Red Shirt rally, this presented an awkward situation for many Malaysian Chinese. Having a foreign entity speak up for my rights made me rather indignant at this gesture.

First, the notion that the relationship with China will draw attention to the rights of ethnic Chinese at home already takes a rather narrow-minded view. If we were concerned about minority rights, we should also be looking out for the interests of all minorities including the orang asli, Indians and indigenous people of Sabah and Sarawak.

Second, China has faced international criticism over its failure to promote good governance and human rights in countries it has invested heavily in, including several countries in Africa. In the past, its policy of non-interference in domestic politics — and hence also its looking past dismal human rights practices within those countries — lent weight to the argument that China was only interested in economic returns and geopolitical self-interest.

Of course, there are always counter arguments, one of which is that China has in fact contributed to development aid for health and education initiatives, apart from infrastructural projects, in poor countries.

A study by AidData, an organisation specialising in global development aid research, stated that Chinese aid is strongly oriented towards poorer countries. But Malaysia is apparently no longer stuck in the middle-income trap, according to Pemandu (Performance Management and Delivery Unit), where Malaysia is reportedly only 15% away from the high-income economy benchmark.

But the main questions that all Malaysians should be asking the government should have much more to do with the welfare of the nation as a whole, not nitpicking about which ethnic community is going to benefit more out of this.

For instance, how might domestic economic policy change as a result of Chinese state-owned enterprises flocking the market? Most of the 14 deals signed are with Chinese SOEs, and this will most certainly have an impact on our public procurement policy. Based on the deals, it looks like the government will be awarding procurement contracts to foreign Chinese companies as opposed to local companies. If the selection is done based on merit and quality, then well and good.

In fact, one of the most controversial chapters in the Trans Pacific Partnership Agreement (TPPA) that Malaysia signed earlier this year was precisely that of public procurement. Malaysia successfully negotiated that a substantial portion of government procurement would be exclusively for bumiputra contractors, to be lowered over time. Are we in fact making exceptions for mainland Chinese companies?

Further, will these new deals be subject to provisions under the TPPA, particularly those related to governance of procurement – will the procurement processes be non-discriminatory, standardised and transparent? Will there be open and competitive tenders? Will the firms be subject to domestic review procedures under a to-be-established procurement review authority?

Second, how will this relationship change Malaysia’s geopolitical positioning vis-à-vis South China Sea? Will this influence Malaysia’s voice in siding with China against its neighbouring Asean countries over any sea and land dispute that takes place? In fact, would this bilateral relationship with China affect regional trade agreements like the Asean Free Trade Area (Afta) in any way?

Finally, and perhaps most importantly, what is the financial burden that the future generations of Malaysians will be strapped with in the years to come? The Edge reported over the weekend that the RM55 billion East Coast Rail Line (ECRL) could be “one of the most expensive interstate rail and cargo lines to be built in the world”, at RM91.67 million per kilometre. What do the current agreements have to do with China’s deal to buy 1MDB energy assets worth RM9.83 billion in December 2015?

The recent decisions by this administration are a game-changer. If they come to pass, this means that we are opening up our market, which in itself is a good thing, but in this case we are selectively opening it to a single market of foreign companies. It has the potential to change our indebtedness to any foreign entity — recall that we very proudly rejected IMF funds during the 1998 financial crisis — in a way we never have before. And it has the potential to reshape Malaysia’s geopolitical interests in the region, and related to that, the power dynamics in Southeast Asia as a whole.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.