PM Najib in China: Signing the NEP into irrelevance, and adding to national debt

by Ganesh Sahathevan 



True to form The Star has attempted to spin a low interest loan of RM 55 billion  to finance the  East Coast Rail Line (ECRL) into some sort of  gift from China.

The project is large but unlike other major projects involving foreign contractors (for example the Petronas PSCs) quotas stipulating  a minimum number of Bumiputera employees ,contracts to local Bumiputera contractors and suppliers and other such conditions enforced pursuant to the affirmative action NEP  are likely to be ignored.China buys its own products from its own suppliers, and employs its own people.
Given the magnitude of projects(in addition to the ECRL) Malaysia is handing over to China on a full finance, design and build basis, the African experience of Chinese investment is likely to be replicated in Malaysia (see Empire Of The Sums,The Economist).
Consequently the Chinese population will grow, reversing the determined effort by UMNO since at least  1957 to ensure a strong Malay majority.

In addition, the fact that Malaysia's national debt will rise by some RM 55 billion seems to have escaped The Star. Given that all supplies will come from China, expect also the current account deficit to widen. 
As for the economic benefits of the project........does anyone seriously believe that there is a demand for freight and haulage services from Port Klang to Tumpat?

END 

Tuesday, 1 November 2016

China to pour in billions for rail project

State visit: Prime Minister Datuk Seri Najib Tun Razak arriving to a red carpet welcome at Beijing International Airport. The Prime Minister, accompanied by his wife Datin Seri Rosmah Mansor, is on his third official visit to China. Last year, bilateral trade between China and Malaysia stood at US97.3bil (RM408.6bil) while it has reached US54.3bil (RM228bil) up to August this year. — Bernama

CHINA will provide RM55bil in soft loans to Malaysia for the construction of the planned East Coast Rail Line (ECRL) that is estimated to cost a similar amount, according to Transport Minister Datuk Seri Liow Tiong Lai.

In an exclusive interview in Beijing with The Star yesterday, Liow said this will be one of the 16 government-to-government memoranda of understanding to be signed when Prime Minister Datuk Seri Najib Tun Razak meets with Chinese Prime Minister Li Keqiang for bilateral talks today.

Apart from financing, the two countries will also sign an engineering-and-construction contract on the project.

This means China will carry out the detailed engineering and design of the ECRL, procure all materials and equipment, and deliver the facility to Malaysia.

“As far as I know, this is the biggest single deal Malaysia will be signing with China,” said Liow, who has worked very hard to obtain China’s investments in ports, aviation and railways since he took over the transport portfolio in June 2014.

On the terms of the soft loans to be given by China’s EXIM Bank, Liow said rates are very competitive and repayment is over 20 years.

“And in the first seven years Malaysia will not have to pay anything – interest and repayment.

“But for the construction contract to be awarded to government-owned China Construction Communications Company, there are terms that state it has to work with local partners,” he said.

Construction of the five-year project is scheduled to start next year.

The first phase of the 600km rail line will be from the Klang Valley to Kuantan, second from Kuantan to Kuala Terengganu, and third from Kuala Terengganu to Kota Baru and Tumpat.

Najib, in tabling Budget 2017 last month, had said the project would be launched in phases and would connect townships such as Port Klang, ITT (Integrated Transport Terminal) Gombak, Bentong, Mentakab, Kuantan, Kemaman, Kerteh, Kuala Terengganu and Kota Baru before ending in Tumpat.

“This rail project is going to bring a lot of economic development to the east coast (of the peninsula). It can unearth a lot of potential,” said Liow who is part of the Malaysian delegation, including Cabinet ministers, accompanying Najib on his four-day official visit to China which kicks off today.

Liow added that China has also pledged to pass on its rail technology to Malaysia, and this will help Malaysia in developing its rail system as a means of public transportation.

On Najib’s third official visit to China, Liow said: “The PM’s visit will not only strengthen bilateral relations but also enhance our economic growth, thereby making Malaysia a centre of growth in Asean.

“This visit will see a lot of ‘firsts’ between Malaysia and China. We are going to sign 16 G-to-G MoUs and more than 15 business-to-business MoUs.

“There will be so much economic activity ... In fact, we are now enjoying the fruits of our close bilateral ties built up by former PM Tun Razak.”

Liow commended the late Tun Abdul Razak Hussein – Malaysia’s second prime minister and Najib’s father – for “his vision in 1974 when he decided to be the first Asean country to establish bilateral relations with China”.

“Now his son is taking the bilateral ties to new heights,” he added.

Apart from this major MoU on the ECRL, another major bilateral deal will be on defence.

“We are a small country but China is giving us a lot of assistance and support. This is good for Malaysians.

“This visit by PM is going to be very fruitful and rewarding for Malaysia,” he added.

China has often said it is grateful to Malaysia for being the first Asean country to extend its hands to China when the region was fearful of communism.

It has also expressed gratitude to Malaysian Chinese businesses, which invested in China and helped its economic development in the early 1980s when China just opened its doors to the world.