Two Southeast Asian countries have made incremental progress on China’s Belt and Road Initiative (BRI), even as events in one have shown how uneven that process can be.
The various pieces of the BRI network by which China will link its trade more thoroughly to the rest of the world are prone to political disruption, as events in Malaysia have shown.
Mahathir bin Mohamad, Malaysia’s recently elected prime minister, said that the multi-billion-dollar East Coast Rail Link (ECRL) and Trans-Sabah Gas Pipeline (TSGP) projects have been cancelled for now. He gave himself room to move the issue to “on” if need be, but given his resolute style, for the moment the projects appear to be well and truly off.
The ECRL, the RM81 billion (US$19.7 billion) project spanning 688 km and linking Port Klang on Malaysia’s west coast with Kota Bharu in the east, was launched last year and had been slated for completion in 2024. The ECRL was seen as an important part of the BRI, as it would have been useful for moving goods across Malaysia and allowing China to avoid the congested Malacca Straits.
Also off is the high-speed rail link with Singapore. “The train travels at a speed of 300 km per hour. You don’t need a high-speed train for the 350 km from KL to Singapore,” Mahathir said via the prime minister’s official website.
Mahathir also rebuked his predecessor, Najib Tun Razak, for allowing such projects to be considered. “Najib is very stupid. You don’t need to spend RM72 billion (US$17.5 billion) just to save a few minutes of travel time,” he said in remarks published by Bernama, the country’s news agency.
Cost is the principal reason these projects have been dropped, as both would put Malaysia in hock to China. The two rail projects alone would have put Malaysia RM153 billion (US$37.2 billion) in debt to Beijing. This is something many governments would baulk at, but in Malaysia, the issue is more sensitive still.
“The projects (will) not go on. Our priority is reducing our debt. For the moment, they are deferred until we can afford [them],” said Mahathir, adding for clarification. “Yes, they are cancelled at the moment.”
Luckily for Malaysia, the Chinese leadership are said to understand Mahathir’s position. “I have explained to them and they understood the situation and accepted them,” Mahathir told journalists at the end of an official visit to China. “Initially, there were some misunderstandings but now they understood why we do it. I don’t think China wants us to be bankrupt.”
There are several reasons for China, whose political leadership is both backing and underwriting BRI initiatives throughout the world with loans of various degrees of softness, to take an understanding view of disruption of one important part of their grand plan.
Firstly, Mahathir did not say never; the issue can be revisited. China is also playing a long game with the BRI, and the situation might suit the project better in the future. Thirdly, while Mahathir said no (for the time being) to Chinese government loans, he was enthusiastic about China’s private sector, especially e-commerce giant Alibaba, which is building a hub at Kuala Lumpur International Airport.
“The work Alibaba is doing is astounding and its modern technology can certainly benefit Malaysia. We look forward to exploring more collaboration and continue to strengthen our partnership,” said Mahathir, after listening to presentations by Alibaba Group’s senior executives, including founder and executive chairman Jack Ma.
While events in Malaysia have been the drama of recent weeks, northern neighbour Thailand has steadily gotten on with a mixed bag of things that provide, possibly, an alternative to Malaysia.
Included in a clump of six MOUs approved by the Thai government in late August was one to promote strategic cooperation between its own development initiative, the Eastern Economic Corridor, and the BRI.
Also getting the sign off was setting up a working group to promote “unimpeded trade between Thailand and China,” according to the Thai government website, with a further protocol specifically looking at cooperation with China on inspection, quarantine and veterinary sanitary requirements for frozen meat product exports. Another MOU promotes cooperation between Thailand’s Board of Investment and the China Council for the Promotion of International Trade.
Some of this is very ordinary and currently without detail, but Thailand is signaling a clear intent to cooperate with China, specifically on the Belt and Road Initiative.
What’s more, this is not just in the EEC, which is the three provinces to the east and south of Bangkok, but also in southern Thailand, where the Cabinet has approved the Southern Economic Corridor project.
The new project is set to kick off in Chumphon, Ranong, Surat Thani and Nakhon Si Thammarat before being expanded to other southern provinces in the future, according to the country’s official news agency.
“Urgent projects in the Southern Economic Corridor include the development of Ranong Port as an important marine gateway to Myanmar, Bangladesh, India and Sri Lanka, the construction of double-track railway from the Eastern Economic Corridor to Chumphon, and the promotion of agricultural production and processing in Surat Thani and Nakhon Si Thammarat,” the report said.
It is, though, wise not to get carried away, especially when Thailand’s military rulers are planning to allow elections next year and a new government, like Mahathir in Malaysia, might decide to scrap the previous administration’s plans. But there are other factors to consider against the promise and the potential.
“It’s not really about the Kra Canal and Isthmus project,” Ruth Banomyong, director of the Centre for Logistics Research at Thammasat University, told Asia Cargo News, alluding to old plans to create a transport corridor and hub to rival Singapore across southern Thailand, “It’s more about how you can diversify the southern economy.”
The EEC-BRI link up, he pointed out, sounds good, but can be seen more as public relations for the government. There is also, Banomyong pointed out, a history of Thailand signing MOUs with China that get forgotten or, as he put it, “disappeared.”
By Michael Mackey
Southeast Asia Correspondent | Bangkok
