China’s Belt and Road initiatives are expected to bring fresh momentum to the already flourish bilateral trade and investment ties between China and Malaysia, despite challenges facing both economies.
Malaysia’s International Trade and Industry second minister Datuk Seri Ong Ka Chuan expressed his optimism that the Belt and Road initiatives which covers more than 60 countries with a total population of 4.4 billion are set to bring opportunities to Malaysia, with a mere population of 30 million.
Ong (pix) told a forum during the weekend that Malaysia would actively participate in the Belt and Road initiativ
es promoted by China, in a bid to benefit its people from a huge market.
Officials said the Belt and Road initiatives, namely the Silk Road Economic Belt and the 21st-Century Maritime Silk Road, would further boost bilateral trade and investment. Malaysia’s strategic location on the Malacca Strait provide unique strategic advantage in cooperation with China under the Belt and Road initiatives, said Li Na of the Economic and Commercial Counsellor’s office of the Chinese Embassy in Malaysia.
As a key member of the 10-nation Association of Southeast Asian Nations (ASEAN), Malaysia could serve not only as an enter point to the ASEAN markets for Chinese companies, but also a transit point to the Middle East, Li told Xinhua New in a recent interview.
Malaysia has responded positively to the Belt and Road initiatives. Finding new opportunities for cooperation under the initiatives and joint efforts by entrepreneurs from both countries would help Malaysia and China achieve a total trade volume of 160 billion US dollars by 2017, a target set by leaders of the two countries, said Ong.
Trade between Malaysia and China remains on a stable basis, though it was not immune to the slower growth, weaker demand, falling commodities prices and dropping export-import figures that hit many countries in 2015, as pointed out by Li.
Total trade volume amounted to 97.36 billion US dollars in 2015, a 4.6 percent drop year-on-year, according to China’s statistics. China remains Malaysia’s largest trading partner for the seventh consecutive year, and Malaysia remains China’s largest trading partner in Southeast Asia.
The smaller trade figure was largely due to falling prices in oil and gas, palm oil, rubber as well as a depreciation of more than 20 percent of Malaysian ringgit against the greenback, Li said.
“However, we have seen improved composition of trading goods and better trading quality,” she said.
“On one hand, China is importing more resources products from Malaysia; On the other hand, China is exporting more high value added products to Malaysia,” she said, adding that the two-way trade was complementary to the need and developments of both countries.
The visit by Chinese Premier Li Keqiang to Malaysia in November has injected new impetus to economic and trade ties, including a 50-billion yuan (8.2 billion U.S. dollars) quota to Malaysia under the Renminbi Qualified Foreign Institutional Investor (RQFII) program.
Meanwhile, as the improving of interconnection and international industrial capacity cooperation under the Belt and Road initiatives is gaining traction, Malaysia is becoming a preferential foothold for the Chinese companies, Li said.
Non-financial investment by Chinese companies in Malaysia recorded an impressing 237 percent increase to 410 million US dollars in 2015, according to China’s statistics. Chinese companies are investing in more diversified areas with more focus on quality.
In November, China General Nuclear Power Corporation (CGN), one of Chinese leading clean energy companies, signed an equity purchase agreement with Malaysian energy company Edra Global Energy to buy 13 clean energy projects scattered in Malaysia, Egypt, Bengal, Pakistan and United Arab Emirates (UAE).
Chinese companies also actively participated in infrastructure constructions in Malaysia, including transportation projects such as railways and ports. They have expressed interest in the high-speed railway linking Malaysian capital of Kuala Lumpur and Singapore.
China Railway Engineering Corporation (CREC) has invested in Bandar Malaysia, the proposed terminal site for the high-speed railway and a future transport, finance and business hub for the Malaysian capital.