20 | FORBES ASIA DECEMBER 2017
migration 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 program, which is less
stringent than gaining residency in Singapore. The company offers
to front the nearly $6,000 application fee and guarantees a 99% suc-
cess rate for applicants.
In an emailed message, Yu Runze, the firm’s president and chief
strategy officer, says that the project was initially targeted at the Chi-
nese market. He adds that it has since broadened out to other mar-
kets. “The Forest City township was planned and designed for the
international market,” he says. “In fact, the buyers for the first phase
of our residential units come from 23 countries.” According to Forest
City sales staff, around 60% of sales have been to Chinese buyers.
The controversy over Forest City hints at wider political ques-
tions about China’s quickly widening economic footprint in Malay-
sia. Under the leadership of Prime Minister Najib Razak, who took
office in 2009, the relationship between Kuala Lumpur and Beijing
has grown close—some say too close.
Once a bit player in Malaysia, China has been the country’s larg-
est trading partner for eight consecutive years, with bilateral trade
volume topping $57 billion in 2016. It is now the country’s main
construction contractor, the largest source of foreign investment in
manufacturing and, despite a downturn following the disappear-
ance of the MH370 flight in 2014, the third-largest source of foreign
tourists to Malaysia. In his farewell speech last month, Huang Hui-
kang, China’s outgoing ambassador, said that the Sino-Malaysian
relationship “should move up over the next 40 years to reach mutual
dependency, like lips and teeth.”
This strategically-located country of 32 million has also emerged
as a key stop on Beijing’s 21st Century Maritime Silk Road, the
maritime leg of its much-vaunted One Belt, One Road (OBOR)
infrastructure scheme. The OBOR initiative, unveiled by Chinese
President Xi Jinping in 2013, envisages linking China with Africa
and Eurasia through a complex network of ports, roads, railways
and industrial parks.
Under the umbrella of OBOR, Najib’s government has signed
agreements for a slew of Chinese infrastructure megaprojects.
At the top of the list is the $13.1 billion East Coast Rail Link
(ECRL), which will run from Port Klang, Malaysia’s main port
near the capital Kuala Lumpur, to Tumpat on the border with
Thailand, bisecting the peninsula’s hilly interior. In October
2016 the Malaysian government inked a deal with three Chinese
state-owned companies to build and manage a deep-sea port and
Maritime Industrial Park on three more reclaimed islands off the
city of Melaka on the west coast, part of the $10.4 billion Melaka
Gateway mega-development. In turn, this will be complemented
by a Chinese-backed industrial park and port refurbishment in
Kuantan, in the east coast state of Pahang.
Malaysia’s OBOR bonanza also includes the new Malaysian
campus of Xiamen University on the outskirts of Kuala Lumpur,
and Bandar Malaysia, a real estate project that will host terminals for
a planned high-speed rail connecting Kuala Lumpur to Singapore.
(Chinese companies may be in the catbird seat for that deal too.)
While Forest City sits somewhat apart from this string of state-led
OBOR projects, it is clearly buying into the “New Silk Road” hype.
Its sales office tellingly features a floor-to-ceiling map of Eurasia and
Africa pinpointing Forest City’s “strategic location” amidst Beijing’s
snaking OBOR trade routes.
For China the economic and strategic benefit of these projects
is not hard to glean, says Ngeow Chow Bing of the University of Ma-
laya’s Institute of China Studies. By constructing deep-sea ports on
both sides of the Malaysian peninsula and a railway—the ECRL—
that runs between them, Beijing is effectively creating a means of
alleviating its heavy reliance on imports through the narrow Strait
of Malacca. “For the China side I think the intention is very clear:
trying to create a land-bridge so they can bypass the Malacca Straits
and Singapore,” Ngeow says.
But as in neighboring countries like Thailand and Indonesia,
many are skeptical about whether these projects will benefit any
country hosting development. Take the ECRL project. Opponents
of Najib claim that it will be constructed by a Chinese state-owned
firm at allegedly inflated prices, using mostly Chinese labor and
building materials, and funded by soft loans from Chinese state
banks. Tony Pua, a parliamentarian from the opposition Democrat-
ic Action Party, says this raises the question of whether the ECRL
can accurately be described as an “investment” at all. “We do want
Chinese investments,” he says, “but the type of Chinese investments
that are coming to Malaysia today are either dodgy or in reality are
Malaysian-paid-for investments that are not really FDI.” The glut
of Beijing-backed port projects has also raised concerns that China
may be eyeing them for naval purposes. Ministers in Najib’s govern-
ment have dismissed claims that the price of the ECRL is inflated.
With national elections looming, the opposition Pakatan Hara-
pan coalition has accused Najib of cozying up to China in a bid todistract attention from the international scandal surrounding the (^) SANJIT DAS/BLOOMBERG.
FORBES ASIA
GREATER CHINA
“A country is created by the population”: former PM Mahathir.