By Bob Tan
22 June 2018 18:30
Chinese from mainland China has a long history of investing into Malaysia. Either for developments or choosing to live here as residents. South China Post reported that between 2002 and 2016, China Chinese who entered Malaysia under the Malaysia my 2nd Home account for 25.1% of total approved applicants. South China Post mentioned that it was a combination of cleaner air, temperate weather as well as cultural friendliness that is one of the reason that the Chinese move to Malaysia. Aside from people moving to stay, developers and investors also make up a bulk of the people bringing their business to Malaysia.
Chinese Developer Interest
From 2014 to 2016, Chinese companies have invested around RM8.2 billion into Malaysia, mainly developers, according to a Cushman & Wakefield report. Another report by Knight Frank shows Malaysia as the third favorite destination for Chinese according to The Star. It was estimated about 35% of residential land transactions were carried out by foreign buyers, majority being the mainland Chinese in the last 5 years. Another report by Knight Frank, shows that Malaysia is the 3rd favorite destination for mainland Chinese developers from 2012 to 2016.
A new government was elected
The new Prime Minister Tun Dr Mahathir Mohamad, had no hesitation in discontinuing high-cost projects such as Klang Valley Mass Rapid Transit (MRT3) as well as the KL-SG High-speed Rail (HSR). Furthermore, the East Coast Rail Link (ECRL) is being put up for review as there are some dubious parts in the contract. Cited by The Star one of the “strange” clauses being payment by timetable instead of based on percentage of completion. Ultimately the money goes to Mainland Chinese contractors which is then disbursed by them.
While it may seem that the new Prime Minister is showing a strong stance against foreign investment, it may not be the case, as quoted from his blog;
“12. The Chinese are welcome to invest in industries in Malaysia. But just as we would not welcome mass immigration of Indians, or Pakistanis or Europeans or Africans into Malaysia we have to adopt the same stance on Chinese immigration into Malaysia”
“16. It is not about being anti-foreign or anti-Chinese. It is about being pro-Malaysia. Additionally, these immigrants will not confine themselves to their enclaves only. They will want to go to other places and to do business. They had come in through the powerful companies of China”.
A stance of putting Malaysia first and focusing on investments that create jobs and bring more benefits to the Malaysian people. One such example is tech giant from China, Alibaba setting up a regional Headquarters in Malaysia. This creates job opportunities for skilled workers while giving opportunity for locals to learn from leading tech companies. Such review of previous contracts with mainland Chinese based companies need to be done to ensure that there are no dubious or lopsided deals.
While cancellation of high-profile projects with many of the backers being from mainland China might put off future investors, this is simply not the case. As NST and The Star reported that peaceful transition of power as well as the new governments stance on fighting graft. This brings about confidence for investor albeit a wait-and-see duration as the market sentiment is still seen as positive.