Review China investments carefully to avoid debt trap, govt told

 

The 665km-long East Coast Rail Link project is a key part of China’s Belt and Road Initiative project in Malaysia. (Bernama pic)

PETALING JAYA: Analysts have urged the government to go over China-related investments with a fine-tooth comb to ensure that Malaysia has secured favourable agreements that do not lead the nation into a debt trap.

Yazid Zul Kepli of the International Islamic University said this was due to concerns of a possible debtor-creditor relationship with China in the future, arising from uncertainties affecting Belt and Road Initiative (BRI) projects around the world.

“There is a growing instability at the global level due to the rising tension in the Middle East, the ongoing war between Russia-Ukraine/Europe, and the tension between US and China due to Taiwan.

“Such escalation can negatively affect the BRI projects. If the nature of our relations with China is a debtor-creditor relationship, we will be burdened with a lot of debt when problems emerge and we default.

“Reviewing the breakdown of costs and overall financial arrangements is essential to prevent Malaysia from shouldering excessive debt or unsustainable financial obligations,” the international relations academic told FMT.

Yazid also urged the government to get independent auditors to look into how many of the promised 18,000 jobs were taken up by locals in the East Coast Rail Link (ECRL) project.

“Making sure that companies regularly share updates about the jobs they are creating and making these updates public can ensure better transparency.

“This helps everyone, including the public, understand how much these projects really help employment,” he said.

In May, the government said it would “monitor” RM170 billion in memoranda of understanding (MoUs) signed with China. This was revealed in Parliament following a query by Titiwangsa MP Johari Ghani regarding the verification of companies involved in the MoUs.

Saying such MoUs were hardly legally binding, Pushpan Murugiah of the Center to Combat Corruption and Cronyism said the proposed RM170 billion might not reflect reality further down the line.

He said the estimated amount from a few agreements did not clearly show how the money would be used for different projects.

Pushpan also said while it was acceptable to keep some parts of the deals restricted, like special technologies or trade secrets, keeping secrets should not trump the public good.

“This is important because if big projects, especially ones that use public money or affect the environment, aren’t transparent, it can lead to serious corruption issues,” he told FMT.

The 665km-long ECRL project is a key part of China’s BRI project in Malaysia. It reached a progress stage of 50.29% in August and is expected to be completed by 2027.

The last reported cost of the project was RM74.9 billion, consisting of RM50.2 billion in construction costs and RM24.6 billion in development costs. The cost was revised twice in the past by successive governments.

The Pakatan Harapan government put a temporary halt to the ECRL project when it came to power in 2018, after construction began in August 2017. Work resumed in 2019. - FMT