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Tuesday, February 28, 2017

Learn from past experiences with Arab investors



This probably being an election year, I would not like to poke a needle to bust Prime Minister Najib Abdul Razak’s bubble of excitement over the investment news, but I think he has to be more ‘streetwise’, or at least learn from past experiences with Arab investors, than what he appears now.
Perhaps it was all meant to hype up for the general election; but as we reflect back, some of the major announcements made in the past by Arab investors did not seem to materialise.
But since I have been skeptical about big investments ‘pouring’ in from China as well, I would look at the recently announcements with my fingers crossed, too.
If RM55 billion was more of a loan to build the East Coast Rail Line (ECRL), my question back then was how would the ECRL be able to earn enough to pay back the loan, now with the Arab ‘big investments’, I ask: “What happened in the past?”
A lot of fluff
During former prime minister Abdullah Ahmad Badawi’s time when Iskandar Malaysia was first announced in 2006, the Arabs were amongst the first to announce that they were going to invest in Malaysia.
If I recall correctly, it was in the headlines. There was, of course, a lot of excitement in the air. I should say, a lot of ‘fluff’ because the big money did not come pouring in from the oil-rich Arab nations.
Instead, who came to grab most of the properties in Iskandar? Even with the recent hype about Forest City, the investors are mainly from China, not any of the Arab nations.
Then, they came up with the Arab City Melaka, a commercial development in Pulau Melaka in 2009. It was said that the Arabs wanted to invest in an Arab City of 16,800 square metres on the reclaimed Island. The project was worth over RM1 billion.
According to Al Arabiya News, there were supposed to be two ‘Arab Cities’ in Malacca, the other one being on “a beachside resort just west of the historic port”.
Both cities would be worth US$303 million, and the project would include an “Arabian bazaar, Middle Eastern restaurants, shopping complex, five-star hotel, water theme park, and a unisex Arabic health and beauty spa”. What happened?
According to Malacca Chief Minister Idris Haron: “The Arab City is a development that takes up less than four acres of land. It’s not even a city, it’s a shopping mall. In fact, we are thinking of acquiring the abandoned Arab City development... because there has been no movement for the past two-and-a-half years.”
That project has since been abandoned since July 2013. Instead, we are now hearing that businessmen from both Malaysia and China have inked a RM30 billion deal to turn Pulau Melaka into a maritime centre and reclaim three islands off Malacca. I repeat, no Arab investors.
According to another news report reproduced from Bernama in May 2009, the company developing Arab City Melaka was also going to set up another Arab City in the federal capital worth RM35 million.
Now there is so much excitement about the signing of a Memorandum of Understanding between Saudi Aramco and Petronas that a university lecturer from UiTM even started crowing about it.
The academic, Hanafiah Harun, told Umno Online that “the presence of King Salman is sufficient to prove Najib was telling the truth that the RM2.6 billion was a donation from the Saudi royal family”.
What logic is this coming from one who carries the title of an associate professor of UiTM?
King Salman, he argued, would not have set foot in Malaysia, if Najib had slandered the Saudi royal family to cover up his wrongdoings.
In my opinion, King Salman’s visit to Malaysia was neither to prove that RM2.6 billion which went into Najib’s private bank accounts was a generous donation from an Arab prince, nor was it to bring major investments to Malaysia.
Once we put things in perspective, there is reason to be sceptical about the MOU between Saudi Aramco and Petronas until we see things materialise.
An MOU is basically not legally binding, therefore, you can sign an MOU today, but tomorrow, you can tell the world you have decided to shelve the project.
Why is Saudi Aramco signing another MOU with Petronas? Why are we Malaysians, except for Najib, not excited about the number of MOUs signed with Arab investors?
There are too many flip-flops for us to take them seriously and until physical money is pouring in, we should not be too excited.
Putting the matter into perspective
When we look at the recent tour by His Majesty King Salman Abdulaziz Al Saud of Saudi Arabia to this part of the world, we must not forget two important things before us.
First, the 1,500-strong entourage was supposed to attract investments from Malaysia, Indonesia, Japan and China to help with the Saudi economy due to the oil price slump.
This included the sale of a 5 percent stake in Saudi Aramco, which is expected to be the largest initial public offering (IPO) in the world.
Secondly, we must understand that Saudi Arabia, being the world’s largest exporter of oil, is now experiencing tough economic times.
One must not forget that Saudi Arabia is a desert land. Apart from oil, there is not much to shout about. Because it has been over-dependent on oil, and when the oil prices dropped, the country is now forced to look at diversifying its economy.
Many of its expatriates who were once enjoying a great time working in Saudi Arabia are now being sent home.

Thirdly, Saudi Arabia is also caught in a conflict between different factions in the Middle East. This is definitely not helping its economic growth. To put it crudely, Saudi Arabia may need Malaysia more than Malaysia needs the country’s oil money.
So, can we be wiser and not get over-excited over the fluff?

STEPHEN NG is an ordinary citizen with an avid interest in following political developments in the country since 2008.- Mkini

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