MP SPEAKS Is the recent 1MBD "fire sale" of assets to China-linked companies in the national interest? Will those sales compromise the long-held neutrality of Malaysia’s strategic posturing?
2015 saw the intensification of US-China competition in the Southeast Asia region. Malaysia is being courted by the US and China, as it has hitherto not taken sides in an obvious manner. Since the 1970s, Malaysia has been the key leader championing South-East Asian neutrality.
By now, it is clear that Prime Minister Najib Abdul Razak’s government is cashing in on Malaysia’s unique bargaining position with both countries. On one hand, Najib is committing Malaysia to the controversial US-initiated Trans-Pacific Partnership Agreement (TPPA).
On the other hand, a number of recent deals with China’s interests risk compromising Malaysia’s strategic position.
These deals with China’s government-linked busineses - often backed by Chinese government loans - are common in Africa, or in Laos and Cambodia. Myanmar turned its back on such inducements in 2010. Sri Lanka moved away from such practices after Mahinda Rajapaksa lost the presidential election in early 2015.
China General Nuclear Power Corp (CGN Group) has acquired all of the energy assets of 1MDB, for RM9.83 billion in cash. Those assets, known as Edra, consist of 13 power plants across five countries from Malaysia to Egypt and Bangladesh. CGN Group will also assume an unspecified amount of debt as part of the deal, having outbid Tenaga Nasional Berhad to clinch said deal.
Not good policy-making
The energy deal requires the government to bend the foreign ownership rules and for the first time allowing foreign ownership of power generation, a strategic business. While privatisation of power generation by foreign firms is not usual around the world in the past two decades, there are backlashes and rethinking on the part of the firstmovers.
On Dec 31, 2015, China Railway Engineering Corporation Sdn Bhd and Johor-based Iskandar Waterfront Holdings purchased a 60 percent stake in 1MDB’s Bandar Malaysia project at RM7.42 billion.
It is now a foregone conclusion that a China-led consortium would be awarded the Kuala Lumpur-Singapore High Speed Rail (HSR) project as well.
I have repeatedly urged the government to release the feasibility study report of the HSR. A HSR is not necessarily the answer to better connectivity for Kuala Lumpur and Singapore. An expanded railway system that can handle both passengers and freight could be a better alternative.
But with the 1MDB fire sale, the government has jumped the gun in deciding on a) going ahead with the HSR without extensive consultation with the public; b) giving it to a China-led consortium. Such is not good policy-making at all.
The ultimate question is, should Malaysia sell strategic businesses to China in exchange of a bailout for 1MDB? Will Malaysia’s long-held posturing be compromised?
LIEW CHIN TONG is DAP national political education director and Kluang MP.