How the Malaysian election result could change Singapore’s role in China’s Belt and Road Initiative

The newly elected prime minister and government in Malaysia has sent an unwelcome shot across the bow of Singapore with the announcement that Malaysia is withdrawing from the high-speed rail project connecting Singapore and Kuala Lumpur. While there had been some controversy around the project in both countries, the rail project should not be seen in isolation but as a key component connecting Singapore to Chinese inland logistics hubs, such as Chongqing, thereby improving Singapore’s port role in the new Eurasian trade paradigm being created by China’s “Belt and Road Initiative.”

So, when Mahathir Mohamad claims Malaysia gains nothing strategic from the high-speed rail, he could be suggesting that it is not in the nation’s economic interest to fund infrastructure that assists a competitor in providing maritime and other services to businesses wishing to participate in China’s belt and road. News reports do not appear to have fully grasped the potential impact of this decision as Singapore becomes increasingly distanced from the initiative. The China-Singapore agreements amount to nothing more than a commitment to cooperate. Unlike the proactive approach taken by Hong Kong since the inception of the initiative, Singapore seems to be reacting to events around it.

Singapore has given the market mixed messages on how to engage with China – from Singaporean Minister for Trade and Industry Chan Chun Sing’s comments at the recent Davos World Economic Forum to Home Affairs and Law Minister K. Shanmugam shrugging off the idea of the country being cut off from the belt and road in a speech last year.