What has Malaysian leader Najib Razak’s China trip got to do with 1MDB?
Week-long trip will seek investment to boost economy and personal popularity, but some observers warn of long-term consequences of relying on Chinese funding
When Malaysian Prime Minister Najib Razak arrives in Beijing on Monday for a week-long visit, chief among his concerns will be to secure investment that can boost his country’s flagging economy.
Success in doing so would help Razak in the short term, as securing investment to fund the country’s budget would boost his popularity by helping to pay for cash handouts and other incentives he has promised constituents.
It would also limit the fall-out from the corruption allegations he faces regarding state-owned 1 Malaysia Development Berhad (1MDB) fund – something many analysts see as his real motivation for the trip. However, the longer term implications of what appears to be a growing reliance on Chinese funding has some observers worried.
Najib’s trip comes on the heels of Malaysia’s 2017 budget, which forecast GDP growth of 4-5 per cent compared to 2016’s estimate of 4-4.5 per cent, and projected a deficit of 3 per cent of GDP from a budgeted 3.1 per cent in 2016.
Malaysia keen to learn from China
While the commitment to fiscal consolidation was welcomed, the international ratings agency Moody’s noted there were no major new reforms to address the country’s underlying fiscal weakness.