Beijing has cut the ribbon on one of its most ambitions Belt and Road projects yet: a $13 billion railway across Malaysia. From the Nikkei Asia Review:
A Chinese state-owned contractor broke ground Wednesday on Malaysia’s largest railway project, symbolizing Southeast Asia’s growing economic reliance on Beijing’s financial clout and technological prowess.
While the project is a major coup for China, which is aggressively promoting its Belt and Road Initiative to develop infrastructure throughout Eurasia and Southeast Asia, the 55 billion ringgit ($12.8 billion) deal has critics questioning Malaysia’s transparency in dishing out big-ticket projects.
Called the East Coast Rail Link, or ECRL, the 688km railway connecting Port Klang, Malaysia’s main shipping hub outside Kuala Lumpur, and Pengkalan Kubor near the Thai border is seen by its supporters as a way to spur the development of the rural states along the line.
The groundbreaking of the Malaysian rail project comes as Xi Jinping’s Belt and Road initiative has run into obstacles almost everywhere else. Violent unrest in Pakistan and Laos, local protests in Myanmar and Sri Lanka, and an Indian boycott of the Belt and Road summit have slowed Xi’s infrastructure agenda and generated a series of negative headlines for Beijing. By contrast, the Malaysian project is off to a happy start: Malaysian Prime Minister Najib Razak has unambiguously embraced China’s overtures, touting the rail project as a “game-changer” that will dramatically ease travel across the country while bringing much-needed growth to Malaysia’s most sparsely populated states.
But there is good reason to question that rosy narrative. Najib has lately been putting all his eggs in the Chinese basket by turning his back on the U.S., accepting multiple Chinese bailouts and speedily cutting deals with Beijing with little regard for their long-term hazards. The rail project is a case in point: initial talks started last October and the project was fast-tracked in a remarkably non-transparent process. To be sure, China’s terms certainly look attractive: Beijing is offering a 20-year soft loan at a 3.25% annual interest rate, with no payments due until the line has been up and running for 7 years. But the simple fact remains that Malaysia will be heavily indebted to Beijing for years to come, and ambitious rail projects hardly have a reputation for coming in under budget and ahead of schedule.
The whole enterprise shows the danger of Najib’s recent policy in miniature: he keeps placing risky long-term bets on China due to short-term incentives. His public embrace of China this fall was an opportunistic one, motivated by immediate financial needs (Beijing had saved Najib’s skin with a $2.3 billion deal after the 1MDB money laundering scandal) and a grievance with the United States, whose Department of Justice implicated him in the scandal. And the Prime Minister’s enthusiasm for the rail project looks similarly short-sighted: with a general election coming next year, Najib is eager to demonstrate that he is bringing investment and development to the country. But the ultimate consequences of all that Chinese money will be mixed—and with critics already charging Najib with selling out Malaysia’s sovereignty, China’s expanding footprint may end up less politically popular than he thinks.
Perhaps this partnership will work out as an example of “win-win cooperation,” to use China’s language. But given the way other Belt and Road projects are going, Malaysia may soon find itself in an unenviable position of dependency vis-a-vis Beijing—and China may run into more construction headaches than are now apparent.