GROWING Chinese investments in Malaysia is forcing the government to balance between the influx of economy-boosting investments, while keeping Beijing’s influence in check, according to a report in US magazine Forbes.

The Forest City project in Johor, which is developed by China’s Country Garden Holdings, will house an estimated 700,000 people in the Johor Strait when completed in 2035.

However, Forest City’s selling points – its massive scale and targeting of affluent foreigners – have made it an object for political controversies about the growing extent of Chinese influence in Malaysia.

To attract foreign buyers, Forest City will eventually feature its own customs and immigration checkpoint, facilitating quick travel to Singapore.

It will also offer buyers various tax breaks and a path to residency under the government’s Malaysia My Second Home programme. The company offers to front the nearly US$6,000 (RM24,500) application fee and guarantees a 99% success rate for applicants.

While Country Garden Holdings have said the project has broadened out to include non-Chinese investors, around 60% of sales have been to Chinese buyers, said Forbes.

In an interview with the magazine, Dr Mahathir Mohamad said he sees in China’s growing interest in Malaysia a historical warning in the Chinese-majority city-state of Singapore.

“A country is created by the population,” he says, “and if the population is overwhelmingly of one particular race or another, then we will see the country is no longer a part of the original owners of the land.”

Prime Minister Najib Razak, who took office in 2009, has been fostering a closer relationship with Beijing.

China has been the country’s largest trading partner for eight consecutive years, with bilateral trade volume topping US$57 billion in 2016.

It is now the country’s main construction contractor, the largest source of foreign investment in manufacturing and the third-largest source of foreign tourists to Malaysia.

But as in neighbouring countries like Thailand and Indonesia, many are sceptical about whether any of the multi-billion projects brought in by China will benefit the country.

For example, opponents to the RM55 billion East Coast Rail Link project which will be built by China Communications Construction Company, claim it will be constructed by a Chinese state-owned firm at allegedly inflated prices, using mostly Chinese labour and building materials, and funded by soft loans from Chinese state banks.

Najib has defended his government’s dealing with China. In March he said that the ECRL would be a “game changer” that will contribute 1.5% growth annually to the three states on Malaysia’s east coast which is linked by ECRL.

On another occasion he asked: “What’s wrong with us fostering closer ties with China, which is expected to be the biggest economy in 2030?”

However, observers have said an overdependence on Chinese economic patronage could make Malaysia vulnerable to a sudden economic downturn or policy shift in China. 

But while most of China’s mega-investments remain in the early stages and have shown little signs of trouble, concerns about the wisdom of increasing Chinese interests will likely continue to plague Najibs’ administration. – November 30, 2017.