Op-Ed: Adapting to Malaysia’s New Political Climate for the Chinese Investors

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Picture Credit: Video grab of Najib Razak launching the China Construction Bank in Malaysia

For the past few weeks, the China factor has certainly been given unexpected ‘publicity’ in Malaysian mainstream presses and social media platforms.

News of the involvements of certain Chinese companies in the projects that are associated with the controversial 1MDB case, have been heavily reported ever since the revelations made by the new Pakatan Harapan (PH) administration.

Adding to the problem is the general and nationalistic discussions among online netizens about the controversial terms and conditions of those loans given by Beijing during the previous Najib administration to finance many public projects.

With the installation of the new PH administration after the last general election, Putrajaya is seeking a different relationship based on traditional trade and investment ties as stipulated by the prime minister, Tun Dr Mahathir.

The creditor-debtor relationship as to what Dr Mahathir framed it, is not what the current government is looking for. But again, such clear foreign policy stand by the present administration does not amply explain what will happen to the Chinese investors within the new political climate of Malaysia.

To this, Anbound seeks to highlight two observable and predictable changes which warranted serious consideration from the Chinese investors. First and foremost, as outlined by the Minister of Economic Affairs, Datuk Seri Azmin Ali, the old practices of imposing direct or limited tender exercises for public projects will no longer be allowed under the new Malaysian government.

With such imposition, it is expected that the lobbying efforts in the Prime Minister’s Office, relevant ministries and ruling parties (whether directly or indirectly) — as happened in the past — will no longer affect how the tenders will be awarded eventually.

Like any potential foreign investors, the Chinese investors aspiring to bid for any Malaysian public project in cooperation with their local partners, will have to go through a single procurement channel.

The other expectation that the Chinese investors should have is that they will be subjected to both government and public scrutiny, from the moment they start the bidding process of public project until they completed the whole project within the time frame given.

Sent to political power with high public expectations, it is expected that the PH government will strictly evaluate and monitor regularly, those foreign companies which are tasked into implementing the projects (alongside the sub-contractors involved).

Such higher level of scrutiny will be very much different from the old days of project implementation — that often resulted in the delays of many public projects and thereby, incurred unnecessary costs along the process.

Furthermore, with the expected move by the PH government to abolish draconian laws that obstructed media freedom in the past, both the mainstream and social media are gaining an unprecedented level of freedom in their daily reporting and sharing.

Adding to such freedom is the PH government’s online release of the required amount of information to the public as part of its transparency and accountability pledges during the last election campaign. Thus, any controversy or flip-flop surrounding public projects will be reported widely not just in mainstream media, but also in social media such as Facebook, Twitter, and Instagram.

Foreign investors involved should expect intense, nationalistic or unpleasant discussions and criticisms among the online netizens whenever there are malpractices or corruption elements that involved foreign companies. Of course, not to mention the non-governmental (NGOs) and the opposition parties which will be the natural scrutineers to the government and its projects.

As a proposer of the world’s common market concept, Anbound is of the view that the recent change of the Malaysian political climate shows China’s overall limitation as a globalized superpower.

Whether they are Chinese investors, Chinese media or the Chinese government itself, there are clear deficits among these actors to speak the ‘international language’ understood by all countries and engaging other communities beyond the political and business elites of the countries they have invested in.

In the case of Malaysia, it is time for the Chinese investors to speak the ‘international
language’ of open-tender exercise. The change of Malaysia’s political climate should be viewed as an opportunity for the Chinese state-owned enterprises and private companies to build up their competitiveness on par with their multinational counterparts of other advanced countries.

Considering the fact that public projects in China are also awarded through open-tender exercises, there is no reason for the Chinese investors to fail to compete with their Japanese, South Korean, American, and European counterparts, in terms of bidding for different projects in the country.

The Chinese investors should, therefore, take Malaysia, which is an advanced developing nation regulated with ‘international languages’ (rules, standards and practices), as the test-bed site to achieve international competitiveness.

Second, mainland Chinese media and even the Chinese government should start deliberating bilateral exchanges with the Malaysian media and different communities within the country.

This can be done through long-term exchange programs between the media players of both sides in order to increase bilateral understandings of each other, encourage healthy and truthful reporting as well as reduce the stirring-up of nationalistic sentiments among reader of the two countries.

The same goes for the wider Malaysian public who should be provided more chances to engage the Chinese counterparts via open-door forums, conferences and seminars. Given opportunities, the Chinese investors should also be roped-in in these exchange programs to clarify their visions, roles and involvements in any public project that sparked a public outcry among Malaysians.

For one, such programs should be conducted with the aim of eliciting the lingering concerns and criticisms among the locals regarding the controversial public projects, and not just about communicating to the Malaysians on their investments in the country.

For any Chinese investor wishing to enter Malaysia or pushing their projects through locally, they should recognise these changes at the domestic front and adapt to such new political climate accordingly — be it through concrete actions or planning.

Such responsive adaption will help to reduce all the potential problems and complications that are faced by some of the Chinese companies in Malaysia today.

If one thinks no major changes have taken place, as in Deng Xiaoping’s famous saying — ‘ma zhao pao, wu zhao tiao’ (literally, the horses will still run and the dancers will still dance), he or she should really give a second thought.
As far as Malaysia’s political climate is concerned, things have started to change.
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Anbound Malaysia is part of Anbound China, a leading independent think tank based in
Beijing. The think tank is also a consultancy firm working with the corporate players in
China-ASEAN cooperation. For any feedback, please contact: siangkimchia@anbound.com.