WSJ report on 1MDB bailout won’t affect Malaysia-China ties, says analyst

KUALA LUMPUR: The Wall Street Journal’s (WSJ) recent report on the alleged 1MDB bailout won’t affect bilateral relations between Malaysia and China or exacerbate the strain on the economic front that followed the cancellation of China-backed projects, an analyst says.

Singapore Institute of International Affairs political analyst for Malaysia, Oh Ei Sun said the news report would not affect relations significantly, as two other factors had a larger impact.

These factors are the Malaysian government’s review of various infrastructure projects undertaken by Chinese companies and China’s tighter currency control measures.

“The Malaysian government has reconsidered the China projects due to the mounting national debt and this has caused a strain in relations between the two countries,” he said when contacted by Bernama.

Among the projects under scrutiny are the Kuala Lumpur-Singapore High-Speed Rail, East Coast Rail Line and Forest City in Johor. Three oil and gas pipeline projects worth US$3 billion (RM12.44 billion) have been cancelled.

Besides the cancelled China-backed projects, Oh said China’s tighter currency control measures had also made it extremely difficult for capital to leave China and be invested in Malaysia.

Oh said Chinese investors usually looked for incentives, especially in the form of tax concessions or a land price reduction, before deciding where to invest.

“This is because when the Chinese government opens the country for foreign investments, it would provide such incentives and it expects the same when it comes out to invest. So, as long as there are such incentives, they will consider,” he added.

The Chinese embassy in Malaysia yesterday said both China and Malaysia had all along treated each other as “friendly neighbours and sincere partners”.

In fact, it said, this year marked the 45th anniversary of diplomatic relations between the two nations, which would open up new opportunities for China-Malaysian relations.

China also denied WSJ’s allegation that some Chinese leaders had offered to bail out 1MDB in return for lucrative contracts in 2016.

The Chinese embassy said Beijing never attached political conditions to its cooperation with other countries.

“China has all along adhered to the principle of non-interference in the internal affairs of any other country. We do not accept any groundless accusations made against China,” the embassy added.

Former prime minister Najib Razak, who faces multiple graft charges linked to 1MDB, has also dismissed the WSJ report, posting on his Facebook account: “There has not been such a thing.”

Source: FMT