Malaysia may help Asean buckle the BRI

Malaysia’s recent commitment to the Belt and Road initiative might prove to be a trailblazer for other Asean countries to buckle the deal that was moving at a slow pace.

Asian countries have been less receptive to the idea on account of its suspicions of China’s geo-strategic intentions with fears it is turning the region into a sphere of influence.

At the Belt and Road Forum last month, Malaysian Prime Minister Mahathir Mohamad said that Malaysia initially thought the BRI was all about the Straits of Melaka, South China Sea and the Silk Road.

However, Mahathir said that it is now obvious it embraces a big chunk of the road extending to Latin America and Africa. He added that it is a world movement to improve relations between countries and connectivity and the development of infrastructure in poor countries, adding that Malaysia is poised to benefit from the connectivity between the east and the west.

The positive response of Malaysia in the BRI is likely to be a strong signal for other Asean counterparts to join the BRI considering Malaysia’s ability to bring an Asian economic superpower China, from a lopsided agreement back to the negotiating table. Malaysia’s successful handling of the East Coast Rail Link project, which is the centrepiece of China’s infrastructure push, has become a benchmark for other nations.

Asean is the world’s sixth-largest economy with a total GDP of more than US$2.5 trillion and economies across the region are growing steadily at an average annual rate of five percent, and sustaining this growth requires the region to meet the growing infrastructure needs estimated at $2.8 trillion from 2016 to 2030.

A major part of the BRI-Asean project is the Pan-Asia Railway Network designed to connect China with Southeast Asia. The three main railway routes, the eastern, western and central routes all begin in Kunming, China. The eastern route which costs $600 million will pass through Vietnam and Cambodia into Thailand. The central route will pass through Laos, Thailand, and Malaysia into Singapore. As a high-speed railway project, it is the most expensive route with an estimated cost of $33 billion.

There are other BRI-related projects that aim to boost Asean’s digital economy. Malaysia is partnering with a Chinese conglomerate to develop the country’s Digital Free Trade Zone. Thailand with its Eastern Economic Corridor that includes a smart digital hub to optimise cross-border China-Asean flows has attracted Chinese HNA Innovation Finance Group Co Ltd’s interest.

The inability of China to get a broad consensus from Asean partners to date was because of a lack of transparency, which goes against China articulating a common destiny with a shared interest. This is because many contractors taking part in BRI are Chinese contractors and the lack of local participation is one of the main hurdles in the project’s implementation.

Asean countries have also voiced their concern that it will expose member countries to “debt traps”. This is clearly seen in the Hambantota Port in Sri Lanka which was handed over to the Chinese after Sri Lanka struggled to pay its debts. Asean should also take advantage of the BRI in bolstering its human capital capabilities of its people by equipping them with the skills needed to work on BRI-related infrastructure projects which would result in job creation for member countries.

China should also foster greater cooperation between Chinese companies and contractors with their local counterparts to ensure that there are greater openness and inclusivity.

This is only logical as local companies are more familiar with operational issues than Chinese companies and if Chinese companies are to enter in joint-ventures with local companies, there is a greater possibility of construction projects completed in time.

It is time for China to assuage the Asean partners of a win-win situation for Asean and China. Perhaps Mahathir assurance can help tilt the scales for China and Asean.

Sathish Govind
Contributing Writer, Capital Cambodia