Source:
https://scmp.com/comment/insight-opinion/article/3001400/mahathir-points-way-forward-beijing-belt-and-road-projects
Comment/ Opinion

Mahathir points way forward for Beijing on belt and road projects

  • The frank views of Malaysia’s prime minister on a controversial rail link judged too costly under the infrastructure scheme should help fine-tune China’s investment approach
In an interview with the Post, Malaysian leader Mahathir Mohamad said he would give the go-ahead to an east-west rail project he had previously scrapped if the Chinese contractor agreed to a significant price reduction.

As he tries to renegotiate a US$20 billion high-speed rail deal with China, Malaysian leader Mahathir Mohamad has clarified concerns over major infrastructure projects financed by Chinese banks and state-run firms that should resonate in Beijing and other recipient countries. In an interview with the Post, Mahathir said he would give the go-ahead to an east-west rail project he had previously scrapped if the Chinese contractor agreed to a significant price reduction. However, the need to cut costs is just one reason governments around the region are tempted to rethink infrastructure deals with Beijing. There have also been worries about the US-China trade war, transparency, commercial viability, environmental protection, job opportunities for local people and so-called debt-trap diplomacy.

Mahathir went to the heart of the matter for recipient countries – their own best interests. His comments were driven by a clear view of where Malaysia’s interests lie and where its red lines are. Investment must enhance productive capacity and create local jobs, rather than an influx of foreigners for unnecessary projects, debt must be managed transparently and political interference never tolerated. “You know capital flowing into the country exerts some influence,” he said, suggesting that it should be limited to money for investment in productive processes.

This may seem no more than common sense for a sovereign borrower, but it still calls for vigilance and firm leadership. China, on the other hand, can only welcome such a stance. These red lines should guide Beijing too, rather than risk having deals made in good faith held hostage to domestic politics. This is the lesson to be learned from China’s experience with Malaysia. The best protection from changing political winds is to have contracts that reflect competitive pricing, defendable in a transparent arbitration process. China’s state-run firms must recognise this as they forge international deals.

It can only benefit China to listen to such frank and honest views, which can help it fine-tune overseas investment approaches to avoid misunderstanding, mistrust and even conflicts. This is also important to secure the long-term success of “Belt and Road Initiative” deals. Promised joint benefits will materialise only if there is cooperation and coordination in a pragmatic approach by all sides.

That said, Mahathir made it plain that if his country is forced to take sides in the current rivalry between China and the United States, its own best interests lay with the economic largesse of Beijing rather than an “unpredictable” US. Beijing is also sure to put a positive spin on the Malaysian prime minister being the first foreign leader to confirm attendance at a belt and road summit next month.